Ways To Lose Money In Real Estate #7 (Maintenance & Repairs)
Homeowners have a lot of responsibilities, including maintenance and repairs on their home. These repairs, especially if routine maintenance is neglected, can be quite costly. And they don’t bring added value to your home.
See other videos in the series here.[Video Transcript]
Hey Y’all, Zach McDonald, your real estate agent with Real Property Associates, and we are going to continue discussing ways to lose money in real estate. This video, I’m going to focus on repairs and maintenance. The maintenance/repairs on your home are actually potentially a quite large way to lose money in real estate and we’ll talk about that here as we move forward. I’ll just start off by saying that as a homeowner you have a lot more responsibility than you do as a renter. So if you’re renting, the homeowner or landlord is responsible for large things related to the house. So if the roof leaks, you call your landlord. If the plumbing bursts, you call your landlord. If the sewer fails, you call your landlord, but if you’re a homeowner, you are the one that’s responsible. The buck stops here.
One of the big ways, I think that people lose money in real estate, and I’ve seen this, is where they don’t do the routine maintenance and then they have a larger problem down the road that they have to then fix. With a car, we can start with a car, it might be a simpler analogy if you don’t get your oil changed and you don’t get your routine checkups, if you’re never changing your oil, eventually you’re going to have major engine problems, which are going to be expensive, and you’re going to devalue your car and you’re going to have to fix it. If you’re doing the same thing with your house and you’re not maintaining it. If you’re not painting your house regularly, eventually the paints going to fail, and now you’re going to have to replace the siding and repaint. Not just repaint, or that paint job’s going to be significantly more expensive than it would have been to just do your normal maintenance on it.
Same thing with the roof. If you don’t replace your roof in time or you’re not doing the proper maintenance on your roof and there’re different kinds of roofs. But if you aren’t doing the proper maintenance, now you’ve got a roof leak and now you start to damage the trusses and the plywood below the roof. Now, all of a sudden you’ve got a lot more expensive and major roof repair and roof replacement than you would’ve if you would’ve just done the proper maintenance and replaced your roof when you needed to. Those are just a couple of examples, but the routine maintenance is a huge part of being a homeowner and that can prevent more major expenditures down the road.
Now, as a homeowner, you’re always going to have to replace the roof eventually and replace the furnace eventually and repaint the house eventually. Those are all just part of being a homeowner. Those are expenses that you have. I would recommend setting aside money on a regular basis for home repairs and better yet home maintenance so that you don’t have large repair bills.
There’re some things that you could practically do. You mean you could set up calendar reminders or set up, maybe have a system and whatever that looks like. You could set reminders on your phone or whatever, Outlook or something like that where if you have a system set up, you can have reminders that tell you, “Hey, it’s time to go into the crawl space and make sure there’s not a bunch of water sitting in there damaging the insulation and the pillars below the house.” It could be, “It’s time to go up in the attic and make sure we’re not having any leaks.” Or, “We don’t have any rodents running around.” Those are all things that, if you have rodents running around in your attic, you’re going to then eventually have damaged insulation and you’re going to have to clean them up, get them out, replace the insulation. There’re just all these little things, right? If you catch the one rodent right away and seal off the entrance, now you don’t have a major problem that you have to fix.
Maybe you get your sewer line flushed out every couple of years or at least do a sewer scope to see how it’s looking. There are a lot of different things and I’m not going to be able to talk about them all in this video, but that home maintenance piece is really important. And home maintenance does cost money, but it’s a lot cheaper than the major home repairs that could come as a result and those home repairs aren’t going to be increasing the value of your home, they’re just going to be maintaining it.
And as an owner, something else to just think about, as a homeowner, the structure of your house is always decreasing in value, so you have depreciation of a structure and appreciation of the land value. So the land is what’s going up in value the most. Your structure, unless you’re continually maintaining it, is going to be depreciating in value. One of the things that, as a homeowner, you can do that regular maintenance keeps that value of the structure up if you’re not doing the routine maintenance, now you’re losing value in your house and when you have those major repairs, all it’s really doing is bringing it back up. It’s not adding any value to your house.
So it makes a lot of sense to do the routine maintenance when you need to do it instead of the major repairs when you have to do it, because that is how you’re going to lose money. I know that was a lot of content, but the big idea is to maintain your house. It’s wise and it will save you money in the long run and keep you from losing money in real estate.