I want to explain the difference between maintenance and renovations to help landlords understand the importance of both.
First of all maintenance is your standard stuff liked blocked toilets, leaking taps etc. It is really important to understand that renovations are important in a rental property and you have got to spend money to make money. It is time for landlords to stop relying on the rental market for increasing the value of the property.
A strategic plan is required to have my clients help be prepared for renovation costs and also to understand that changing crappy vertical blinds for a new set of crappy vertical blinds is not a "renovation". You are simply maintaining the property.
A renovation needs to add value to the property in the form of a better rent return or in capital value.
The guideline I discuss with my clients is the 10% rule which means that 10% of your rental income should be set aside for future renovations. On an average property return of $20,000 per annum, this is $2000 per annum or $10,000 every 5 years.
What happens if this budget is not set, owners will be left with 3 options:
Refinance the loan to allow for expenses
Sell the property
Rent it out as is in a low standard which will attract a low rent and possibly a low class of tenant.
None of these options are good.
What can you do as a landlord to stay on top of this ??
Look at what you can do while your tenant is living in the property. Change of light fittings, new blinds, exterior work are simple things that you can start doing, while you have an income and tenant. A tenant could also see this as a massive positive and likely to stay as a long term tenant if they can see the owner is serious about looking after the property.
Then when the tenant vacate, you can reduce the downtime of it sitting empty because a lot of the work has been done already.
Hope this helps by giving you a better understanding of how you can create longevity as a landlord and the importance of spending money on your investment.