The Best Reason To Stay Positive If Rental Property Maintenance Costs Are High

KEEPING YOUR EYE ON THE LONG TERM WILL HELP MAINTAIN THE CORRECT MINDSET

There’s no doubt about it…the world around us is becoming more and more expensive. Electricians, plumbers, landscapers, handymen…you name it, if you need them to help with your property, it’s going to cost more than it did just a couple years ago. D-I-Y? Home Depot and Lowe’s are gonna hit you harder too. With increased interest rates, even money itself is more expensive! With that in mind, it’s easy to get stuck in the up-front costs and lose sight of the most effective strategy there is: staying focused on long term results and remembering the number one reason why real estate investment is so attractive.

LEARN MORE: THE TRUE COST AND VALUE OF REAL ESTATE INVESTMENT

THE SECRET TO STAYING GROUNDED WHEN COSTS ESCALATE

A large reason many of us are pulled toward real estate investment and rental properties in general rather than other means of investment is the prospect of pocketing a couple bucks at the end of each month. To compare to alternatively investing in stocks, rental property is more likely to provide you with a handsome dividend every time the rents come in. And if that’s what gets your dopamine going, the impact of the aforementioned increase in costs is really going to weigh on you.

The secret is to think of monthly gains as a bonus and instead focus on the greatest advantage that rental properties provide for landlords: the opportunity to have someone else pay your mortgage!

As long as your rental units are occupied and generating rent, you’re winning, provided you were wise in your purchase…but that’s a whole nother story. The point is that if you’ve got a 4 family home and it generates $48,000 in revenue for the year, you’re in great shape if that total covers your mortgage, taxes, insurance, and management expenses (mostly in the form of maintenance). Let’s say those costs equalled $48,000 and your profit was zero. You weren’t able to pocket anything additional and you weren’t able to build up any reserves, but nonetheless, you paid off a year’s worth of your mortgage without spending any of your own money!!!

LEARN MORE: CHANGE THE WAY YOU LOOK AT MAINTENANCE AS A LANDLORD

A DEEPER DIVE INTO LONG TERM FOCUS

If you buy into that logic, you’ll be more comfortable spending money to take care of maintenance issues as they arise, which is also integral to any successful investment strategy. By approaching the extra money that might come in each month as a bonus, not a goal or necessity, you’re more likely to add value to your property over the years. In this way, you’re simultaneously improving the quality of your asset while it is being paid off. And how do you pay for these expenses? With the help (or entirety…depending what your interest rates look like) of money collected from tenants. Another added benefit of owning rental property is that rental income can help finance your maintenance…and these expenses can be written off against your income.

And then…over time, your maintenance costs decrease because you’ve been proactive…and then the odds of collecting that monthly dividend increase further.

LEARN MORE: TOP 3 MISTAKES OWNERS MAKE WHEN INVESTING IN RENTAL PROPERTY

THE ONLY WAY THIS DOESN’T MAKE SENSE:

The only way this approach doesn’t work is if your investment wasn’t a great one. The market has been pretty bad for several years now and it’s easy for investors to settle as improvement hides the fact that prices and interest rates are still above what is ideal. If you’re paying the bank 7.5% interest rates, there’s less for you to put toward the property…but it’s still important you do so. Even if you end up spending a bit of your money each year, your tenants are still paying most of your mortgage and expenses. You just need a bit more capital of your own to cover the difference.

LEARN MORE: BUYING A RENTAL PROPERTY DOESN’T MEAN YOU’LL MAKE MONEY!

CONCLUSION AND NEXT STEPS:

Nexus Property Management® has been partnering with rental property owners for over 11 years and now has franchise offices in four states. We are committed to the principles that helped our Rhode Island office grow rapidly and the most essential is the focus on long term results. Our clients come to us with varying degrees of experience and the vast majority become effective investors in no time. Reach out to the Nexus team closest to you.

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Mick Lefort is the General Manager of Nexus' New Haven County Franchise Office and the Vice President of Operations for Nexus Property Management®, a National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.

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