How do you address constant minor maintenance issues

[Carlos Lez]

I have been doing student rentals for a long time. I have single family homes with students renting by the room. With students there is bound to be maintenance issues perpetually. I have been handling these myself as it will cost an arm and leg to hire someone to come out and fix trivial things. But I am getting older and find that this is getting impractical. 

I am opening this discussion to seek your feedback on how you address small issues. Like just this evening a student tenant wrote to me that the fridge is leaking water all over the floor. Obviously this need immediate addressing to save from bigger issues down the line but who to call if one cannot go out there themselves. Next will be a clogged toilet, followed by the modem needing a reset and the list continues.

Thanks in advance for any suggestions.

[Jim K.]

@Carlos Lez

I think a number of us are in the same boat as you, Carlos. I certainly am. I self-manage and I maintain my own rentals, just like you. I think 25 units is the far upper limit of the practicality of my business plan before I have to change things. I'm in my mid-forties.

Probably like you, I have a network of friends and associates in the business in my area and we occasionally rely on each other to get heavier jobs done. I have a few guys in my contact list who will work for $15-$20/hour for four hours at a time in their free time. Lastly, my wife is an active part of the business and has taken off work in the past to help in this kind of maintenance work. Of course COVID is making things more difficult when dealing with new appliances and shortages at the big box stores, but we're managing by paying a premium for our appliances from smaller appliance stories with more in-stock stuff and resilient supply chains.

I'm not in student housing, although I currently do rent to students at one of my properties.

My rentals are almost all strictly single-family C/C- class, hovering above what I see as the D-class divide in my area. There are concentrated in a small geographical area, in which I also live. One of the biggest mistakes I see people who are trying to get into real estate make is buying these cheap, high-maintenance rentals all over the place, and deciding to live somewhere completely different. No. You run this kind of property, you have to be present and accounted for.

One of the unusual features of my rentals is that the appliances in my places are almost all new when they go in, especially refrigerators and washing machines. I want to have to move these things in and out a infrequently as possible, and when I do, I want to rely on Home Depot and Lowes crews to move them in and out of my properties. Their work is worth the appliance's higher price. Right now, you have a leaking fridge you have to attend to. No, you don't. You have to make a phone call and put in a $700 fridge in that place that won't leak for the next six-some years. Whirlpool, their 18 cubic-foot models, all the way. If Home Depot or Lowes won't deliver in a reasonable period of time, go to smaller outfits. Yes, delivery and haul-away costs more money. Pay the man.

For much the same reason, I enthusiastically install extremely expensive American Standard furnaces in my properties. I want as little maintenance going on as possible with them, and Am. Standard is my winner on tenant furnace reliability. I have the same sort of setup with Rheem Performance Platinum water heaters. Every water heater in my places could easily be found in housing that costs four times as much.

When I initially acquire or turn my rentals, I use several tricks of the trade to harden them. There is a piece of thick vinyl stretched and adhered under every drain in a cabinet in my places. Screws for furnishings are anchored in place. I have hardwood floors and tile in all of my rentals. Much of it I've installed myself. The hardwood is plenty beat up and finished in semi-gloss, sure, but it's always sealed and there are two to three good coats of oil-based poly on it. The list goes on and on.

Every time I do a service call at any of my properties, I also do a general inspection to keep small problems from turning into larger ones. Each property has its own log book, so I can keep all maintenance issues and problems straight. I know my places. I know their weaknesses. I have them buttoned up as much as possible. I tend to buy rentals based on location, of course, but general building quality runs a very close second.

I get rid of sick properties. Some places...the building quality just isn't there. These places have serious weaknesses. They come out of my portfolio and get sold to someone else.

I suspect all this sounds very familiar. Very little has changed about the mom and pop handyman landlording business model for a very, very long time. So I have to ask, are you at the natural limits of the model? Too many weak properties, your body isn't holding out, minimal support in a pinch from your wife or other handymen you know? No guys you can call up to help? Tenants who nitpick over trivialities like, well, modem resets? Verizon and Comcast should be handling that, not you, by the way.

The next step for me is to get out of single-family and consolidate my holdings into multifamily. I'm already looking more at duplexes going forward than single-family. Eventually, I'll move into managed B-class multifamily. I'm only in C-class for the high returns that are possible, as long as I can hold out. The job of handyman landlord pays VASTLY better than anything else I've done. I just have to understand that when it's time to get out, it's time to get out. Do I have 10 more years in this class, soaking up the profits? At a maximum. I'm not going to be doing haul-outs in my sixties. If I wanted to stay in the game down here in this class, I would max out on properties and look to hire an in-house property manager and handyman. Not a service, not a contractor, not a property manager's boy. A young, strong, bright, reliable guy with the belly to do this, whose paycheck I sign, whose health insurance I pay, whose family I take care of, who calls me with any questions he has, whom I can mentor into being able to take over my portfolio and expand on it in 5 to 10 years.