Rental Property Maintenance: The Ultimate Guide

If you want to make money owning and renting out real estate, it’s important to take care of your rentals. Rental property maintenance is a key part of managing your portfolio and protecting property values. Rental maintenance is typically divided into five main areas including interior and exterior maintenance and move-in/move-out maintenance.

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The five key areas of rental property maintenance are:

1. Routine and Preventative Rental Maintenance

Routine and preventative maintenance is done on a regular basis and includes small scale projects and general upkeep of your rental property. It usually requires minimal skills or training. For example, interior routine maintenance could include checking fire extinguishers and smoke and carbon monoxide detectors to ensure they’re working. It also includes exterior routine maintenance such as snow and ice removal, mowing the lawn, and raking leaves.

It’s a good practice to have a schedule and a plan for maintaining your rental property. Of course, there will be times when unexpected maintenance issues arise, but by scheduling your weekly, monthly, quarterly, and annual routine and preventative maintenance, you will be able to maximize your time and financial resources.

Routine Interior Maintenance

The interior of your rental property requires routine/preventative maintenance to both the common areas and the individual rental units, whether they have tenants or not. In the common areas you are responsible to ensure that all entrances and exits are clear, passable, clean, and free from damage. Landlords must also ensure common areas have adequate lighting as well as working fire extinguishers and smoke and carbon monoxide detectors.

Within individual rental units, routine maintenance varies. Landlords aren’t required to clean up after tenants, but should make sure appliances (if landlord owned), smoke detectors, plumbing, electrical, windows, and doors are all working, safe and secure. A benefit of performing routine maintenance on rented units is it gives you an opportunity to inspect the unit on a regular basis. Be sure to give tenants at least 24-hours’ notice before entering the unit.

Interior Preventative Maintenance for Rentals

Another good annual practice is to have the municipal building inspector walk through and check for sanitary code and safety violations. Not only will this ensure your property meets local standards, it can also protect you if a tenant tries to withhold rent by claiming the property is not up to code or uninhabitable.

In addition to interior routine and preventative maintenance, you’ll need to perform maintenance to the exterior and grounds of your rental property.

2. Routine Exterior and Grounds Rental Maintenance

Exterior routine maintenance gives curb appeal to your rental property, provides attractive spaces for tenants to relax and enjoy, park their vehicles, and reduces vandalism and unwanted wildlife. As with the interior, exterior maintenance requires weekly, monthly, quarterly, and annual work. The exterior of your rental property often requires more seasonal work than the interior.

Routine Exterior Maintenance for Rentals

As you schedule ongoing maintenance for your property, use our Rental Property Calculator to make sure your property is cash flow positive as you plan your rental maintenance budget. You also want to plan for other types of routine maintenance, including when tenants move in or move out.

3. Move-In/Move-Out Maintenance

Rental property maintenance is also a necessary step when existing tenants move out and new tenants move in. You want to be thorough, but also move quickly to avoid vacancies and lost rent. To help, we’ve created a Move-In/Move-Out Checklist you can use as you inspect your units during tenant turnover.

There are state and federal laws regarding maintenance and habitability that landlords need to comply with when overseeing the maintenance of their properties. Some are tied to your routine and preventative maintenance, while others apply when tenants move in and move out.

Tenant Screening

Tenant screening including background checks, rental and eviction history, and calls to previous landlords, can help you ward off potential property damage that will increase your rental maintenance costs and take time to address. Find solid tenants with a good rental history and avoid extra maintenance problems later.

TurboTenant is a property management real estate software for both landlords and renters. Its features include extensive tenant screening, reliable customer support, and rental marketing among others.

Statement of Condition

While it’s not required by every state, it’s a good practice to have tenants inspect their rental unit within the first two weeks of moving in and sign an apartment condition agreement or statement. This document allows you and the tenant to acknowledge in writing any pre-existing conditions in the apartment that you may have missed beyond what is considered reasonable and normal wear and tear.

