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The Real Cost of Not Doing Preventative Maintenance

Written by Connor Swalm

Jaime: Well, hello, my name is Jamie Swalm and I am here with Connor Swalm and we are the hosts of the Landlord’s Resource. Brought to you by Swalm Property Management where each week we educate and empower landlords just like yourself. Aright, Connor, how you doing today?

Connor: I’m doing wonderful today.

Jaime: Aright, well, good to hear. So we’ve got a very important topic for you today on today’s show and that is The Real Cost of Not Performing Preventative Maintenance. And so very often we see landlords that seek to put as little money into a property as possible with the idea to maximize cash flow. And one of the most common ways that we see landlords attempting to do this is to put off or defer preventative maintenance. And I can tell you, we can tell you this is just about the worst thing that you can do because almost always this will come back and bite you in the rear end where in the end costs way more money to not do preventive maintenance. So on today’s show we’re going to talk to you about what are the risks to the homeowner or the real cost to the homeowner, if not doing preventative maintenance, what are the risks or the real cost to the tenant and what are the risks or the real cost to a property manager if you’re a landlord that actually has a property management or that you work for. So are you ready to get started?

Connor: I’m ready.

Jaime: Alright. Well let’s go ahead and start with what are the risks to the homeowner of not doing preventative maintenance?

Connor: So the first and probably the most obvious risk when a home owner decides not to perform preventative maintenance that is recommended by their manager is greater damage to the home. An example of this, a really easy example to understand, if you have a small leak in the roof and you decide to patch it instead of really replacing it because it’s maybe 25 years old, you risk that there’s going to be a greater problem and then you’re going to have interior damage as a result.

We’ve actually seen that it happens a lot where the roof is either repaired and then a couple of years later, that there is another leak in the home and then it needs to be replaced eventually as well. So really if a piece of the home, like the roof or even appliances and fixtures have outlived their life expectancy and then they break, it’s really in the owner’s best interest at that point to replace instead of repair, just to prevent further issues that will crop up. It’s just a matter of time. The second is, if an insurance company comes out and you had prior notice of something that had gone wrong in the home and they can demonstrate that you did not give them proper notice or you did not act in the right way, there is a possibility that your claim won’t get filed or filled with your insurance company and you’ll be standing there to foot the bill. So that’s also something to keep in mind. Every insurance policy is different with that for the owner. But some, I could see that case being made as well.

You also, if you don’t perform preventative maintenance, have a lot of risks on the tenant side. If you have a quality tenant, a quality tenant would want to live in a quality home and if you don’t perform preventative maintenance, it’s not going to be a great situation to live in. And a good tenant isn’t going to put up with that. Right? And you’ve risked turning a good tenant into a bad one. So if repairs aren’t being made that your property manager requests because your tenant requested them, then the tenant feels ignored and the tenant will sometimes as a result, move out or bad things start to happen when a tenant becomes unhappy with the situation that could have been resolved with a little bit of preventative maintenance, that would have been good anyways. You also, when you don’t perform maintenance that is preventative or that your property manager recommends you stress the relationship with your property manager.

So if there’s maintenance that really needs to be done and you decide not to get it done, your property manager also feels ignored and it creates a lot of stress and a lot of havoc on the back end of the property manager to manage an owner who doesn’t want to do the maintenance that is required on the home. And as he said earlier, a lot of owners do this in an attempt to maximize cash flow. And in our experience, the long term cash flow of your property is never greater when you do preventative maintenance on your property, every dollar you spend on preventative maintenance will prevent $3 that you spent, let’s say $3, in the future that you’ll end up having to spend, maybe you have to provide a hotel for a tenant to live in if they have to be displaced due to repairs or maybe now there’s a lot of internal issues in the home that if there’s a roof leak, now you have to fix as well.

