222 Week 4 F /For WIZARD KIM

Chapter 6

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G E T T H E S C O O P O N … Routine maintenance and repair ■ Knowing how to handle the most common problems ■ Hiring and training contractors of all kinds ■ Teaching

your tenants to communicate maintenance issues

Maintaining Your Property

O wners often think that no news is good news. They believe they have the perfect tenants because rent is received on time, the tenants

have lived there a long time, and the tenants never complain. Not true. You should be conducting a walk- through of the inside and outside of all your proper- ties at least once a year. You can have the nicest tenants, but they may have not told you about any items in need of repair. There are many tenants who believe if they call the owner and let them know of repair or maintenance items they will, in turn, receive a rent increase. They feel if they say nothing and pay their rent on time you will not raise their rent.

So take action. Preventive maintenance should be a part of your regular routine in the care of your investment property.

If you live in the area and are managing the prop- erty yourself, drive by and check on the outside of your property at least once a quarter, preferably monthly. A lot can change in a month or two. But

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keep in mind that your tenant also has the right of quiet enjoy- ment. Don’t disturb the tenant when you drive by or get out of your car and investigate the rear yard.

Maintaining and repairing your property When you own property, especially rental property, you will find there are many different needs for maintenance. You need to be aware of the different types of maintenance, have a plan in place, and develop a routine for these needs:

■ Preparing the property when it is vacant

■ Emergency maintenance

■ Routine and preventive maintenance

In Chapter 5, I discuss how to prepare your property for rent while it is vacant — cosmetic and basic safety issues that make your rental more appealing to potential renters. You also want to do most of your routine and preventive maintenance work at that point so you will not have as many scheduling conflicts when a tenant is in residence. However, emergency mainte- nance has to happen whenever it’s needed.

Emergency maintenance Some things are out of your control. When you are a property owner, you have to expect and be prepared for emergency main- tenance requests at all hours of the day or night. It never fails that an emergency on your property will happen on Friday at 4:45 p.m., especially on the Friday of a three-day weekend!

Bright Idea

If you regularly use any contractors, ask them to let you know if they feel anything has changed in the care or routine of the property. Often they are the ones who will call you to let you know that the tenants have a new dog or that something is wrong.

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91C H A P T E R 6 ■ M A I N TA I N I N G YO U R P R O P E R T Y

Bottom line: It is very common to have an emergency call of some type when you own rental property. You need to be sure you have instructed your tenants to call the proper authorities first if the emergency is life threatening or if safety is an issue.

Tenants tend to think the smallest things are emergencies. You have to educate your tenants about emergencies at the beginning of their tenancy. I talk more about that in Chapter 10 (shown in Appendix 4) when I discuss having a tenant’s handbook and what to include. When a tenant calls you with what he or she thinks is an emergency, you have to first determine whether the nature of the problem is urgent. An emergency repair is something that cannot wait and must be done immediately in order to pre- vent further property damage, minimize the risk of endangering people, and/or restore an essential service to tenants. During the winter, you may get calls about burst pipes, roof leaks, or trees blowing down. Probably the most common emergencies are water heater problems, heaters not working, plumbing problems, and electrical problems.

When you get that emergency maintenance call from your tenant, advise the tenant which steps to take. Be prepared to stay on the phone and walk your tenant through what to do and how. This means you need to know what to do, where emer- gency shutoffs are located, and how to handle the call. You need to have a diagram that shows the location of your utility shut-off valves, where the clean-out for the sewer/septic line is located, the location of the furnace and water heater, and the location of all the circuit breakers. In some areas that experience freezing

Moneysaver

Define “emergency” by asking the following questions and listening to the answers: Could you give me a better description? How bad it is right now? When did this start? How extensive is the damage? By asking the questions, you can determine how quickly to respond, which parts are needed, and which contractor to call.

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temperatures, you will need to educate your tenants as to what to do in freezing temperatures to avoid the pipes freezing and bursting, which can lead to a real emergency.

After you’ve called a contractor, call the tenants back and let them know from whom to expect a call from and when. They are living the emergency and are probably in a stressful situation.

