A friend’s father passed away late last year. When he died, it turned out that this modest man
surprisingly had quite a lot of money; his son could really not believe the
financial acumen he apparently had! He left
a rudimentary will that bequeathed everything to his three children (including
my friend). With this tough news, there
was an economic silver lining.
But the father’s estate was a mess. There were bank accounts everywhere. He owned real estate in several states. Documentation was half on paper and half
on-line. Some of the self-managed rental
houses had leases, others were handshake deals.
There was no estate plan; everything was going to probate court.
And complicating the matter, the heirs were not of the same
mind. Some of the siblings needed the
money immediately, while others could afford to wait on trying to get the best
prices. It caused a lot of family
unrest, on top of the grief they all shared at his passing. A blessing had become a curse.
I thought of how his father could have made this process so
much easier by employing professionals.
A good financial advisor could have had all of the financial accounts organized
and available at the push of a button.
An estate attorney could have had the assets placed in a trust so they
could have avoided probate court. A
property manager could have just kept the houses maintained and rents coming
into the estate until any selling decisions were made. The cost would have been a fraction of his
total wealth and would have largely eliminated the turmoil and sheer man hours
required to piece things together.
On a smaller scale, this reminded me of a dilemma in Charlotte property
management with broken appliances.
Almost every house has the four major appliances:
refrigerator, stove, microwave, and dishwasher.
When bought, they work and look great.
There is fully-functional, appliance kitchen bliss which is expected by
tenants and required by the lease.
But as the years go on, appliances start to break and stop
working as designed. The question
becomes whether to try to repair a broken appliance or just replace it.
Employing an appliance repairman will cost around $100 to
get him in the door. Then one of three
things happen:
- It’s a simple fix and the
cost stays around his appearance fee (best case scenario)
- It’s a more complex fix
and will cost around $200-$500 all-in (most common case)
- It’s a more costly fix and
replacing the appliance is the most appropriate option (worst case)
After one of these options is selected, the tenant has a
working appliance and everything is back to kitchen bliss.
A legitimate question arises: At any point, is it prudent to
go directly to appliance replacement and save the $100 appliance repairman
fee? What if the appliance is 30 years
old? What if there is another,
pre-existing issue already (like a broken handle)? No one wants to waste money.
As a property manager, we almost always go with sending the
appliance repairman for several reasons:
- Older appliances tend to
last longer than the newer manufactured ones
- Replacement costs of $500
-$2,000 are much larger than the possibility of a quick fix at $100
- If an appliance is broken
due to tenant misuse, the tenant can be responsible for the cost. There is no way to ascertain this without
a repairman.
- The tenant has less down
time without a working appliance typically
- Pre-existing issues are
usually not functionally-related and not the reason for the call
Much like administering large estates, professionals are
trained to understand and handle problems.
They can make trained decisions that usually wind up paying for themselves
at a fraction of their upfront cost.
Smart landlords are wise to employ them!
Happy Landlording!
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