So it’s always in the best interest to perform preventative maintenance. You also might have increased fees for your property manager, so some property managers charge maintenance override, and if they do and if you don’t perform preventative maintenance long term, you’ll end up spending a lot more money on maintenance, which means a lot more money to the property manager in terms of a maintenance override fee. And also if a property manager has to perform, has to go to the house more often, you might be charged more home visit fees if your property manager charges those as well. So really all around, when you look at it from any perspective financially or just time-wise, it is always in your best interest to perform preventative maintenance. And a lot of property managers, especially us, if we recommend maintenance to your home, it’s not because we want the maintenance to be performed. We’re not gonna go out to a house and actively search for things that don’t need to be done and then suggest them. We only suggest maintenance that needs to be done in an attempt to protect the property owner as well as possible. So if we suggest something as a property manager, then it really should be done whether or not you go the exact route that we chose to fix the thing in question is a different story. But if a maintenance issue is brought up, it really should be fixed. Really all that boils down to at the end of the road, an owner will have more stress, financials, all of these lead back to paying more in the long run. So if you ended up having to pay more in the long run, you end up having increasingly stressed financials in the long run as well. And so it really just isn’t in the best interest of an owner to ignore preventative maintenance when it should be done.

Jaime: And I would add to that that our role as a property management is to really enhance and protect and grow the wealth of the owners that we manage for. And so one of the ways that we do this is we’ll do annual inspections and we’ll identify things that need to be repaired or areas of preventative maintenance or if we’re going into a home for a maintenance call, we have the relationships with all of the local vendors who are reliable and trusted who want to continue to do business with us. So when we come to an owner and we say, okay, here’s what needs to be done and here is a quote or two quotes for this work. We know that those quotes are accurate. We know nobody’s being taken advantage of and we know that there are things that need to be done.

And you know, our relationships with the contractors are such that if something does not need to be done, they will let us know that as well. Or if there is a way to do something effectively but less expensively, they will let us know that as well. It’s very difficult as an individual property owner to have the level and the quality and the depth of relationships with contractors in the community in any and every specialty who are reliable. And so it’s really important that we view our role with you as partners to really enhance and protect and grow the wealth of your property. And preventive maintenance is one of the best ways for you to do that. And it’s just like what Connor said, preventative maintenance is a lot cheaper than the alternative, which does not end well. Aright, so let’s talk about the risk to the tenant and the real cost to the tenant of not performing preventative maintenance.

Connor: So first and foremost, there’s always a risk of injury that’s involved. Maybe you have a leaking pipe, an exposed electrical wire or something like that. Or maybe there’s a leak in the roof that is repaired. There’s always a risk of injury. Maybe some drywall gets wet and falls on their head if there’s a roof leak in a weird place, there’s always a risk of injury involved when preventative maintenance is not done. So a tenant could be at risk of injuring themselves. There’s also a risk of not having a livable home environment. Right? So maybe the basement floods because it’s not sealed correctly or not sealed after a long amount of time and then the electricity goes out so tenant can’t live there. First and foremost, the owner would have to pay to place the tenant, and then sometimes that may or may not be covered by insurance and the tenant doesn’t like that, right?

Maybe they’re worrying about their possessions getting damaged by water as well, and then they have to move their entire family into this hotel room or wherever they would be moved. And that’s just not a good situation for the tenant either. And they also could be concerned with the safety of themselves or of their possessions. In any case where preventative maintenance is not being done. And all of this really contributes to not having peace of mind. So when a tenant goes home, when they rent a home, they would like to feel comfortable renting that home. And if preventative maintenance is not done, various things will continue to go wrong with the home and the tenant really doesn’t have peace of mind when they have to call their property manager because the heater stops working for the sixth time in one winter. So stuff like that happens and that does not lead to a good experience for a tenant. And like I said earlier, a quality tenant will not put up with a lack of quality in their home. And so that tenant maybe won’t renew their lease. will try to get out of it early if it’s month to month or might try to do a whole slew of other things if they don’t feel like they’re living in a quality environment. So those are pretty much all the risks to a tenant, just damage to themselves, damage to their property and then they might not be able to feel comfortable living in the home that you have provided for them, which is never a good scenario.

