All Forum Posts by: Joey Copper

@Elijah White

I’m also based in Wichita. A big part of my job is projecting maintenance and capex spend prior to investors purchasing properties. Shoot me a note if you would like to discuss your specific properties more.

@Bernie Neyer

Hello Bernie,

Thanks for sharing. If you don’t mind I’d love to hear your final build numbers when available. I’ve been compiling some new build costs around Wichita to see how effective a build and hold approach might be.

Imagine all of the possible maintenance items plotted across a spectrum. On the left side are items that you just reactively fix as they present themselves. On the right side are items that require proactive considerations.

Today I want to talk about items that fall on the furthest right end of our spectrum. So far to the right in fact, that it’s probably best to remove them from the spectrum and provide them a special dot off to the right hand side.

These are the items that you should just avoid altogether. If you are considering purchasing a house with any of these qualities then please reconsider. If you already own a house with any of these qualities then you had better add to your emergency maintenance reserve fund.

• Finished Basement Built Before 1980

There is nothing magical about 1980 but it’s a decent delineation between “old” foundation walls and “new” foundation walls. Once water starts infiltrating the foundation walls it is extremely expensive to fix. If the basement is finished then foundation and drainage work might only a part of the total expense.

• Galvanized Plumbing Supply Lines

What could go wrong when a rust susceptible metal is used for water delivery? One day it seems fine and then next day none of your faucets dispense water. This expensive problem is magnified if the pipe runs under a slab foundation.

• Orangeburg Sewer Pipe

Imagine wrapping tar paper into a giant straw shape, burying it 10’ below group, and relying on it as the sole route to remove sewage from your property. Crazy, right? Why was this ever considered a good idea?

• HVAC Vents in Slab Foundation

This invites a long list of potential problems. Bugs and musty odors are a few potential small problems. Collapsed lines and radon gases highlight some of the more significant problems.

• Knob and Tube Wiring

I’ve heard several electricians state that “theoretically” knob and tube wiring doesn’t pose any fire risk. The insurance companies that won’t underwrite a property with knob and tube wiring don’t seem to care about theory. Much of the world has decided this is unsafe and there is not an easy fix.

This is not a comprehensive list and there is definitely some regional (Midwest) specificity but the advice is sage nonetheless. Avoid these maintenance landmines and be rewarded with furthering your real estate journey.

Please comment and let me know the “landmines” specific to your area.

One funny thing about people is that while we are almost always well intentioned, we seem to do a lot of things that are just plain crazy. I, for example, still prefer to eat my oranges by dissecting each into their individual wedges, peeling back the skin on each wedge, and delicately crumbling each skinned wedge into the tiny teardrop pods that make up an orange. Is it crazy? I already know the answer, but, I'll probably still eat my next orange this way. 

Here is another example that I was luckily able to break free from - self managing my rental portfolio. Now that I'm on the flip side of this crazy behavior I want to lay out why this is crazier than my orange dissection ritual. 

To begin to frame things, investors can be categorized into three buckets:  

Bucket #1 - Those that hire a professional property management company

Bucket #2 - Those that self manage and love doing the work

Bucket #3 - Those that self manage and don't love the work

For those of you in Bucket #1 - Congratulations! I'm guessing you will run the world someday. 

For those of you in Bucket #2 - Really? Do you LOVE doing this work? Could it really be that you LOVE complete control instead? If you are sure that it's not a control issue or trust issue then by all means, manage away! I suspect this group is pretty small.

For those of you in Bucket #3 - I'm writing this article for you. Why? Because I used to be you! I didn't hate managing my properties (outside of a few late evening maintenance calls), but I definitely did not enjoy managing them either. I convinced myself that it was worthwhile because I was saving money doing it myself. And heck - I was even fairly qualified for the work. I could do most of the maintenance, I could turn a property in a few months time, and most tenants paid on time. The basic tasks were getting completed. So what's so CRAZY about this? Let me rephrase the reality of the situation...

The basic tasks were getting completed ------> Only the most basic of tasks were eventually getting completed. 

If we break down the more realistic statement we can see exactly why this behavior is CRAZY. 

"Only the most basic tasks"

I thought that completing maintenance requests, filling the property with tenants that passed a background check, and keeping an excel-based tenant ledger were enough. This list "checked the box" in my mind but didn't even begin to address the components of a successful rental portfolio. As a basic comparison, the below list is what I expect from my professional management company. 

Basic maintenance requests completed within 5 days, emergency maintenance requests completed within 2 days, preventative maintenance work twice a year, tenant-caused maintenance billed back to tenant, periodic inspections to make sure that the tenant is reporting necessary maintenance items, late fees collected, immediate 30 day notices posted, pet fees monitored and collected, move in inspections, move out inspections, move out damages charged to tenant, advanced notice on capital repair items, 30 day move out notices communicated, pre-leasing of property, tenant stay incentives, gutters cleaned, annual rent rate analysis, turns completed in 30 days, background checks on all occupants over 18, prior landlord references, co-signers on leases, direct deposit funds, monthly summary statements, online vacancy postings, post-eviction collections...

That in a nutshell is the different between managing a property and managing a property well. 

"were eventually getting completed"

Time is money. Just think for a second how much money is generated from decreasing vacancy rates from 15% to 8%. This alone will pay for professional management fees. How much money is going to be saved over time from having gutters clean out? How much better is tenant satisfaction (and average duration) if they get clear and immediate response to their maintenance requests? The benefits of timeliness are as real as the cash in your wallet. Every time you delay your property management responsibilities you are deteriorating your investment returns.

This is my best attempt to logically coerce you away from this CRAZY behavior.  If you are not already convinced to the point of taking action then I will try one last plea to your emotional side. Please, set aside your reservations, open up an additional browser tab, and begin researching for the best management company in your area. Your future self will embrace you with a warm hug.