Determine as quickly as you can whether or not they will be required to obtain alternate housing. Know your insurance cov- erage and whether it will cover the tenants’ housing and your lost rents during the time the property has to be vacated.

Routine and preventive maintenance No one likes to hear about needed maintenance on the property because this usually means spending money. But there are times when choosing to make the appropriate expenditure means future dollars are saved and tenants choose to stay longer. Who wouldn’t want to save money and increase the value of their investment?

It is often minor expenditures that save the most money, such as new doorstops, replacing filters, checking appliances, testing smoke detectors, adjusting doors, window latches, dead- bolts, and more (see Chapter 5). Many of these items can pre- vent more expensive maintenance such as holes behind doors, clogged heaters and air conditioners, large appliance problems, dry rot, safety issues, and more. Of course, there are major items in a home such as the roof, the exterior condition of the build- ing, carpeting, interior and exterior paint, and so on. When left to deteriorate, it almost always means you will have to spend more in the future.

You need to be familiar with your property and have a plan in place. By conducting routine inspections of the interior and exterior of your property, you will not have as many emergency problems. I often advise owners to plan their walk-through just prior to the expiration of the first year’s lease. When you notify your tenants you will be coming out to do your property survey,

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let them know you are planning to come inside. If they are unable to be there and there are problems or anything they want you to see, ask them to leave a detailed note inside the property in an obvious place.

During your inspection, check basic items such as smoke detectors; caulking around the tub, toilet and sink; the overall condition of the property; fire extin- guishers; and so on. Walk completely around the property looking for broken windows or anything that stands out, as well as any yard work or tree trim- ming necessary. You should plan to change the heater and air conditioning filters while you are there. Pay attention to details while you are there. You should identify and correct all safety issues, which may present potential liability.

You should have a simple file for each property where you keep a log of items you have checked and the things you do each time you are at there. Record the date, including the year, and the time. Don’t rely on your memory. For larger properties, take the time to check all your common areas, the exterior lights, walkways, and laundry rooms. Make sure the common areas are free of cobwebs and debris. You can take care of most of these items yourself.

Use a detailed property survey checklist and take the time to complete it in its entirety (see Appendix 4 for a sample). Take it with you each time you review the needs of your property before a tenant moves in and at the annual property inspection.

The following is a list of maintenance tips that may help you protect your investment in your building and at the same time avoid possible problems with code violations and resident complaints.

“ It is equally importantto keep up with the same maintenance after the tenant occupies the property. No news is not always good news. Take a proactive approach to the maintenance and upkeep. ”—Jean S., investor

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Regularly check smoke detectors Inoperable or improperly installed smoke detectors are a com- monly found code violation. Smoke detectors are one of the most important life safety devices in your property. If you have an older property with battery-operated smoke detectors, these batteries need to be checked periodically by the tenant.

Every smoke detector includes instructions for use and dia- grams to help you install them in the proper locations. If you have questions concerning the location of your smoke detec- tors, call your local housing inspector or contact your neigh- borhood fire station. Batteries are tested by pushing the test button on the detector. To find out if the smoke detector actu- ally works, I recommend using one of the commercially available aerosol smoke detector-testing products.

Check for non-grounded electrical outlets Older buildings built prior to the mid-1960s don’t have fully grounded electrical systems. These buildings typically have older receptacle outlets with only two openings for plug attachments. Many modern appliances, electronics, and computers are equipped with grounded plugs. Tenants and property owners commonly replace older receptacles with newer u-ground type receptacles. This is a code violation and it is potentially danger- ous to use a grounded receptacle on an ungrounded system.

You can use u-ground receptacles on your property if you either ground the outlet or provide GFI (ground fault inter- rupter) protection to the outlet. If you do not have ungrounded

Bright Idea

Fire officials recommend that batteries be checked twice a year when clocks are changed for daylight savings time (April and October). Encourage tenants to check batteries and report any problems to you or your management as soon as possible.

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outlets, repairing them is not a “handyman” repair; consult a licensed electrician. If you choose either one of these two meth- ods for correcting your outlets, you may need to get an electri- cal permit and final inspection approval. Check with your city or county for more information.

