“Repairs and maintenance” is often used as an umbrella term for anything that needs doing to a property, but there are actually four quite different categories involved. For any investor who is serious about maximizing their return, all four types of expenses should be regularly considered.
Repairs occur when something foes wrong as a reactive response. An example would be a blocked pipe, a non-functioning oven or a roof that suddenly stats leaking. Repairs don’t improve the value of a property; they are just the bare minimum required to maintain the property in an adequate condition.
These items should be regularly addressed to ensure the number of repairs in the previous category is kept to a minimum. Examples of seasonal maintenance include:
- gutter cleaning
- garden pruning
- painting to prevent cracking and deterioration
- checking of roof tiles
- regular pest control
This is the planned replacement of any item in the property that depreciates in value, including carpets, blinds, ovens, hot water systems, insect screens and the like. Planned maintenance negates even more repairs that would otherwise fall into the first category and enables a good level of control over the standard of the property and the cost of maintenance.
This is any new element that is introduced into the property. Examples include:
- installing a dishwasher
- adding a new reticulation system
- installing an air-conditioner
This type of expense is likely to actually increase the value of the property as well as the rental return. If a landlord only attends to items in the first category, over time the property will be worth less and the rental return will effectively fall. With careful consideration of all four categories, the property can achieve more rent, a better quality of tenant, and the value of the property is likely to increase. And with the tax breaks available on property-related expenses, there is every good reason to do so.