CHAPTER
7

Property Management and Maintenance

In This Chapter

You’ve purchased your rental property, and you’ve ensured it’s clean, safe, and ready for occupancy. Welcome to the property management phase of landlording!

When you purchased your property, you acquired the right and responsibility to repair and maintain it. By law, landlords are required to provide properties that meet basic structural, safety, and health standards. Your specific state might have some different or stricter laws and requirements, so be sure to check. If you don’t fulfill these duties as a landlord, your tenants have the legal right to withhold rent, sue you, or move out without notice.

The Property Team

Being a landlord is a 24-hour, 7-day-a-week, 365-day-a-year job. A friend once told Kimberly, “It may take a village to raise a child, but in the world of property management, it takes a team to run a building.” At any given moment, something can break or need to be replaced or upgraded. You may be the best handyman in the world and able to fix everything, but there’s no way you can be available all the time. As a result, you need a team to call on for repairs and other aspects of property management.

WATCH OUT

If you repair something and it harms someone, you might be liable and suffer considerable financial losses—maybe even prison time. Check with local building officials to see what repairs you are allowed to make and what repairs should be left to licensed professionals. Also, to avoid paying unnecessary fines, know the local requirements for your properties. Is a carbon monoxide detector required? Are you legally required to change the locks and carpeting between each tenant? Research this information before you get started.

Who’s Answering Phones?

Who’s going to answer the maintenance emergency call 24 hours a day, 7 days a week? In the beginning, this might be you. If it is, you can set up a free phone number for emergencies through a service like Google Voice (voice.google.com). You can easily forward this number to a specific phone so that one week calls come to you and the next week calls go to your handyman.

You can also hire a phone answering service that will always answer the tenants’ calls and can determine whether the issue is really an emergency that should get you up in the middle of the night or whether it can wait until normal business hours.

Whatever you decide on, remember your goals—focus on your financial success, set up the right team, and don’t get bogged down with troublesome phone calls.

Assembling Your Team

So who is on your team? It depends. Maybe you need someone to answer the phone in case of an emergency if you’re not available. Or someone who is going to repair the heater when the weather is below zero.

Start by creating a list of service providers who can take care of specific issues. Your list can include, but isn’t limited to, the following:

If you’re planning extensive renovations, you might need a team of architects, engineers, and general contractors as well.

To find any one of these vendors, check with your local trade or business organizations for references and referrals. If you’re looking for a builder or contractor, for example, check with your local builders’ association. Need a landscaper? Check the local landscaping trade association.

Vetting Potential Team Members

Once you have a few potential professionals to choose from, you can start checking them out. Ask the following questions when vetting prospective team members:

Also ask for references. When you call those contacts, ask for their honest thoughts on working with the professional. What did they like and not like?

Schedule times to visit workers on other job sites. As you’re there, observe whether they’re doing a job that would be similar to yours. If your job is larger and the contractor has worked on only smaller jobs, is he capable of handling your job?

Be sure the vendors you choose have any required licenses, insurances, and warranties. You don’t want to be liable for any accidents.

Find out if the professional guarantees the work he’s doing. Most contractors provide a long-term warranty that says the work they do will last for a minimum period of time. If anything were to happen with the work before then, they’ll cover the cost of the replacement repair.

When working with the vendor for the first time, meet him at the property to give him access and monitor his work. If you’re comfortable with his level of service and he’s properly bonded and insured, you can give him the keys and allow him to work on his own.

Why is it important for the vendor to be bonded and insured? Let’s say you give the plumber the keys to your rental property that’s currently occupied. You previously got written permission from the tenant to enter the property, and the plumber goes into the property and fixes the leak. The tenant later returns home and claims an expensive watch is missing. If the plumber is bonded and insured, you’re off the hook. If he’s not, you’re responsible for the missing watch.

Should You DIY?

It costs money to have repairs done by a handyman or contractor, so if you have the skills and experience, you might be able to tackle some repairs yourself.

You can do plenty of repairs without needing a license, such as painting, patching drywall holes, and changing washers in faucets. You could also change locks, install carpet and tile, replace windowpanes, and cut the grass. Just be sure you have the experience and the time to do these repairs correctly.

RENTAL REMINDER

Don’t worry about not having a task to do. When you are a landlord, there is never a dull moment.