Mandatory Lead Paint Notification

If your rental property was built before 1978, along with your lease, you’re required to give tenants the mandatory lead paint notification. This disclosure includes an EPA-approved pamphlet on identifying and controlling lead paint, disclosure of any known lead paint on the premises, and a “Lead Warning Statement” confirming the landlord is in compliance. If you’re aware of lead paint, you are required by law to remediate it.

Security Deposit Statement

When collecting a security deposit from tenants, you need to include with their lease a Security Deposit Statement that explains how you will handle their security deposit. In some states, security deposits are held in a separate interest-bearing escrow account with the interest given to the tenant upon each anniversary of their lease. The statement should include the name and address of the bank and the timeframe in which it will be returned when they move out.

If the tenant stops paying rent or if there are damages to the unit considered beyond “normal wear and tear” you can have those items fixed and deduct it from the tenants’ security deposit. You will need to provide invoices and/or receipts for the repairs and return any remaining balance to the tenant.

Move-Out

When a tenancy ends you’ll want to walk through the unit with the tenant, inspect the condition and have them return any keys to the property. The expectation, specified in the lease, is that the unit is empty of all tenant belongings and in “broom swept condition” meaning they didn’t leave any debris and the floors have been swept or vacuumed. If everything looks good, you can return the security deposit per your lease agreement.

After a tenant moves out and before a new tenant moves in, take photographs of the “before” condition and include the time and date stamp on the photos. Keep these photos in a safe place and back them up if you keep them electronically. This will help avoid confusion if you need to withhold a security deposit for damages the tenant claims were pre-existing.

Even if the tenant returns all the keys to your rental, you should consider changing the locks for an incoming tenant. When the unit is vacant, you can do a deeper cleaning and fix any normal wear and tear. Use this opportunity to make the unit shine and be move-in ready for the next tenant.

Avail offers a full-service property management system that helps both landlords and tenants. Avail helps landlords manage rental maintenance, find and screen tenants, sign leases, and collect rent right online.

4. Tenant Calls and Issues

In addition to knowing how to maintain your rental property, landlords are required to work with tenants to manage any repairs and maintenance. In some cases, a tenant may move out and leave some or all of their belongings. How you handle this can vary by state. In some states there is no landlord “self-help,” meaning you cannot just move their stuff out of the unit and change the locks.

While you have responsibilities to tenants to maintain habitable conditions, your tenants also have responsibilities as stewards of your rental property. Your lease should clearly state what the expectations are for both the landlord and tenant and you must make certain that the expectations fall within your state’s laws. For example, some states do not allow landlords to require tenants to shovel the walkways since this is considered a common area.

Here is a list of some reasonable expectations for tenants:

• Tenants cannot block or alter common areas, entrances, exits, lighting, or store their belongings outside of designated storage spaces.
• Tenants are expected to abide by the lease regarding maintaining a clean and habitable unit.
• Tenants should not change the locks or prevent the landlord from entering the unit for inspections and repairs if the landlord has given reasonable notice (typically 24-hours).
• Tenants shouldn’t remodel, paint, or renovate their unit without prior landlord consent. It’s a best practice to require written consent.

Withholding Rent

If you’ve been given a reasonable amount of time to fix a maintenance issue and have not done so, in some cases the tenant can withhold rent or pay for repairs and deduct the costs from their rent. If the tenants withhold rent, they should put this money in an escrow account so that once you make the repairs, they can pay you and avoid potential eviction. How this is handled varies by state, but there are a few helpful things to know.

Typically, a tenant informs the landlord about the maintenance issue, preferably in writing.

The maintenance issue generally needs to be about basic structural, health, and safety standards that make the unit unlivable. For example, a leaking roof, electrical hazard, or sewage backup would need to be fixed in a timely fashion. If the tenant created the damage, they’re responsible for the costs to fix it. Include these responsibilities in your lease.

