Wednesday, March 19, 2014

What Rental Home Repairs Should A Landlord Pay For?




Oh, home repairs…  One of the aspects of rental home investing that can really eat into a landlord’s financial return.  Landlords and tenants both want to have a perfect home, but debate on who should pay for it.  

In 10 years of practicing property management in Charlotte, I’ve found that the responses of who should pay for what repairs are unanimous (depending on what faction of people you ask):

Q:  Who should pay for broken stuff at the rental house?
A.  The owners!! (results tallied from 100% of the tenants)

Supporting testimony: “This house is a piece of garbage!  They are lucky I’m a great tenant and renting it.  I pay on-time every month; the least the owner can do is make some needed repairs around here.  I guess Ebenezer is too busy counting his money to remember the little guy living in one of the houses in his vast real estate empire.”

Contradictory facts:  House was lived in by owner prior to tenant move-in.  Everything worked fine.  Actual real estate holdings of owner are 2 houses.

B.  The tenants!! (results tallied from 100% of the owners)

Supporting Testimony: “The house was in perfect condition when the tenant moved in.  I lived there for 5 years and everything worked.  Now they want every little thing fixed?  Who cares if the screen door has a little rip in it?  It didn’t kill my family, but the tenant can’t live with a flea once in a while?  Please!  He doesn’t even have children!”

Contradictory facts: “Little rip” in screen would allow full grown vulture entry.  Perfectly conditioned homes would be violently offended at this owner’s shoddy home being placed in the same category as them.
    
And this is why property management can be challenging at times.

“To pay to repair or not to repair”, that is the question.  And it is one that has no clear-cut answer.  But, with that being said, there should be some methodology applied to make fair decisions.

My take on some parameters:

1.  The house must be kept at code.  Major systems (plumbing, heat, electricity, appliances) need to work properly.  This includes working air conditioning nowadays (I know the old-school hardliners just stopped reading).  I’m aware it used to be a luxury item, but that was a long, long time ago.

2.  If it worked when they moved in, it should work throughout their tenancy (some exceptions apply on really high-cost or not-being-manufactured-anymore items).  Example: a home was rented with a working gas fireplace.  The fireplace stopped working in the middle of the tenancy.  The manufacturer went out of business for the parts that were needed to fix it.  In my opinion, the owner is not responsible to pay $3K for a replacement fireplace for home that rents for $1K a month.

3.   If tenant negligence clearly causes something to break (example: a bottle cap found blocking a garbage disposal from working), the tenant should be billed back for the repair.  But a tie goes to the tenant.  Think of this as more of a criminal trial (where the tenant is innocent until proven guilty) than a civil trial (only requires a preponderance of evidence).  There is a higher standard of evidence required before a tenant can be billed back for a repair (it must be really obvious).

4.  Operational items need to be repaired; aesthetic items (aka how the house looks) do not.  It should be made clear to the tenant during the lease signing that the home looks the way it looks now and nothing will be done by the owner about it.

5.  Just because the tenant is renting the house, it does not mean that they will never spend money on the house.  Maintenance items are required (air filters, light bulbs, lawn care, etc.) and are not paid by the owner. 

This is obviously not a comprehensive repair policy, but it is a good start.  Good luck!


Brett Furniss is the President & Owner of BDF Realty (Charlotte Residential Property Management), the trusted real estate advisor for Charlotte landlords & Home of $100 Flat Fee Property Management.   BDF Realty utilizes their innovative Pod System for exceptional customer service in residential property management, home repairs, and home sales (including Rent-To-Sell) for single-family homes, condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!

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