Rental homes may generate a consistent, significant income for property investors if everything goes as planned. However, if you fail to fully check the property before acquiring it, or if you fail to keep up with the upkeep after the sale, things may quickly go wrong. The “little” issues you may see (such as wet stains, cracked drywall, or bubbling paint) might all be indicators of serious issues lurking behind the walls.
Quick and low-cost repairs may lead to apparently never-ending nightmares when the full depth of the “small” problem is revealed or as other difficulties emerge throughout the renovation/repair process. Overnight, your figurative money tree might devolve into a money hole. Many consultants will tell you that purchasing modern buildings would reduce your troubles, which is true to some level. By avoiding buildings constructed in the 1980s or later, you may avoid some of the most expensive concerns, such as asbestos, obsolete wiring, or even lead plumbing.
However, you will not be able to avoid all of these concerns indefinitely. The environment, time, and your tenants all take their toll on your homes, and even immaculate rentals may quickly degenerate into pricey disasters (as they did for one landlord in Minneapolis). The following are a few of the strong hitters to keep an eye out for the next time you go on a rental property tour:
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Plumbing
Water is a very corrosive element. Not only can older houses contain metal piping that rusts, bends, and bursts in cold weather, but moisture from the exterior of the pipes may also cause harm.
However, all of a home’s piping is concealed behind walls, beneath floors, and in crawl spaces, which means that in order to remedy any plumbing problems—even minor ones—you’ll have to take out walls, smash through foundations, and generally create a mess. The good thing is that plumbing isn’t all that expensive to repair on your own, so it’s preferable to hire a professional.
While a plumber may charge you a few hundred dollars to rerun a shower line, if you don’t hire one, you’ll have to get handy and seal up the drywall yourself. As a consequence, even for simple work, plumbing repairs may easily double or treble in price when the essential repairs are included in.
Unfortunately, plumbing problems, particularly leaky pipes, must be addressed immediately. Unlike some other maintenance concerns, you can’t postpone them till next month, next summer, or next year. Every minute you leave a plumbing problem unattended, you increase the risk of accidental damage to other components of your rental property.
The greatest thing you can do as a landlord is to examine your homes’ plumbing on a regular basis and then prepare for the worst.
Stability of the Foundation
Your property’s foundation might literally be the basis upon which your investment is built. Foundations that are cracked or eroding indicate danger for the rest of the property. It may not only create water leaks, but it can also twist and torque walls, causing drywall and plaster to fracture, windows to break away of their casings, and doors to jam. Damaged foundations may potentially cause structure collapse if left uncontrolled.
That implies that the basement should always be the first stop on any home examination. “I go to the basement when I want to get a rapid read on the condition of a property,” says Bradley B. Cruickshank, a contractor and proprietor of Cruickshank Remodeling in Atlanta. “Typically, you can see the style of construction, quality of materials, and proof of the calibre of artisans who constructed it from the basement.”
Examine the basement flooring for uneven water lines (evidence of water penetration), fractures in the concrete or cinderblock, previously repaired damage, and chips or cracks.
Foundation repairs may be exceedingly expensive since pieces of the property must often be raised on jacks in order for repairs to be completed. Fortunately, most foundations do not degrade overnight. These problems are caused by poor initial construction, inadequate water sealing, and ground movement – all of which may be fixed if addressed early enough.
Electrical
The majority of your home’s electrical systems, like its plumbing, are buried behind the walls. Fortunately, the electrical code hasn’t changed much in the last 20 years or so. That implies that if you’re investing in a freshly built home, your wiring should last for many years. However, before purchasing a home, you should have it examined for any “modifications” that past tenants may have done without consulting an electrician.
In addition, if you are worried about the state of your electrical equipment, an exterminator might be your greatest friend. Mice, rats, and squirrels may all damage exposed electrical equipment in attics, basements, and crawl spaces. These small animals like chewing the insulation and occasionally utilise wire as nesting material, resulting in serious electrical concerns that must be addressed immediately.
Systems for Heating and Cooling
Heating and cooling systems are another significant expenditure that many rental property owners do not budget for. In the worst-case scenario, depending on the size of the property, they might cost tens of thousands of dollars to repair or replace.
In addition to inspecting the system before to purchase, ensure that your HVAC is on a regular maintenance plan with a reputable service provider. Keeping burners clean, condensers free of mould and mildew, and ducting free of rats and other pests all contribute to the life of these critical, expensive systems.
Whenever possible, avoid cosmetic fixes.
Landlords are often tempted to make a slew of minor aesthetic changes after acquiring a home in the hopes of increasing rental prices. The issue is that little work may quickly escalate into much larger ones. For example, gutting a kitchen may seem simple, but if you uncover the wall cavities, a building inspector must be summoned—and anything the inspector discovers incorrect behind those walls must be corrected before you can complete your remodel.
That’s not to say you shouldn’t strive to enhance your properties if you believe the investment is worthwhile, but it’s best to keep things basic as much as possible. These are revenue properties, but sometimes “good enough” is all that is required.
Don’t Put Your Trust in Property Inspectors
Do not depend on an inspector’s reports unless you have complete confidence in him or her. Inspectors are often not licenced, regulated, or even fully trained. They may also ignore severe concerns that will go unnoticed until your renter phones you one morning threatening legal action over plumbing deficiencies in your apartment (pro tip: know your alternatives for obtaining legal representation before things get to this stage).