Jaime: And that’s an important point because the reality is, the tenant is our customer and when I say our, I mean it’s the owner’s customer and it’s also us as a property manager or the property manager’s customer. And so the tenant ultimately is the one that provides the financial resources to make everything work, to make the owner’s wealth grow, to make our finances work as a property management company. And so we work very hard to provide our tenants with the absolute best living environments and the absolute best response times and interaction to make sure that for our tenants well being, that they are always in a very professional, clean, safe environment so that their well being is taken care of. And in no scenario will we ever allow a tenant in any of the properties that we manage to be compromised. And you know, occasionally we’ll run into an owner that gets into a situation and they want to compromise that. And for us, it’s non negotiable that tenants must always be provided with the best environment to live in, and the reality is, as an owner, that is in your best interest as well, because the absolute best thing you can do to grow your wealth is have long term tenants in your property or properties that pay on time. And here’s the thing, that actively take care of the property and a lot of a tenant’s perspective and maintaining your property is mindset. How are they treated? How are they respected? Are things responded to in a very appropriate, courteous manner.

And I will say that one of the most important things to any tenant is when something needs to be repaired, it is done in a very professional, quick manner. Alright, so now let’s talk about what are the risks to the property manager, because we see this all the time on our end of the agreement, but what are the risks to a property manager, to an owner that is not willing to do preventative maintenance?

Connor: Yeah. So I specifically want to mention these because when a homeowner doesn’t do preventative maintenance that is requested by their property manager, there is a lot that goes on on the property manager’s side that may be the owner isn’t aware of or isn’t taking into account when they make these decisions. The first is there is a huge increase in administrative workload if preventative maintenance is not done, the amount of maintenance long term increases and also the amount of communication a property manager has to do with the owner going back and forth over and over and over again on every single maintenance issue just increases.

So there’s a huge amount of administrative workload, right? If property management or as simple as putting a tenant in a property, collecting the rent every month and never talking to anyone ever again, everyone would be doing property management. It’s not that simple. So the goal is to reduce administrative workload as much as possible. Preventative maintenance does this very well and it also protects the owner’s wealth at the same time. So it’s really a win win situation. And if you decide as an owner not to participate in that, you’re really robbing yourself of a lot of future income. And so that’s why we always suggest that it’s always in the owner’s best interest. The next is that if an owner doesn’t perform preventative maintenance or at least give a very, very good reason why preventative maintenance that we professionally suggest not to get done, it stresses the relationship we have with that owner.

So we don’t suggest maintenance to be done for our health. The one thing I don’t want to do is call an owner and suggest something that doesn’t need to be done. That’s just a waste of my time. It’s a waste of the owner’s time, it’s a waste of all the staff involved time, it’s a waste of the vendors time. It’s really just a big waste. And then so if that’s the feedback I get from an owner or that the company gets from an owner, it just shows a lot about the owner’s mindset or maybe the owner’s financial situation. And so it increases the stress whenever there’s a maintenance need in the future and I know that I have to give that on our call or I’ll have to have someone else give that in our call that there’s thoughts in the back of your mind about.

I mean this is a very valid maintenance need, but they may just blow up in my face. It just increases the stress between the property manager and the owner and it also stresses the relationship that I have with the tenants, that Swalm Property Management has with their tenants. So if an owner decides not to do preventative maintenance, which most of the time we are made aware of by the tenant, where something goes wrong in the home that is not an immediate need, but the tenant makes us aware because it’ll develop into something much greater in the future. First of all, anytime your tenant does that, you should be giving them a pat on the back. Anytime a tenant makes you aware of a problem in the home that is not an emergency but will protect the future usability of your home and protect as a result, your future income, you should be giving them a pat on the back. Over at Swalm Property Management, we thank every tenant for making us aware of that and then we call the owner. So most of the time when we call an owner to suggest maintenance that needs to be done, it was because the tenant gave us a call and let us know if something that needed to be done. We didn’t just go over the home and come up with it ourselves, right? Unless it came up in an annual inspection or a biannual inspection depending upon what you want. We didn’t go to the home and we didn’t just think about something to be brought up and repair. A tenant made us aware or one of our staff members was at the property and made us aware.

Next is that there could be legal claims made against the tenant. So I brought up injury against the tenant, if a home is not repaired and then the owner was made aware of the home that needed to be repaired and the tenant injures themselves as a result of repairs being made, you can bet there is a lot of liability that comes along with that. So really if a repair is suggested to be made to prevent something in the future, it is really a huge liability not to do that maintenance and so we’re actually protecting you from a whole slew of legal issues that could crop up as a result of not doing the correct maintenance when it is required. And so really when you come at it from any perspective legally or financially or relationally with your property manager, it is always in the owner’s best interest to perform preventative maintenance when it is requested and one is brought up. And so really that’s just what we like to communicate to all of our owners and then re-communicate if that fact happens to slip their mind.

