Balancing Rental Maintenance Costs vs. Tenant Expectations

Managing rental properties involves a delicate balancing act between maintaining the property, minimizing overall maintenance costs and keeping tenants satisfied. Managing maintenance requests, especially when dealing with demanding tenants, can be difficult. While it's essential to maintain your property to retain its value and keep it livable and safe, it's equally important to avoid being overwhelmed by excessive maintenance costs due to overly-demanding tenants.

This blog assumes that you don’t have a large complex with onsite, salaried, maintenance people. Most landlords who self-manage their properties have a roster of handyman and contractors who they use to maintain their properties. When you don’t have salaried maintenance people then every service call costs you something, if only just a handyman trip-charge.

Most landlords only make between $200-$500 per month on a rental unit. 2-3 maintenance calls a month can easily eliminate your profit for the month so managing your maintenance budget is absolutely critical to allowing rental properties to be a profitable endeavor. Therefore, it is important that you learn how to say "no" to unreasonable maintenance requests. Here are some best practices for how you can manage your maintenance budget while also maintaining a positive relationship with your tenants.

1. Set Clear Expectations from the Start

One of the best ways to manage maintenance costs and tenant expectations is to set-out clear guidelines from the beginning. When having a new tenant sign a lease, provide a detailed list of what is landlord maintenance (e.g., plumbing, electrical, AC issues) and what falls under the tenant's responsibility (e.g., changing light bulbs, unclogging minor drains, tightening loose screws). Also, outline the types of cosmetic repairs you will consider and what cosmetic issues will be considered “as-is”. Cosmetic issues are often a point of contention for more demanding tenants. Ensure your tenants understand what they can expect from you and what you expect from them. Put as much detail as possible in your leases, or you can create your own maintenance addendum that you can include with your leases.

2. Regular Property Inspections

Conducting regular property inspections can help you identify and address issues before they become significant problems. By proactively maintaining the property, you can prevent many maintenance requests from occurring in the first place. Regular inspections also demonstrate to tenants that you are committed to maintaining the property, which can reduce the likelihood of unreasonable demands. It is also important for tenants to understand their role in helping to minimize maintenance expenses. Your tenant has a role in identifying issues, such as water leaks, as early as possible. A small 1-day water leak where the tenant cleans up the water until the plumber can fix the leak is generally an inexpensive repair. A long-term water leak, over the course of weeks or months can create a lot of damage, including mold, which can be very expensive to repair. Your tenant needs to know that, by lease, they are responsible for reporting issues like this to you in a timely manner. Otherwise, they will be liable for some of the repairs.

3. Prioritize Maintenance Requests

Not all maintenance requests are created equal. The best practice is to prioritize them based on urgency and impact. For example, an issue that affects the safety or habitability of the property, such as a broken heater in winter, or a water leak, should be addressed immediately. On the other hand, cosmetic issues or minor inconveniences can often be scheduled for a later date. We often wait until we have 3-4 non-urgent items at a property (or several nearby properties) and then schedule a handyman to do them all in one day to minimize trip fees.

4. Be Transparent About Costs

When denying a maintenance request, transparency with your tenants is key. Explain to your tenants why the request is not being fulfilled. Whether it's because it falls under their responsibility, it is purely cosmetic (not necessary) or due to budgetary constraints. Offering alternative solutions, such as providing them a simple DIY fix for a minor issue or a small rent credit, as an example, can show that you’re reasonable and willing to work with your tenant.

5. Maintain Open Communication

Open, respectful and consistent communications is one of the keys of a positive tenant-landlord relationship. If you need to deny a maintenance request, try to be empathetic, but firm, while offering a clear explanation. Maintaining a friendly but professional tone can help keep the conversation constructive and prevent any misunderstandings. If you are a landlord long enough, you WILL have a tenant who pushes your buttons! It is inevitable. However, once you “go-off” on a tenant, it will be hard to salvage the relationship, and having a bad relationship with a long-term tenant sucks. Always try to take the high road and keep your cool, even when saying NO.

6. Maintenance Trip Charges

Consider adding a maintenance trip charge to your lease. This would allow you to charge a maintenance trip fee back to a tenant each time they submit a maintenance request that requires the landlord, or a contractor visit the property, repair something, or have a professional inspect the area. The fee should be documented in the lease and can range from $25 to $100 per visit (we charge $75). We include this fee in our leases but waive the fee for all reasonable and customary maintenance requests. We charge the fee when we are getting unreasonable requests (inconsequential cosmetic items) or an inappropriate quantity of maintenance calls.

7. When All Else Fails

Despite best efforts, sometimes you simply cannot come to an equitable agreement with your tenant. They believe that you should be doing an expensive upgrade or repair that you don’t think is necessary. Or, they consistently call every other week with a laundry list of inconsequential items and refuse to stop. You have tried every thing you can think of but you cannot come to agreement and your relationship with the tenant has deteriorated and is not resolvable. In this case, you have a few options:

Offer the tenant the option to break their lease. We have found that forcing an unhappy tenant to stay in their lease when they are unhappy is not worth a few months of rent or the stress it causes us. There are two variants of this option:

1. 1. You can just agree with them on when they will leave and have them pay their rent through that date. You will have to absorb any lost rent from that date until you can get another tenant.
2. 2. Our preferred option is that we agree they can break the lease but the tenant remains responsible for the rent until we can get a new tenant. This option removes the financial risk of vacancy although it may be less appealing to the tenant.

Choose to not renew the lease. It is unusual for landlords to not renew a lease. Anytime you turn over a property, a landlord is exposed to make-ready and vacancy costs so 99% of the time you want your tenants to renew and stay as long as possible. However, in our experience, a bad tenant that causes you stress or makes the rental unprofitable, is not worth the trouble. We would rather not renew them, absorb the transition costs and start fresh with a new tenant.

In conclusion, balancing maintenance costs with tenant expectations requires a thoughtful, strategic approach. By setting clear expectations, prioritizing requests, and maintaining open communication, you can generally manage your property effectively while maintaining your profits and keeping your tenants happy. That said, there are occasionally situations that are not going to be resolvable and in those cases, the best solution may be to move on and find a new tenant.