Keep chimneys clean Fires generally result from lack of cleaning or ventilation. This happens several ways. The most common is a blocked flue, which may be from debris falling into the chimney due to dete- riorating material, or may even be a bird’s nest blocking the ven- tilation. Fires often erupt from ignition of creosote accumulated on the walls of an unclean chimney.

Preventive maintenance is the key to maintaining a safe chim- ney. Here are some safety tips recommended by the Chimney Safety Institute of America: www.csia.org.

■ Schedule annual inspections for all chimneys and use a qualified, certified chimney professional. This person should be able to not only clean the chimney and vents, but also inspect them for deterioration or weakness.

■ Provide and install working carbon monoxide detectors in the property.

■ Install a chimney cap if one is missing.

■ Provide and install working smoke detectors.

■ Have the chimney waterproofed.

■ Have the chimney flashing inspected and maintained to prevent leakage.

■ Following any violent events such as earthquake, flood, or lightning strike, have the chimney inspected for damage inside and out.

Peace of mind, reduced liability, and the safety of tenants are worth the expense to maintain a chimney.

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Check the condition of balconies, stairways, decks, handrails, and guardrails You have heard the old saying “an ounce of prevention is worth a pound of cure.” It applies today, especially to balconies, decks, and stairways. These parts of your property are usually more exposed to weathering and water damage. Over time, water seeps into and under surface coverings and causes rot and dete- rioration to wood structural members. This process can be accelerated in some properties due to older construction meth- ods that fail to divert moisture or hide moisture and damage behind stucco or siding.

Watch out for mold and mildew Mold can be a serious problem, especially during the winter months. Exposure to mold can cause health risks for infants and children, the elderly, pregnant women, and people with aller- gies, asthma, and damaged immune systems. If your building has areas of mold growth, have an environmental inspection done to determine what type of mold is present and if it is sur- face or evasive. Make an appointment with a professional con- tractor who can determine where the moisture is coming from and how the problem can be corrected. Check your local phone directory for environmental inspectors and for contractors that provide such services. Code enforcement will expect property owners to locate and correct any sources of water or moisture infiltration in affected units. Replacement of damp or damaged materials is also required. Additional information on mold is available from your county health department. Some states are now requiring a mold disclosure be given to each new occupant (see Appendix 4).

Check your insurance policy to determine whether you are covered for mold damage. Don’t put off fixing those pinhole water leaks. Mold only needs a day to start growing, and the resulting cleanup can be very expensive.

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Tenants can help prevent mold in their units by taking the following steps:

■ Keep the unit clean and dry.

■ Use the exhaust fan or open the bathroom window after showering.

■ Wipe down damp surfaces after showering.

■ Wash bathrooms with mold-killing or mold-prevention cleaning products at least once a month.

■ Use the kitchen exhaust fan to remove water vapor when cooking.

■ Discard spoiled foods immediately.

■ Empty garbage daily.

■ Empty water pans below self-defrosting refrigerators frequently.

■ Remove moldy stored items.

Remove trash, litter, debris, and inoperable vehicles If your garbage bin is filled above the rim, the bin lid will not close securely. This can lead to rodents, flies, unpleasant odors, and trash falling or blowing out of the bin. Not only is this unhealthy, it also gives your property poor curb appeal for prospective tenants. If your bin is overfull two or more times every month, you have inadequate garbage service. Call your local garbage company.

Various collection options and price ranges are available to meet your needs. If your garbage bin is overflowing because a

Bright Idea

Experts say that the best way to combat graffiti vandalism on your building is to paint over the graffiti “tags” as soon as possible. Taggers eventually get frustrated and find some other place to vandalize. And in some areas, it’s a code violation to allow graffiti to remain on your property.

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tenant or unknown persons disposed of furniture, mattresses, or other large items in the bin, you can call your local company and ask for their bulk pick-up service. If this is not a multi-family residence, ask your garbage company for a brochure to provide your tenant with the appropriate procedures for bulk item pick- up or for obtaining additional bins. This should be your tenant’s expense, not yours.

