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Updated 5 months ago, 08/10/2024
High maintenance costs.
What are the options to help mitigate maintenance costs. These vintage Detroit homes are lovely but they sure are higher maintenance due to their age. Service warranties? A recommend contractor? Any experienced advice would help and be greatly appreciated.
#3 General Real Estate Investing Contributor
- Rental Property Investor
- Hanover Twp, PA
- 3,120
- Votes |
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#3 General Real Estate Investing Contributor
- Rental Property Investor
- Hanover Twp, PA
@Jose N., I'm in a market with older houses and I don't think the age of the house has much to do with the maintenance cost. In fact, I would suspect on a dollar basis they may be cheaper! For example a new house might have central air where an old house has tenant provided window a/c so the maintenance cost is shifted to the tenant.
A few more practical things to think about:
1. A purchased warranty is like insurance. They make LOTS of money for the company because they pay out much less than you pay them! So, they aren't a way to save you money only to protect you against things you can't cope with on your own.
2. I would say the most important thing is to be proactive! If you wait for an emergency to happen it is the most expensive time to deal with the issue.
To that end you could do regular inspections to identify issues before they grow into bigger problems.
Look at every aspect of the house for things that could become issues. For example where does water drain on the property. Roofs, flashing, gutters, downspouts, grading all are important things with shedding water off of and away from a house but people often don't think about these things until they have a problem that has caused damage and then its expensive!
3. Develop relationships with different providers so that you know how they operate and how they charge before you call them.
4. Hire the right provider for the right job! Many issues can be addressed by a cheaper handyman rather than hiring a top notch contractor. Many contractors will charge more for a small job because they really don't want those jobs. So, when you have a toilet that won't stop running call a handyman to replace the internals of the toiler instead of a plumber.
5. Plan ahead for more serious issues. A common serious issue would be no heat in winter time. Paying a plumber extra for an off hours call runs your bill up. Be proactive and have a plan in place. In some of my properties I have a 2nd heat source. That could be as simple as adding a couple large strips of electric baseboard in the downstairs to provide heat in an emergency. If you are having electrical work done, you tend to get better pricing for a larger job so adding on this work is more economical at that time.
6. Use turnover time to its best advantage! When the unit is vacant is an ideal time to address issues because its easy to work on and isn't impacting a tenant. It's also easier to identify work that needs to be done. So, instead of dreading the lost rent (opportunity cost) of the vacancy focus on the opportunity the vacancy provides.
@Jose N. you can do maintenance with band-aids or replace/upgrade the problem.
Often cheaper overall to use band-aids to get as much "life" out of a system.
Roofs for example. Keep patching and tarring until you can't - then replace.
Same with windows.
Electrical, HVAC and plumbing are not as easy to do this with, but you can do band-aids a bit. At a certain point you do have to replace/upgrade, which is not cheap.
In our experience service warranties are almost worthless, especially on a rental.
Appointments take at least a week, then several days for them to analyze their coverage, then you go into a queue for one of their required contractors - all while the tenant is without heat, water, etc.
The sewer & water line program offered by the DWSD can be useful if you haven't already replaced those lines.
There are plenty of centuries old houses on the east coast that have been upgraded and properly maintained over the years. The biggest cost challenges with them is keeping them "historical".
- Michael Smythe
Quote from @Kevin Sobilo:
@Jose N., I'm in a market with older houses and I don't think the age of the house has much to do with the maintenance cost. In fact, I would suspect on a dollar basis they may be cheaper! For example a new house might have central air where an old house has tenant provided window a/c so the maintenance cost is shifted to the tenant.
A few more practical things to think about:
1. A purchased warranty is like insurance. They make LOTS of money for the company because they pay out much less than you pay them! So, they aren't a way to save you money only to protect you against things you can't cope with on your own.
2. I would say the most important thing is to be proactive! If you wait for an emergency to happen it is the most expensive time to deal with the issue.
To that end you could do regular inspections to identify issues before they grow into bigger problems.
Look at every aspect of the house for things that could become issues. For example where does water drain on the property. Roofs, flashing, gutters, downspouts, grading all are important things with shedding water off of and away from a house but people often don't think about these things until they have a problem that has caused damage and then its expensive!
3. Develop relationships with different providers so that you know how they operate and how they charge before you call them.
4. Hire the right provider for the right job! Many issues can be addressed by a cheaper handyman rather than hiring a top notch contractor. Many contractors will charge more for a small job because they really don't want those jobs. So, when you have a toilet that won't stop running call a handyman to replace the internals of the toiler instead of a plumber.
5. Plan ahead for more serious issues. A common serious issue would be no heat in winter time. Paying a plumber extra for an off hours call runs your bill up. Be proactive and have a plan in place. In some of my properties I have a 2nd heat source. That could be as simple as adding a couple large strips of electric baseboard in the downstairs to provide heat in an emergency. If you are having electrical work done, you tend to get better pricing for a larger job so adding on this work is more economical at that time.
