Charging Tenants For Maintenance Will Cost You!
This is an age old topic that will bring forward a myriad of opinions. However, in Nexus' experience we have seen the pitfalls to charging tenants for ordinary, non-intentional maintenance requests. If a tenant doesn’t cause intentional damage, however, you can certainly charge them for that. This article outlines what the potential downside is when dealing with routine, ordinary wear and tear!
1) Future Maintenance Won't Get Reported
Here is an exact scenario we dealt with at a multi-family building in Pawtucket:
A third floor tenant called in a service request for a leaking kitchen sink. Nexus went over and found that the gasket between the sink fixture and the sink basin had failed. This happens over an extended period of time, and is considered ordinary wear and tear. In this case the faucet seemed over 10 years old. The landlord decided that it was something he wanted to bill the tenants for. We advised him against it, but he chose to move forward. So, we charged the tenant. It was around $110 for the service call, hourly labor, and materials. The tenant was very upset.
A few months later the dishwasher started to leak, but the tenant didn't tell us because they were in FEAR of being charged again. Instead of calling us they just mopped up the water after every time they used the dishwasher. So, over the course of weeks and months we started to receive calls for weird smells in the 2nd and 1st floor units. The owner blamed it on the cooking as the smells were in the kitchen are, and prevented us from heading to the property to investigate (as he wanted to save money). The smell then reached a point where we had no choice but to investigate further by opening up portions of the wall. Upon opening a few areas we discovered that it was actually the 3rd floor dishwasher drain! It was not hooked up correctly, and the wastewater was slowly leaking behind the walls and dripping down each time the dishwasher was used. This was causing the rancid smell of mold/gray water. It ended up turning into a situation where the landlord had to file an insurance claim, 3 families were displaced, rent was lost, + all three kitchens needed mold abatement, demolition, and a complete remodel. The work cost well over $30,000 and was not covered by the insurance company!
If the tenant had called in the leaking dishwasher we would have immediately found out the solution and it would have cost less than $100 to fix!
2) The Tenants Are Paying To Occupy YOUR Home
One of the biggest oversights landlords make is that when a unit is rented, it is no longer their responsibility to maintain it. However, what is important to realize is that a tenant is paying to occupy space and time, but hold no ownership interest. So, with that said, if something breaks/needs repair from ordinary wear and tear, the homeowner should assume accountability as they are the one who is in charge. No matter what state you are in there are certain minimum requirements and responsibilities that must be followed. If you choose not to follow them you are at risk for a lawsuit, minimum housing citations, rent withholding, or even, in a serious case, having the property shut down by the local government.
3) Evictions, Move Outs, And Unhappy Tenants
When you own a rental property your tenants are the lifeblood to a successful investment. They should be held in high regard, and looked at as your advocates. The most successful landlords have tenants that communicate efficiently and effectively should something arise. In turn, the successful landlord will then rectify those issues immediately. This is the key to your investment success! If you choose to be a slumlord, the tenants may withhold rent, move out, or even spread the word to new tenants that you are not good at managing the property. These are things that will cost you time and money! Imagine you just spent thousands of preparing an apartment, leasing the unit, and the lost rent from the vacancy. After this tenant moves in other occupants of the building go up to that person and bad mouth the landlord/management. This instantly will create a sour taste in their mouth, and likely lead to a shorter occupancy stay than normal. It is important not to underestimate the importance of good grace and positive relationships!
So, after reviewing just some of the top reasons as to why this is a bad idea you can quickly see that it becomes a risk-reward situation. Does the risk of losing a tenant, not knowing about future maintenance, or dealing with an eviction situation weigh more than the couple bucks you’ll collect from the tenant? Absolutely; it’s not even close! Real estate holdings are a long term investment and require a long term approach. Don’t spend your time dabbling with a microscope when you are dealing with situations that will arise over and over again. You will lose money or lose your mind; maybe even both! =)
Nexus' Vice President of Franchise Sales, and Nexus Pawtucket General Manager, Gregory J. Rice, talks about why charging tenants for maintenance will cost you more than you expected in the long run! Click the link below to watch.
Gregory Rice is the Vice President of franchise sales for Nexus Property Management®.
Nexus Property Management® is 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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