The general exterior picture that your building presents to the neighborhood is very important. An unsightly building can be a message to criminals, drug dealers, and other unautho- rized persons that no one pays attention to what is going on. Trash, litter, and debris on your premises can be an invitation to criminal activity, graffiti, and illegal dumping. Inoperable vehi- cles use limited parking spaces and may create a nuisance, as well as provide places to conceal drugs. Excess storage on bal- conies is unsightly and can contribute to infestations of insects and rodents, and often promotes moisture damage to the sup- porting balcony structure. All of these items are also violations of many cities’ blight ordinances and can result in the issuance of administrative citations and possible fines if not promptly corrected.

I like people to be able to drive by my property and not be able to recognize it as a rental unit. Pride of ownership ensures that tenants care about how they maintain their home.

Maintain a good relationship with your tenants At this point you must be asking, “What is this item doing in a list of maintenance items?” Well, your tenants are at your property

Moneysaver

Some cities have programs designed to help rental property and apartment building owners who are victims of graffiti vandalism. Free paint and other materials to cover or remove graffiti are sometimes made available through the program. To access this free service, call your local authorities.

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all the time. They are the first to know about that leak in the bathroom that could lead to serious water damage, and probably know about those tenants next door who may be dealing drugs.

A little work to keep up good channels of communication with your tenants can pay you big dividends. If your tenants feel comfortable informing you about maintenance problems and other issues, they can become active partners in the process of keeping your buildings safe, pleasant places to live.

Contractors are your best friends Having good contractors with good skills who can take care of the problems efficiently and safely is half your battle of being a property owner. Good contractors (also called vendors) make your job easier as a landlord. Often, they take care of your prob- lems and while they are there, are your eyes and ears as well.

There are many different types of contractors. Following is a list of some that you will get to know quite well over the years.

■ Maintenance person: The person you can call for just about any minor problem. This is an important person to your success as a rental property owner, and is usually the best one to call and quickest to respond in an emergency.

■ Plumber: Keep in mind there really are two types of plumbers. There is the plumber who repairs your faucets, running toilets, installs new plumbing fixtures and more. Then there is the plumber who comes to clear your drains and lines going to and coming from the street, when they are plugged up.

■ Electrician: Always use a licensed electrician when it comes to electrical work.

■ Appliance repair person: It is important to have a good, reliable appliance repairman. If the refrigerator stops working, there is not a lot of time to have it repaired or replaced. But when this person is at your property, ask that he or she call you before fixing an appliance. It may be

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cheaper to replace the appliance than fix it, especially if it is an older model that will continue to need maintenance.

■ Painter: Make sure your painters know how important it is to properly dispose of unused paint. Make sure they don’t dump paint in the garbage, rinse their brushes down your drains, or put products outside allowing paint to run onto the street. Expect a good job from your painters. A good painter can give you tips to keep from doing a full paint- ing at every vacancy.

■ Floor covering installer: You don’t need to use the biggest company but be sure you are being provided the service and getting the quality you have paid for. Purchasing good-quality carpets and an upgraded pad is a good idea. An upgraded pad is key to making the carpets last longer. Don’t use a carpet taken out of another building, even if it is a good deal — it’s not likely to last.

■ Window covering maintenance person: Usually you hire a professional company to take care of your window cover- ings. You may also consider having your handyman/ maintenance person use a home improvement warehouse place where they do the measuring, purchase the window coverings, and install.

■ Chimney sweep: This is a good person to know to con- tinue to service your fireplaces. I recommend you have your fireplace cleaned and safety-inspected at least once a year.

■ Glass company: You can establish a good rapport with a local company. I recommend opening an account with them right away. Broken windows need to be addressed in a timely manner. Having an account in place and knowing they will take care of the repair will save you a lot of time and money. They may be able to handle screens as well.

■ Roofing company: I usually have two or three companies I work with but one main company I always call first. When

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bad storms come, all the companies are hit hard with phone calls and emergencies. Everyone wants service first. Also, getting a roof inspection every five years could pre- vent some of those emergencies during a storm.

