You’ve made the big decision to purchase a rental home. Now that rent money is coming in, you’re done, and the only major expense you need to worry about is the mortgage. Right? Not quite.
A rental property is a great investment, and here at Nestwell, we strive to make it as easy as possible, but it’s important to keep in mind that, like any other investment, there are things you need to do to protect it. Your rental property is going to age. Things are going to wear out and will need to be replaced. You can opt to defer some maintenance so you don’t have to spend money, but you can only do this for so long before you end up losing money. Tenants like to rent properties that are up to date and in good condition, so properties that fit this criteria have a higher market value and rent faster, which means that, by putting money into your rental property on occasion, you make more money in the long-term.
How can you best do this? We recommend putting together a saving plan. Set aside a portion of the monthly rent income so that you have funds available when you need to use them. To help give you an idea of the life expectancy of certain items in the home so you can take this into account when creating your saving plan, let’s go on a tour of a brand new home.
As you enter through the front door, you find yourself in an entryway. You wipe the snow off your feet on the mat before stepping onto the smooth tie floor. A mayfly buzzes around your head. Annoyed, you swat it away. The life expectancy of the mayfly is a mere 24 hours. The tile, on the other hand, will last much longer but not forever. It will need to be replaced in about five years.
Leaving the entryway, you reach an open living room. The builder of the home was smart and installed an earth-toned carpet. You nod in approval. That will last longer than a light-colored carpet, but it still only has a life expectancy of around five years.
The room is fashioned after a sleek modern style, but you don’t take the time to admire it because your attention is drawn to the bright curtains on two parallel windows. You open them to find that one window has its window shade down while the other window’s blinds are cracked open, allowing the warm light of the sun to peer into the room. Though you remark that this seems a bit mismatched, it works well for demonstration purposes, for though both windows have a different style of window coverings, the window shades and blinds as well as the window screens have the same life expectancy, three years.
You make note of this, then work your way into the adjoining kitchen. The linoleum floor adds a nice element to the overall design. You hope that, when the linoleum wears out in around five years, you will be able to find a replacement that goes just as well with the stainless steel fridge and stove, which will last around ten and twenty years respectively. You take a moment to look inside the fridge and guess what level of food Tetris you would need to win to fit your groceries within. With that large of a fridge, it would be an easy game.
You leave the kitchen and backtrack through the living room until you reach a hallway. The gray-tone flat paint is just the right color to make the hall inviting without being too glaringly bright. Then, turning the corner, you enter the master bedroom and are immediately taken aback. The walls are painted bright green with an enamel paint. You note how unfortunate it is that the builder decided to use a paint that would last five years on the eyesore, which you will need to paint over before you would be able to rent the home, and a paint that will last only three years for the neutral gray. Shaking your head, you cross the garish expanse and enter the master bath. It is far better designed than the bedroom. With neutral paint, modern fixtures including a garden tub and a trough faucet over a decorative bowl sink, and more of that five year tile from the entryway.
Cool air is blowing from a vent beneath the counter. You puzzle why the air conditioning is on in this kind of weather, and, on your way down to the basement, you make a point to turn up the smart home thermostat. An air conditioning unit is estimated to last 10 years. No need to make it work harder than it needs to. And in the middle of winter! You think to yourself how this is a poor use of resources. Whoever wanted it colder should have just opened a window.
The basement is finished. That will make the home easier to rent. You investigate the spacious family room with its projector TV and the basement bedrooms. Along the way, you find the mechanical room. Like many mechanical rooms, it is rudimentary, and if spiders ever got in there to build webs, it would make the room look like the opening set for a murder mystery. You’d think characters would learn not to go into spooky rooms alone. The water heater, on the other hand, is not spooky. In mint condition, it will last around ten years before you need to replace it.
Leaving the mechanical room with your life fully intact since you are not in a murder mystery, you return upstairs, where you take the life expectancy of everything into account and devise a saving plan so that, when it comes time for replacing things, you will have the needed funds so you can continue to get the best value out of your rental property by keeping it in good condition for new renters. You also save a little extra for an emergency.
Now that you’ve finished your tour of the home, here is a chart of the items addressed that you can use as a quick reference guide. If you have any questions, always feel free to contact our office, and we’ll see what we can do to help.
- The Nestwell Team