As a real estate investor, you obviously want to keep your property profitable for a long time to come. That means keeping it attractive to occupants, and that means keeping it in tip-top shape on all fronts. Here’s how.
Document everything
When it comes to property value, treat it like you would an HR dispute and get everything in writing as soon as it’s happening. You need accurate documentation about:
- Building and safety codes and standards in your area
- Proof of compliance
- The contractors/ businesses who built the property
- The entities responsible for maintenance
- Inspection timelines and reports
- Any repairs or changes made over time
- A history of tenancy/ occupancy
The same logic applies whether your investment is a rental apartment, holiday house, an office space, or anything else. Sometimes property damage is a consequence of some minor problem from years ago that was either overlooked or disregarded, and grew into a major issue as it ran unchecked.
Likewise, things that weren’t an issue at the outset might become problematic over time, as standards, regulations, and best practices change. A classic example – nowadays nobody would think lead and asbestos are a good idea, but there was a time when every property was full of them.
Monitor the “big systems”
Keep an eye on the condition of your property’s structural key points, electrical installations, heating, ventilation, air conditioning, fire detection, drainage and disposal systems, and backup energy installations. It sounds like a lot, but the cornerstone of successful real estate investing is knowing how to stay marketable in all conditions.
Modern renters are increasingly demanding eco-friendly spaces that facilitate health and wellbeing both for the tenant and the environment. You can’t cater to that if the foundations have deteriorated, if the insulation and ventilation is outdated, if the electricity consumption is inefficient, etc.
Some easy strategies to implement include:
- Transitioning to smart lighting and thermostats
- Installing low-flow water fixtures
- Using solar or wind power, at least partially
- Joining a recycling program
- Maximizing natural daylight and fresh air on the property, etc.
Damage prevention is a natural result of these efforts. Your property will directly benefit from less exposure to harmful materials, reduced load on the electrical network, and similar mitigations of long-term wear and tear. Of course, timely detection and prevention of fire hazards, structural dangers, and such goes without saying.
Stay on top of your plumbing
Yes, this “big system” deserves a section of its own. Plumbing is a major category of responsible property ownership, and it can be the source of many types of damage, some of which are surprisingly sneaky. For example, soaked wooden beams rot and become unstable long before any obvious distortion appears in the walls or roof.
Damage and wear on the indoors and outdoors pipes can appear as clogging, corrosion, stripping, cracks, chips, breakage, and bursting. Depending on their location and the flow they handle, damage can affect your property’s:
- Foundations
- Walls
- Electrical installations
- Waste disposal system
- Air management system
- Furnishings
- Appliances
It can even attract various pests, which opens a whole new can of worms regarding health and safety hazards. You can minimize risks if you make a point of proactive plumbing leak detection, immediate troubleshooting, regular maintenance, and timely replacement or renovation of risky property elements.
The point is to identify and remedy any issue quickly, before it grows into a big and costly problem. Consider having a fixed inspection schedule and arranging long-term collaboration with some reliable, quality plumbers in the area. Sprinkle in some random checks throughout the year for good measure.
Get the right insurance
Insuring your property is an obvious step in protecting it, but you need to know what type of policy is best for your needs. Generally speaking, they’re categorized based on how long of a “cycle” the property is rented out for.
If your business is short-term property management, such as holiday homes or seasonal rooms for festival goers, you should specify holiday rental insurance (or whatever the equivalent is called in your area). These are tailored to scenarios where you have a faster turnaround of occupants, since your property faces fresh risks every “cycle” (weekend, holiday, etc).
If you rent out long-term (family homes, standard rental apartments) your tenancy agreements will span many months, meaning plenty of time for damage to happen, but little variation in its sources. It comes down to accidents, tenant negligence, loss of rent, and environmental disasters. In that case, landlord insurance policies are typically the way to go.
Prevent tenant damage
Finally, protect your property from tenant-induced damage, both accidental and intentional. The most unreliable factor in investing is always people, but fortunately it’s also pretty straightforward to deal with. You need to implement:
- Tenant screening
- Late payment policies
- Pet policies
- Move-in and move-out monitoring
- Regular property inspections
- Good landlord-tenant rapport
Also, try to fill any vacant property quickly. Lack of occupancy is a magnet for deterioration and maintenance neglect, and long-standing damage which comes from that is costly and time-consuming to fix.
In conclusion, protecting your investment property from damage mostly comes down to maintenance and planning ahead. Monitor the various installations and structures, and commit to fixing any issues in a timely manner.
Tailor your leases and insurance policies to your specific type of property. Finally, stay up-to-date on legislation and occupants’ demands, and keep accurate documentation throughout.