■ Gutter company: Usually you can get a recommendation of a good, reliable company from your roofing company because they often work closely with gutter companies. Have those gutters cleaned yearly and leaks repaired immediately.

■ Gardener: Most gardeners can care for your property on a regular basis. If your gardener stops by weekly or even monthly, he or she usually knows whether something has changed at your property, so let your gardener be your eyes and ears. However, your gardener can also be your greatest liability exposure, from chemicals on the lawn to a rock flying from the mower.

■ Tree company: It is best to use a professional tree com- pany for trees blown down during a storm. You can also use a tree company to trim trees in order to keep from having those downed branches and trees during storms.

■ Pool servicer: If you have a pool, pay for a monthly pool service. Make sure the required signs are posted and the safety equipment properly installed around your pool.

■ Emergency service company: It is a good idea to establish a rapport and open an account with an emergency service company in advance. When you have the emergency, you don’t have time to shop around and are always in a hurry. Plan ahead. Ask other property owners for a recommenda- tion. Your insurance company may already have desig- nated companies they use and would be a good resource.

■ Cleaning company: Unless you plan to do all the cleaning yourself, I recommend hiring someone. There are compa- nies that specialize in move-in and move-out cleaning. They already have the products and the expertise. This is

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a good way to prove that the unit was clean when the tenant moved in. Additionally, if the tenant is not happy with the results, you can have your cleaner redo the areas overlooked.

The preceding is a list of most of the types of contractors you will work with over your years of owning rental property.

Prior to allowing any contractor to work on your property, you need to have proof of several very important items. I rec- ommend you have a contractor information form with a list of items you need to receive prior to beginning any work.

When you hire a contractor, it is important to obtain the fol- lowing items:

■ Copy of an official document with his or her tax ID num- ber and full name (for example, Social Security card, tax coupon, mailing label from an income tax return)

■ Copy of his or her contractor’s license and/or business license

■ Two business cards

■ Copy of a certificate of insurance and copy of the workers’ compensation policy

■ If the contractor is a sole proprietor, a letter of declaration on their letterhead stating there are no other employees and you will not be held responsible in the event of injury or accident; you still need to require general liability insurance

■ Ask for at least two references from the contractors’ clients

Bright Idea

Ask your friends who own investment property for the names of contractors they’ve used and are happy with. Also consider shopping around for a local rental property owners’ group, such as a local apartment association. Try the Web site of the National Apartment Association at www.naahq.org.

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Fair housing and your contractors It is important to have something prepared that you can give to your contractors that will inform them of the importance of the fair housing laws. A prospect driving by your property where there is a “For Rent” sign out front may see your contractor and stop to ask questions regarding the availability and details. You need to instruct your contractors working on your property that they aren’t to give out any details or answer any questions at any time, whether it is a current tenant or a prospective one. You may want to have a flyer available on the property that a contractor can give out that gives them more information and how to con- tact you.

Consider the following example: A family walked up to a vacancy and asked the gardener about availability. The gardener mentioned that they probably wouldn’t want anything with stairs because it would be dangerous for the children. A discrimina- tion charge was brought against the owner, not the gardener. This was a discriminatory remark and the gardener was working for the owner.

Discrimination can also be against tenants living in posses- sion of the home. Any derogatory comments made by a con- tractor in regard to race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18), and handi- cap (disability) can be considered discriminatory. These remarks can result in a fair housing suit against you, as the owner of the

Watch Out!

Remember that when you pay a contractor over $600 during the year, you must submit a 1099-MISC (unless he or she has formed a corporation), a form that’s available from the IRS. There may be other laws in your state concern- ing the reporting of income, so contact your accountant to discuss your indi- vidual situation.

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104 PA R T I I I ■ U P G R A D I N G A N D M A I N TA I N I N G YO U R I N V E S T M E N T

property. Note that some states have added to this list of items considered to be discriminatory.

Safety equals reduced liability Providing safety for tenants is a common-sense approach to reducing liability for the property owner, as well as complying with building codes and laws. It is important that both the inte- rior and exterior of a property provide a safe environment for a resident. See Chapter 5 for details.