Some repairs you shouldn’t—and legally can’t—do without a state-specific license. Plumbing, electrical, and structural construction work fall in this category. To ensure the safety of your tenants, only qualified service personnel should do these and other repairs that could result in a condition that could harm the occupant. In many states, single-family, owner-occupied properties are the only ones you could fix without these state laws requiring a license.

Just as the electrical company always wants you to check for buried electrical lines before you dig, you should also check with your local building officials to find out what you can and cannot do.

The Importance of Maintenance

Normal wear and tear will occur on your rental property. Maintaining the property is a two-part job; you have responsibility for maintaining it, but so does your tenant.

Establish the maintenance rules in writing and have the tenants sign them to acknowledge they have read them and agree to comply. Rules should be reasonable and directed at keeping your property in excellent condition. They should emphasize the tenants’ responsibility to report any issues as soon as they occur. Failure to report a leaking water heater or faulty wiring could ultimately be dangerous to the property, the tenant, and you.

Outline how you want the tenant to report a maintenance issue, too. For example, do you have an online maintenance form accessible on your website, or do you want tenants to call or email you? Maintenance requests are always best to get in writing so you can keep track of the dates and details. (Check out the sample documents available in Appendix C.)

If your rental unit is unoccupied, it might be a good idea to engage in some preventive maintenance before the next tenant’s occupancy. Use this time to test the functionality of a microwave, snake a drain pipe, or clean a gutter.

RENTAL REMINDER

Before purchasing expensive maintenance equipment, check with the hardware store and find out what tools and equipment you might be able to rent by the hour instead.

Sometimes when we focus all our energies on more pressing items, we overlook the smaller things—in this case, daily wear and tear. For example, fireplaces and wood and gas stoves need annual inspections to prevent gas buildup or other possible hazards. Be sure to schedule an annual furnace inspection and schedule seasonal maintenance on heating and air-conditioning units.

Also set up a filter replacement schedule and keep replacement filters next to the furnace. Clogged filters can cause a system to underperform or even break.

A common issue with air-conditioning units is that a tenant runs them at full blast and they freeze up. If a tenant calls to say the system stopped working, talk them through what happened and suggest they turn the system off for an hour to unfreeze it and then turn it back on.

The Complaint Department

You have a legal responsibility—and a good business responsibility—to properly process tenant complaints in a timely manner.

It helps to be a good listener. Sometimes the problem isn’t with the property as much as it is with the current circumstances in the tenant’s life. Taking 15 minutes to listen to the tenant process her complaint can go a long way in resolving the issue.

REAL ESTATE ESSENTIAL

It’s worth listening to and checking out tenant complaints, no matter how crazy they sound. Kimberly once managed a three-floor apartment in San Francisco. One warm spring day, a tenant had her windows open. When she called to say she had rats jumping through her windows, no one took her complaint seriously. After her third call, maintenance went to her apartment and indeed found rats jumping through her windows! The property next door (built about a foot away) was being renovated, and the workers had stirred up a rat colony. The rats were now escaping the building by jumping to the next building—through the tenant’s window!

Next, ask the tenant to follow up with a complaint in writing. This gives the tenant time to process his or her issue and gives you a good basis to start your remediation of the issue. It also gives you written documentation should there ever be legal action related to this complaint.

Establishing the Rules

Make clear to your tenants, in writing, what’s considered an emergency and what isn’t. You want to avoid 2 A.M. phone calls asking you to come remove a moth, but overflowing toilets, leaking pipes, and electrical sparks are something you need to address before serious damage occurs.

When you became a landlord, you became the boss. Every landlord has a different approach to dealing with tenants. You should be friendly and professional, but beyond that, choose a level of interaction that works best for your personality and comes naturally.

Remember, there may come a day when you have to tell a tenant no or track someone down for unpaid rent. It’s hard to get them to take you seriously if they think of you only as a drinking buddy.

Handling Tenant Complaints

How you handle a complaint depends on a variety of factors. For example, handling a dispute between residents of a co-op or condo depends on what’s written in the building’s bylaws or covenants, conditions, and restrictions (CC&Rs), while a dispute between single-family home neighbors in a homeowner’s association may be handled differently.

DEFINITION

Covenants, conditions, and restrictions (CC&R) are restrictions on the use of a property. Generally, CC&Rs are established and maintained through a homeowner’s association.