6. Use turnover time to its best advantage! When the unit is vacant is an ideal time to address issues because its easy to work on and isn't impacting a tenant. It's also easier to identify work that needs to be done. So, instead of dreading the lost rent (opportunity cost) of the vacancy focus on the opportunity the vacancy provides.
Thank you, you've made some valid points.
Quote from @Jose N.:
What are the options to help mitigate maintenance costs. These vintage Detroit homes are lovely but they sure are higher maintenance due to their age. Service warranties? A recommend contractor? Any experienced advice would help and be greatly appreciated.
Easiest way to avoid this is to rip off the bandaid and do it right with the large capex items.
Detroit homes are pretty simplistic, especially if you're buying a bungalow. You really have:
- Roof
- Plumbing
- Electrical
I replaced a roof the other month on a 1931 built brick Tudor for $10,500. It had three layers of shingles on top of original cedar shake. I won't have to do this again for 20+ years.
Electrical in most of these homes is usually sufficient unless you still have knob and tube.
Plumbing is the biggest culprit in these older homes. The stuff you can see has likely been converted to pex. But it's the stuff you don't see that will need attention. The main stack, drain lines in the basement floor, trap and the sewer line to the city main are the big ones.
You can either knock these out as they become problems or bite the bullet and spend the money. I've taken the former approach but I may start fully doing one house per year here soon just to get it out of the way.
What issues, exactly, are you dealing with?
My favorite for guaranteed savings is this: Hang up the suit. Put on some old clothes. DIY. Just like cars, I much prefer working on older ones than newer ones. Things are usually more accessible. But that can also depend on who remodeled/remuddled it.
Quote from @Travis Biziorek:
Quote from @Jose N.:
What are the options to help mitigate maintenance costs. These vintage Detroit homes are lovely but they sure are higher maintenance due to their age. Service warranties? A recommend contractor? Any experienced advice would help and be greatly appreciated.
Easiest way to avoid this is to rip off the bandaid and do it right with the large capex items.
Detroit homes are pretty simplistic, especially if you're buying a bungalow. You really have:
- Roof
- Plumbing
- Electrical
I replaced a roof the other month on a 1931 built brick Tudor for $10,500. It had three layers of shingles on top of original cedar shake. I won't have to do this again for 20+ years.
Electrical in most of these homes is usually sufficient unless you still have knob and tube.
Plumbing is the biggest culprit in these older homes. The stuff you can see has likely been converted to pex. But it's the stuff you don't see that will need attention. The main stack, drain lines in the basement floor, trap and the sewer line to the city main are the big ones.
You can either knock these out as they become problems or bite the bullet and spend the money. I've taken the former approach but I may start fully doing one house per year here soon just to get it out of the way.
What issues, exactly, are you dealing with?
I'd say it's mainly the plumbing, the infamous "stack" and the cast iron drain lines and the galvanized water lines behind the walls. I picked up a portfolio of homes the previous owner had for 15+ years so I'm dealing with what seems to be a lot of deferred maintenance. The previous owner thought it was a great idea to install central air in 14 of the units. I changed the roof (full tear off) on a colonial including it's garage in E English village for $9k which I thought was pretty good. I'm not new to being a landlord in Florida, but am newer (1 year) to being one in Detroit. I have 21 homes mainly bungalows and a 2 unit flat throughout the east and west sides.
What kind of maintenance costs are you running into?
Much of What remains of Detroit appears to be brick, a low maintenance exterior.
Many of the refurbished structures seem to have new windows put in.
When you do a rehab are you using new appliances or used appliances?
Are you upgrading the old 110v electrical system to 220v 3 wire?
Are you sludge hammering out the old coal heating systems for modern natural gas Forced air HVAC units?
Exactly what kind of maintenance costs are you having problems with?
Quote from @Jose N.:
Quote from @Travis Biziorek:
Quote from @Jose N.:
What are the options to help mitigate maintenance costs. These vintage Detroit homes are lovely but they sure are higher maintenance due to their age. Service warranties? A recommend contractor? Any experienced advice would help and be greatly appreciated.
Easiest way to avoid this is to rip off the bandaid and do it right with the large capex items.
Detroit homes are pretty simplistic, especially if you're buying a bungalow. You really have:
- Roof
- Plumbing
- Electrical
I replaced a roof the other month on a 1931 built brick Tudor for $10,500. It had three layers of shingles on top of original cedar shake. I won't have to do this again for 20+ years.
Electrical in most of these homes is usually sufficient unless you still have knob and tube.
Plumbing is the biggest culprit in these older homes. The stuff you can see has likely been converted to pex. But it's the stuff you don't see that will need attention. The main stack, drain lines in the basement floor, trap and the sewer line to the city main are the big ones.
You can either knock these out as they become problems or bite the bullet and spend the money. I've taken the former approach but I may start fully doing one house per year here soon just to get it out of the way.
