The most important factors to consider when creating a maintenance and renovation plan.
The acquisition of a real estate investment not only brings stable income but also costs – especially renovation and maintenance costs. Renovation costs can be planned and budgeted, while maintenance costs can sometimes be unpredictable.
Make sure to include the following points in a 5-year maintenance and renovation plan:
- Scheduled maintenance and repairs that were agreed upon when purchasing the property.
- Unplanned maintenance and repairs – e.g.: Budget for replacing a faulty heating system in the middle of winter.
- Budgeting for necessary renovations to re-rent vacant damaged apartments.
- Occasional remodels – evaluate an expansion to create more rental space.
Modern properties require less extensive maintenance budgets but are often sold at a premium with lower rental yields. For older properties with higher rental yields, money should be set aside for future maintenance work such as floor replacements, painting, and especially renovation work. You should also allocate a budget for capital investments, such as improving the heating system or insulating the façade. These additions can increase your rental yield, enhance the value, and make your property more attractive to potential tenants.
From the moment you decide to purchase an investment property for capital gain, you need to be aware of all the investment and maintenance costs you will incur to keep the property in rentable condition. You must carefully account for potential wear and tear, as it can lead to more significant issues on the property if not addressed. This is why it is so important to develop an ongoing maintenance plan for the benefit of your tenants and to generate returns from your real estate investment.
