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How Much Should a Landlord Allocate for Monthly Maintenance & Repairs?
Monthly residual cash flow can be attractive incentive to become a landlord. Landlords collect rent each month, pay their mortgages and pocket the rest of the cash. What the public doesn't see, however, is that successful property management involves managing people, forecasting repairs and maintenance, covering untimely losses and unexpected costs. This includes monthly maintenance. Landlords can keep their properties in tip-top shape and tenants happy by reinvesting a portion of rental income and performing monthly maintenance.
While there are no hard and fast rules on monthly maintenance costs for rental properties, Fannie Mae suggests a property owner allocate 2 percent of the property value annually. That means if a property is worth $150,000, the landlord should save a minimum of $3,000 for maintenance costs. Landlords should include anything that keeps the property in livable condition for occupants as a maintenance cost.
Landlords should plan to include additional costs that arise periodically to the monthly maintenance budget. This includes repairs to the building's heating, cooling and electrical systems, plumbing, and roofing. Landlords should include minor carpentry, window repairs, occasional painting and cleaning costs as tenants move in and out. Any supplies purchased on a regular basis should also be included like air filters, hardware fixtures or light bulbs.
Landlords' Duties Regarding Repairs, Maintenance, and to Provide Notice to Tenants for Entry
Among the many duties of a landlord is to repair rental property and keep it in habitable condition. Also, whenever a landlord has to enter a rental property, they must provide notice to tenants in a timely manner, except in emergencies.
Many landlords have run into problems with their tenants by not repairing or fixing problems with a rental unit. In general, the best advice to give a landlord is to repair a problem with a rental property as soon as possible. Heating and plumbing problems, because of their unique nature, should be handled within 24 hours of learning of the issue. For other problems that are not as immediate, repairs should be made within 48 hours. However, landlords should always keep in mind that they need to provide advance notice to tenants before entering the rental property. Only in emergencies, like floods or fires, can a landlord enter a rental unit without advance notice.
Duty of Repairs and Maintenance
In most states, a landlord is required to make sure a rental property is in habitable condition when the tenant first moves in. Also, once the tenant moves in, a landlord is required to make repairs and conduct maintenance to keep the rental property in habitable condition. A habitable property is one that has adequate heating, water, electricity, cleanliness, and is structurally sound.
In addition, landlords should look at the local codes regarding the standards for things like ventilation, light and electrical wiring. These laws vary from state to state, and even from city to city. For instance, some cities require that landlords place smoke detectors in key locations in a rental home, and to regularly check these smoke detectors and replace batteries when needed.
Some states also require that landlords be aware of, and protect, their tenants' safety. In such states landlords must ensure that there are latches on all exterior windows, a locking doorknob and deadbolt on each exterior door, a pin lock mechanism and handle latch lock for each exterior sliding glass door. In addition, many states also require landlords to change all the locks to a rental property between tenancies.
Because of the varying nature of landlord duties, you should be sure to carefully consult local codes regarding rental properties in your state and city. Normally, you can find this information at your local building or housing authority, as well as local health and fire departments.
What Can Happen If You Do Not Make Required Repairs
Next, if the landlord fails to repair a problem in a timely manner after receiving notice, the tenant has the option of hiring an outside party to make the necessary repairs. Although the tenant should be reasonable in choosing who to make the repairs, this cost will probably be deducted from their next rent check.
Also, if the problem violates state or local building or health codes, your tenant may decide to contact the local authorities regarding the issue. If inspectors come out and find the problem, you, as the landlord, may be facing an order to fix the problem, plus possible fines and/or penalties.
Lastly, if the problem is pervasive and disturbs the tenant's right to live in a habitable structure, the tenant may choose to simply move out of the rental unit and end the lease agreement. This could lead to a lawsuit against you as the landlord, called a constructive eviction lawsuit. In order to prevail in this suit, the tenant must be able to show two things. First, the tenant must prove that the uninhabitable conditions were a result of the landlord's lack of action to fix the problems. Second, the tenant must also show that they left the rental property in a reasonable time. If the landlord cannot put up a strong defense, he may be facing money damages for breaking the lease, emotional and physical stress, and discomfort from the bad conditions.
All in all, the best advice for a landlord is to fix problems as soon as you find out about them. In addition, you can work with your tenant and see if the tenant is willing to fix the problem in exchange for a reduction in rent.
Notice to Tenants about Upcoming Entry onto the Rental Property
In most states, landlords are required to give notice to tenants prior to entering the rental property informing the tenants about the necessity to enter to make repairs, or to show the place to prospective new tenants. Most states require that a landlord give notice to tenants 24 or 48 hours before the entry is to take place. However, as mentioned earlier, a landlord can enter a rental property at any time without notice in order to make an emergency repair. In addition, in some jurisdictions, landlords can enter a rental property without notice if the tenant is away for an extended period of time, in order to check up on the property and make necessary repairs.
If a landlord breaks this law, they can be subject to a lawsuit by the tenant. Some states, like California, provide a tenant with a claim for harassment if their landlord enters the rental property without proper notice and also provide for a monetary fine against the landlord.