Jaime: Yeah. And I think one thing you said there, which is really important, is that it’s really a mindset issue on the part of owners. So sometimes we see owners with the mindset of “oh man, a tenant made me aware of this repair issue, you know, I just don’t even want to have to do it”. And I would encourage you as an owner, to actually flip that mindset and actually have the mindset that, “hey, the tenant is actually working hard to protect your investment”. The worst thing that you want is a tenant in your home that lets stuff deteriorate and lets stuff break or lets stuff leak and does not let you know about that. I mean, that’s when things can get really dicey. And so we make it a point to always encourage that our tenants, that when there are legitimate issues that they see, they are the front line of the maintenance reporting process.

So we encourage our tenants. When you see something you gotta let us know and we’re there to help get it resolved. And we actually coach our owners and encourage our owners to have the mindset of a tenant that’s on top of your property that’s letting you know what’s wrong with it, when it’s wrong, right away, that’s the best kind of tenant for you to have. And then I would say the other thing that I think you said, which is really good is the liability issue. So we have fired more owners over an unwillingness to do maintenance that we felt put a tenant in jeopardy than any other reasons. In fact, it just happened recently, we were working with an owner and there was situation where they’re unwilling to fix this issue, we thought it was a risk to the tenant. There ended up being a fall as a result of that and the owner was unwilling to get the work done that needed to be done. And so we very quickly ended that relationship with the owner and said “hey, you know, we can no longer manage that property”. And then, so for us in any way, putting a tenant at risk is non negotiable because of the liability, not only of the owner, but actually as a property manager, we’re liable as well. And in that case there’s actually a state agency involved that actually came out to the property and actually suggested to the tenant that they could potentially have an issue that they could pursue legally because of the owner’s unwillingness to address the issue. Unfortunately for us, you know, we had a lot of documentation back and forth between us and the owner of the property. Making the owner aware and their unwillingness to bring forward. So this is a very large issue and for us in working with an owner, it’s actually non negotiable. And that’s a good thing, you know, that’s a good thing for you as an owner. And so this is a really common topic that we’re talking about today and it’s a huge issue that every owner deals with. Anything else that we need to say sort of to wrap this up?

Connor: Yeah. One thing to keep in mind when you hire a property manager or you are a property manager yourself, think about the one thing you would want them to do and really that’s just to protect your assets. You want to protect the future usability of the home, the future income of the home, and the condition of the home as well. And the best way to do that is by having your property manager make you aware of preventative maintenance that needs to be done or any maintenance issue that needs to be done. And then if your property manager does the one job you want them to do and then you tell them not to do it, you end up just shooting yourself in the foot. And so really the one job of a property manager is it could be centered around this preventative maintenance and then having to deal with the tenants. And so if you tell them, if you tell your property manager no or you don’t want to go along with preventative maintenance, the property manager is unwilling to do the job, unable to do the job that you intended to have for them. And so really just keep that in mind whenever a preventative maintenance is brought up because it really is in your best interest from any angle.

Jaime: Yeah. And if you’re a landlord listening to this and you’re managing your own property and you come across an issue and you’re not sure what to do, just reach out to us, just shoot us an email. We are in it every single day. And so the likelihood of you having a situation that we have not experienced before in some way is pretty low. So if you ever have a question, just to reach out to us, ask us and we’re happy just to let you know. And what’s the best way for folks to reach out to us?

Connor: Best way to reach out to us, if you want to get involved, you can contact us at our website or just send me an email at connor@swalmrealty.com. And you could also check out any of our content on YouTube, Facebook, Instagram, twitter, LinkedIn, and then just send us a message on there. We could also get in touch with you. Anywhere you find us online, you can get in touch with us.

Jaime: Yeah we’re easy to find in the website is swalmpropertymanagement.com. So don’t forget to visit us there and jump online and to remember to give us a review and let people know how much value you’re getting from this. Alright,well thanks for joining us for another edition of the landlords resource. We look forward to seeing you next time.