What issues, exactly, are you dealing with?
I'd say it's mainly the plumbing, the infamous "stack" and the cast iron drain lines and the galvanized water lines behind the walls. I picked up a portfolio of homes the previous owner had for 15+ years so I'm dealing with what seems to be a lot of deferred maintenance. The previous owner thought it was a great idea to install central air in 14 of the units. I changed the roof (full tear off) on a colonial including it's garage in E English village for $9k which I thought was pretty good. I'm not new to being a landlord in Florida, but am newer (1 year) to being one in Detroit. I have 21 homes mainly bungalows and a 2 unit flat throughout the east and west sides.
Sounds pretty normal. And this is exactly why I tell people to take it slow with 1-2 properties at first before scaling.
I hope you have a small war chest to get these homes up-to-speed.
Quote from @Travis Biziorek:
Quote from @Jose N.:
Quote from @Travis Biziorek:
Quote from @Jose N.:
What are the options to help mitigate maintenance costs. These vintage Detroit homes are lovely but they sure are higher maintenance due to their age. Service warranties? A recommend contractor? Any experienced advice would help and be greatly appreciated.
Easiest way to avoid this is to rip off the bandaid and do it right with the large capex items.
Detroit homes are pretty simplistic, especially if you're buying a bungalow. You really have:
- Roof
- Plumbing
- Electrical
I replaced a roof the other month on a 1931 built brick Tudor for $10,500. It had three layers of shingles on top of original cedar shake. I won't have to do this again for 20+ years.
Electrical in most of these homes is usually sufficient unless you still have knob and tube.
Plumbing is the biggest culprit in these older homes. The stuff you can see has likely been converted to pex. But it's the stuff you don't see that will need attention. The main stack, drain lines in the basement floor, trap and the sewer line to the city main are the big ones.
You can either knock these out as they become problems or bite the bullet and spend the money. I've taken the former approach but I may start fully doing one house per year here soon just to get it out of the way.
What issues, exactly, are you dealing with?
I'd say it's mainly the plumbing, the infamous "stack" and the cast iron drain lines and the galvanized water lines behind the walls. I picked up a portfolio of homes the previous owner had for 15+ years so I'm dealing with what seems to be a lot of deferred maintenance. The previous owner thought it was a great idea to install central air in 14 of the units. I changed the roof (full tear off) on a colonial including it's garage in E English village for $9k which I thought was pretty good. I'm not new to being a landlord in Florida, but am newer (1 year) to being one in Detroit. I have 21 homes mainly bungalows and a 2 unit flat throughout the east and west sides.
Sounds pretty normal. And this is exactly why I tell people to take it slow with 1-2 properties at first before scaling.
I hope you have a small war chest to get these homes up-to-speed.
I started with one, then every couple of months added 1 up to the 7th unit, then took a plunge on my first portfolio. I think I've made some good connections thus far. A handyman that does honest work (had a few that didn't and one that ran off with a few hundred bucks). A good contractor that has established themselves in Detroit and a realtor/broker that runs all over Detroit checking out properties I find on and off markets. During this year, I've experienced inheriting a crooked property manager I let go on day 1 that tried collecting rents from tenants weeks after, an eviction (same person) and a successful lawsuit against a non performing seller that backed out the day of closing. I've learned and have grown, this gig is not for the weak.
There are items in every home which will require constant maintenance, meaning yearly or every other year such as the furnace-A/C, toilets, faucets, main drains, and gutters. You should calculate the annual maintenance for an occupied property to be 10% of the Gross income.
As it relates to your roof, windows, doors, hardwood or vinyl flooring you should expect a serious issue to present itself every 5 years. The best roof will suffer wind damage, doors warp etc.
Maintenance is a fact of life in owning property. That said, a good way to reduce costs is to hire preferred vendors. Explain to your contractor that you need a reduced price and if he/she will accommodate you will always bring your business their way and you will refer everyone you know to them.
- Leroy K. Williams
@Jose N. Some good advice shared on how to mitigate the cost obstacles you are facing but I am afraid what you perceive as high costs are actually normal costs associated with single family homes of the vintage you purchased. I am not personally familiar with Detroit housing outside of what I observe in these forums but from what I gather these homes are acquired at relatively low price points. Single family homes regardless of market are very inefficient to operate to begin with but the lower price point homes are disproportionately impacted by ordinary upkeep maintenance, repairs and cap ex because they struggle to absorb these costs (some of which are fixed or close to fixed regardless of whether this is $100,000 house or $300,000 house). This is why you see so many continue to utilize band-aid fixes rather than invest in Cap Ex repairs.
The hope is the homes appreciate to the extent the cap ex repairs can be absorbed but until that event occurs operating these homes will remain challenging. Philadelphia, which is where I invest has a number of neighborhoods with similarly priced housing where its difficult to operate SFH's and even multi's for the same reason. This is one of the most overlooked issues with SFH's in lower price point areas.