Apart from earning a stable income, owning a property investment comes with expenses as well – mainly renovation and maintenance costs. Renovation costs can be projected and budgeted for whilst maintenance costs can be unpredictable at times.
Make sure to include the following in your 5 Year Maintenance & Renovation Plan:
- Scheduled maintenance and repairs identified when purchasing the property.
- Un-scheduled maintenance and repairs – eg: budget to replace a broken heating system in the middle of winter.
- Budget for necessary refurbishments to re-rent vacant damaged apartments.
- Opportunistic renovations – consider extensions to create more rental sqm’s.
More modern properties are less likely to require large maintenance budgets however these are often sold at a premium with lower rental returns. For older properties with higher rental yields, money should be allocated for future maintenance such as floor replacement, painting, and, most importantly, upgrades to bathrooms. You should also allocate a budget towards property improvements such as improving the heating system or insulating the facade. These additions can increase your rental return, add value and make your property more attractive to potential tenants.
From the moment you decided to purchase a property for investment, you have to be fully aware of all the Capex and maintenance costs that you would have to spend in order to keep the property in a good rentable condition. You must be diligent in anticipating possible damages caused by wear and tear as they can cause bigger problems to the property if left unaddressed. This is why it is so important to develop an ongoing maintenance plan for the benefit of both your tenants and to create wealth from your property investment.