Habitability standards Many tenants and landlords get into disputes about whether a maintenance item makes the unit uninhabitable. Check with your local housing department to determine what state and local codes and statutes apply to your property. Basically, these codes are created to provide a safe and habitable home. They may include electrical, plumbing, access and egress (exit) stan- dards, weather tightness, and many others. They are usually minimum standards.

The landlord who responds to maintenance needs, does preventive maintenance, and maintains the property in a safe and clean manner is, most probably, exceeding any local code requirements. Several local landlord/tenant non-profit organi- zations provide information regarding maintenance issues.

Responding to maintenance calls Making sure to respond to your tenants’ calls for maintenance will not only keep your tenants happy but will also protect your investment.

Watch Out!

Some tenants ask excessive and unreasonable requests. Encourage all requests to be in writing, and then evaluate what is necessary. You need to be sure your contractors know to only take care of what is on the written maintenance request. If there is a change, they must contact you.

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105C H A P T E R 6 ■ M A I N TA I N I N G YO U R P R O P E R T Y

A maintenance call generally comes in from your tenants via the telephone. I truly believe you can educate your tenants to make it a routine to put their maintenance requests in writing (see Appendix 4 for a sample maintenance request form). You can provide blank maintenance request forms to your tenants at the time they initially sign the lease and at renewal time. I rec- ommend you encourage all requests to be in writing, even via e-mail. Many people have e-mail these days and that is a great way to receive a written instant request in writing about work that may be needed at your property. You can also receive this form of notification while you are basking in the sun in Hawaii.

You need to obtain details from the tenant and determine the best way to repair the problem at the property. On your writ- ten maintenance work order, there are places for important details. Find out information such as whether your contractor has permission to enter or whether there are any pets to be con- cerned with. For example, if there is a plumbing problem, be sure to find out where, not just in “the bathroom” but which bath- room and which faucet/drain. Plumbers get paid by the hour, and more details make the service call more efficient, helping your bottom line.

I encourage you not to get in the habit of allowing your ten- ants to make repairs themselves. Most tenants lack the skills to properly make the needed repairs and what started out as a small problem may just turn into a large one. The initial reac- tion of an owner is to allow the tenant to make repairs, especially if you think you are saving money. Believe me, it is not worth it. If a tenant gets hurt while making a repair on your property it will cost you a lot more than the initial repair.

Remember to always keep the tenant informed. If they know you are working on the problem or have to wait on a part, it is less likely you will receive an angry phone call or a letter because your tenant thinks you don’t care and aren’t doing anything. Some repairs may require multiple phone calls to find a contractor

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106 PA R T I I I ■ U P G R A D I N G A N D M A I N TA I N I N G YO U R I N V E S T M E N T

that is able to help. Don’t get discouraged. Just keep a log of all you do.

A word about building codes. Most people are confused about building codes. The Uniform Building Code (UBC) was created in 1997 and is generally accepted as the standard for all states. However, that changed in 2003 when the ICC created the International Building Code (IBC). Some states, such as Utah, have already incorporated the new IBC standard into their state building codes. States pass laws to make the UBC or ICC more stringent to cover their particular needs. Of course, many coun- ties want to improve on that and the cities have their special needs as well. So, at every level of government, a few more codes are added. Ask the local building department or a professional contractor what the code is for whatever maintenance you are doing. The advice is usually free — just be sure to get the per- son’s name and the advice in writing, if possible. Remember that the code is there for a reason. It isn’t just to make your life more difficult — it is to save a life!

Just the facts ■ Routine inspections of your property are extremely

important.

■ Preventive maintenance will save you money.

■ It is important to get all required information from all people who you hire to perform any work on your rental property.

■ Insist on receiving your basic maintenance requests in writing.

■ Responding promptly to your tenant’s reasonable mainte- nance calls will keep your tenant happy.

■ Having reliable, responsive, and honest contractors will make your life easier as a rental property owner.

■ You, the owner, are responsible for the actions of the peo- ple you hire to work on your property.

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