The Property Management Pitfall that Catches Most Rental Owners Off Guard

The Property Management Pitfall that Catches Most Rental Owners Off Guard

As the owner of both a rental property portfolio and a property management company, I was very surprised to discover that most rental property owners have no idea that there is a difference between two key terms in management: maintenance and repairs.

Misunderstanding these two terms can get expensive and create serious problems with your budget as well as creating strain on the important relationship between a rental owner and their property manager. For this reason, when my property management company, Olson Property Services (OPS), establishes a new relationship with a client or potential client, we always try to underline this important distinction.

Here is a brief overview of the differences between maintenance and repairs and why they matter:

  1. Maintenance is regular and preventative, while repairs are intermittent and restorative.

Understanding when maintenance happens and when repairs happen will help a rental owner budget for each accordingly. For example, maintenance costs are relatively predictable and include things like changing out air filters or snow removal. They happen at certain times of the year and should cost pretty much the same amount (give or take based on market conditions and the amount of time that the property manager has to spend working with the tenant). Repairs, on the other hand, are not as predictable. They are non-negotiable or nearly-non-negotiable fixes that must be made immediately in order to keep your property in working order. Since they involve fixing something that is broken, repairs are more difficult to plan for. After all, while you can certain guess that pipes are more likely to freeze in the winter, for example, you cannot say with certainty which pipes will go or how many, although your property manager may be able to estimate this based on statistical knowledge. Your maintenance and repairs budgets must be separate because the two types of service are very distinct from one another.

  • Maintenance may be discussed with your property manager, but repairs are usually notification-based in nature.

Your property manager should absolutely notify you when an expensive repair situation arises, but the burden of establishing what constitutes a non-negotiable, emergency repair is on both the rental owner and the property manager prior to the event. This is because in most cases, repairs cannot wait. For example, if you are going to have to replace multiple broken windows in a property, you really must do this as quickly as possible in order to keep the property safe and habitable for the tenant. Your property manager should alert you so you can make decisions about which windows to select, but you really do not have the option of waiting until next month to make the repairs. Maintenance, on the other hand, may be spread out to accommodate your budget or the convenience of the tenants. Of course, if you postpone maintenance too long, you run the risk of creating a need for repairs instead.

Maintenance and Repairs Both Necessitate Good Communication

As you can see, communication is essential if you want to navigate the often-confusing topics of maintenance and repairs. A good property management company will not only know the difference between maintenance and repairs; they will make sure their clients are on the same page as well. Furthermore, this conversation should happen at the outset of the relationship and should establish some benchmarks for notifying rental owners of costs associated with maintenance and repairs. For example, some property owners want to be notified any time there is any expense outside of budgeted items – right down to hearing about it every time a toilet clogs! Most owners, however, have a set of red flags based on either cost or the magnitude of damage that their property managers use to govern notifications. Getting clear about these things in advance will help your property manager do the best job possible to keep your properties running smoothly and your portfolio making money.

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