Regardless of how it’s handled, your goal is to solve the problem before it gets to litigation. Once lawyers become involved, it costs you money, so litigation should be the last thing on everyone’s mind.

Sending Complaint Letters

You, as the landlord, might send complaint letters, too. Say you’ve already approached a tenant who continually throws large, noisy parties. Sending a complaint letter to the tenant is usually the next step to keep documentation of how a complaint is handled, especially if the tenant is in violation of the building’s bylaws, proprietary laws, or house rules.

Noise complaints are probably the number-one reason tenants have problems with one another. If you’re getting more than your normal share of noise complaints, it might be time to educate your tenants about local noise laws or any noise-reduction requirements that are in their lease or bylaws.

If the tenant still won’t respond to a complaint letter, it may be time to contact the authorities. In most areas, noise complaints can be filed anonymously. A visit from the authorities is usually enough to stop the person in violation from continuing.

Emergency Preparedness

We touched on emergency preparedness briefly in Chapter 5, but let’s take a more detailed look now. A successful landlord thinks ahead, contemplates worst-case scenarios, and ensures steps are taken to reduce the risks when something does happen.

Create a Plan

One of those steps is creating a plan of action that you provide to your tenants. This plan tells them what to do in case of various emergency situations and should include emergency numbers and evacuation plans. Although every person is truly responsible for his or her own evacuation, you can be sure the evacuation goes smoothly.

REAL ESTATE ESSENTIAL

Be sure you have in-case-of-emergency contacts for each of your tenants.

Create a list of local emergency numbers, as well as evacuation and escape plans, and share these with all your tenants. You may want to permanently attach the numbers and evacuation plans to the inside of the front door.

In the preparedness plan, include a property escape plan that includes a map of the building with the exits clearly marked. Also list the most structurally secure rooms in the building, in case your tenants would need to seek shelter.

Plan for Everything

Start by being prepared for anything Mother Nature could throw your way based on your specific location—hurricanes, tornadoes, earthquakes, fires, floods, and such. Believe it or not, planning for a natural disaster is actually a little easier because, for some, you get some advance warning.

Hurricanes: If your property is located in a potential hurricane area, have a clause in your lease that tells the tenant what to do in case of a hurricane warning. You’ll need to secure your rental property, too, to minimize damage the storm might cause. This could mean boarding up windows and doors, bringing in outside items that could fly away or create more damage, and so on. Check out the list of things to do at ready.gov/hurricanes.

Tornadoes: If your area is prone to tornadoes, instruct your tenant on what rooms in the property provide the most shelter. Typically, the basement is the best choice. If that’s not available, a windowless interior room, such as a bathroom with a bathtub, is a good idea.

Like other acts of nature, you’ll need specific insurance to cover tornado damage. Damage as the result of a microburst, or strong downward gust of wind, is generally covered by your traditional homeowner’s policy.

Earthquakes: You don’t get advance warnings with earthquakes like you might get with other natural disasters. If your property is in an earthquake zone, your best bet is to plan for the unexpected.

To reduce the impact of earthquakes, the Federal Emergency Management Agency (FEMA) suggests repairing deep plaster cracks in ceilings and foundations, anchoring overhead lighting fixtures to the ceiling, and following seismic building standards.

When an earthquake strikes, instruct your tenants to stay away from the elevators and shield themselves under a sturdy table or other piece of furniture until the shaking stops.

Fires: Fire may or may not be an act of nature. But regardless of the cause, fires can spread quickly. Be sure the property includes fire extinguishers, smoke detectors, and carbon monoxide detectors, and instruct your tenants on what to do in case of a fire.

REAL ESTATE ESSENTIAL

To keep up-to-date with the latest research, technology, and safety practices when it comes to fire, check with the National Fire Protection Association at nfpa.org.

Floods: Flooding can result from hurricanes or other strong storms or be the result of a water leak or backed-up water or sewage lines. Not all property insurance covers flooding, so check with your insurance agent if you’re not sure what your coverage is. And as with the other potential disasters, be sure you provide clear instructions to your tenants on what to do if flood waters start to rise.

We’ve covered only a few of the emergencies you could face here. Think about what others might occur in your area, whether natural disasters or man-made, and make a plan for each of them. You can never be too prepared when it comes to protecting your property and your tenants.

The Least You Need to Know