On average, landlords will spend over 1.5 times their monthly rental yield on maintenance to their property.
This, combined with a recent survey by Bankrate, which revealed that 16% of homebuyers “significantly underestimated” the amount of money that it would cost to maintain their homes, suggests that most real estate investors have room to improve their margins by lowering their maintenance costs.
A lot of the factors that affect the amount of money that a building will cost to maintain can be identified during the purchasing process.
When purchasing a property, home warranty cost is one of the key considerations. This cost includes the expense of protecting your investment against unexpected repairs and replacements of essential home systems and appliances. Evaluating the choice home warranty cost can significantly impact the overall maintenance budget for a property. By factoring in this expense, property owners can better estimate their long-term financial obligations and make informed decisions when it comes to the purchase. However, it’s essential to conduct thorough research to understand the coverage options, terms, and conditions of different home warranty providers, as this will ultimately influence the overall cost and the level of protection for the property.
We will now go through exactly what you should, and should not, look for when buying a property with inexpensive maintenance in mind.
Look at a property’s deeds to discover past structural problems
Before purchasing a property, it’s worth pouring over the property’s deeds to discover any maintenance issues that it has had in the past like a toilet that swirls but doesn’t flush, and how these were fixed.
If there have been any maintenance issues that required a permit to fix, then these should have been recorded on the deeds of a property. Since most major maintenance issues do require some sort of permit to fix, this should tell you if there are any structural problems that may crop up again.
You can usually find a property’s deeds by speaking to the tax assessor of the county that you are buying the property in. Specific works that you want to look out for as being “red flags” that a property may become expensive to maintain include:
- Any foundational issues such as settling.
- Replacements to any wooden features of a home (including framing) as this is usually indicative of chronic damp.
- Any plumbing or electrical issues as these can be particularly expensive to remedy if they crop up again.
You can also find out a property’s age on its deeds. If a building is over 30 years old and has not had any significant structural or foundation issues, then it has likely been very well built and therefore its maintenance should be relatively cheap.
Specific issues to look out for during a home viewing
House viewings give you the perfect opportunity to suss out whether a home may be susceptible to expensive maintenance issues. You just need to know what to look for in order to diagnose these potential problems.
When viewing a property, pay particular attention to the following:
- The doors: One of the most common signs of problems with a house’s foundations is doors being difficult to close. As you walk through each room, close and open each door to ensure that the door itself fits flushly in its frame.
- The floors around the bathroom(s): Creaking and unevenness in the floors that immediately surrounds the bathrooms or toilets indicate that there may be some leaking from these wet rooms.
- Larger windows: Much like with doors, windows that are “tight” when opening and shutting can be indicative of movement in a house’s foundations.
It’s also worth keeping an eye out for any parts of the house that look like they have been repainted recently, or which clearly have been painted at a different time to the rest of the home. This is often indicative of some maintenance work that has been carried out in that room, and you should follow up with a seller or their agent what such maintenance work could be.
Questions to ask the seller and their agent
Most states require a seller to disclose any ongoing maintenance issues with a building. However the law is much more vague when it comes to repairs that have been fixed, but which may reoccur in the future.
You should therefore try to dig a little bit deeper than the legal documents to try and anticipate any maintenance issues that could come up in the first few years after purchasing a property.
There are two main things that you want to ask your seller (or seller’s agent) when trying to ascertain such maintenance issues. These are:
- If there are any maintenance issues denoted on a property’s deeds, ask the seller what they did to fix the issue. In particular, you want to look out for whether the contractors involved in the fixes had all the necessary certifications according to local building codes.
- Ask the seller’s agent what materials were used in the building’s construction. Although there are tight regulations surrounding what materials are used in creating the frame (the foundation supporting structure of a building) home builders have a fair amount of licence when it comes to the materials they use to create a home’s exterior and interior finishes. In particular, try to find out what materials are used in a building’s roof and external walls. These parts of a home are most exposed to the elements and therefore require the most durable materials. Opting for cheaper materials here is indicative that a home builder may cut corners in other parts of the construction project.
Be wary of agents who are not forthcoming with this information. Although such withholding is unlikely to be intentional, you still want to be working with agents who really understand the provenance of the real estate that they are selling.
Summing up
Although maintenance costs are an inevitable part of being a real estate investor, you can minimize this overhead by specifically looking for homes that both have little in the way of previous maintenance issues, and which have been built for durability. You can find out whether this is the case by looking at the property deeds, thoroughly inspecting a property during a visit and asking the right questions to the seller and their agent.