If the maintenance issue makes the unit unlivable or cannot be fixed in a timely fashion, you may be required to move the tenants into temporary housing and foot the bill while you make repairs. Therefore, it is best to budget for and have a regular schedule for routine maintenance and repairs and respond to calls from tenants within a reasonable amount of time.

If you choose to outsource your maintenance, it can be challenging to coordinate schedules with contractors, so call as soon as issues arise.

5. Outsourcing Rental Maintenance

As you can see, there is a lot involved in maintaining rental property. You may have the skills and want to handle property improvements yourself to save money. Some investors prefer to outsource their maintenance, while others use a combination of DIY and outsourcing. This will save you time and money. Check out our top picks for property management software that will help you through the process of marketing, renting, and maintaining your property.

Here is a list of the different types of professionals you may hire and a range of their fees. You can get specific information by getting estimates from your local service providers and contractors.

Some typical costs of local contractors include:

• Pest control — $100-$270 per job
• Plumbers — $45-$200 per hour
• Electricians — $50-$100 per hour
• Snow, rubbish, lawn, yard cleanup — $30-$80 per job
• Painters — $50-$70 per hour
• Cleaners — $25-$45 per hour
• Carpenters $30-$50 per hour
• HVAC — $45-$50 per hour
• Appliance repair — $100-$200 per hour
• Carpet cleaners — varies, but typically $35-$45 per hour

If you hire a property management company it will usually handle your rental maintenance. Management companies typically charge 6%-10% of your gross monthly rental income. You may be able to pick which maintenance items you want them to handle and might be asked to provide a repair reserves fee of $200-$500 that is held by the management company to cover your rental maintenance.

Rental Property Maintenance Costs

To help keep your rental property profitable, it’s a good idea to plan and budget for routine, preventative, and unexpected maintenance. This should be part of your pre-purchase due diligence; but if you already own your rental property, it’s never too late to start. Expect maintenance and repairs to cost more than anticipated. Use our rental property calculator and a cash flow projection as tools in your planning.

Cash Flow and Planning

A cash flow forecast is a goal-setting tool. It is a plan that shows you how much revenue you expect to receive, and how much you expect to pay out in expenses over a given period (typically one to three years). While the cash flow forecast is projecting something that has not yet happened, it can help you stay on track when budgeting your rental property maintenance.

In your forecast, consider increasing your projected expenses since maintenance costs can be more than anticipated. Plan for routine maintenance and budget for unexpected repairs. When buying a new rental property, also consider the distance you need to travel and the rates subcontractors in that area charge. If there are homeowner’s association fees (HOAs), understand what is covered and which maintenance you’re responsible for.

It can be challenging to accurately estimate maintenance costs and to know when to repair instead of replacing items like appliances. Generally, a repair is less expensive than a total replacement. However, if the repair is temporary, or the costs including labor are near replacement costs or more you may want to replace it instead.

Budgeting for Rental Property Maintenance

With so many maintenance and repairs items, you want to make sure you’re covering what is necessary and avoid overspending. There is no single way to estimate rental property maintenance.

Here are some formulas investors use when calculating how to maintain their rental property:

• 1% Rule: Maintenance costs about 1% of the property value per year.
• 50% Rule: Maintenance and repairs are equal to 50% of your total operating costs.
• 5x Rule: Maintenance costs average 1.5% of monthly rental income.
• Square Foot Formula: Maintenance will cost about $1 per square foot per year.

For example, if you use the 1% rule and your property is worth $250,000, your annual maintenance costs will be $2500, or about $208 per month. On average, property maintenance costs can run from $75-$350 per month or more depending on the square footage of your property, contractor fees, extent of repairs, age of the home, and location.

Managing Finances for Rental Property Maintenance

Whether you outsource to a management company or maintain your rental yourself, you’ll need to manage your maintenance finances, including budgeting for unexpected repairs. The best way to do this is to set aside some of the positive cash flow from your rental income each month to cover routine and unexpected maintenance and repairs. You’ll then have a pot of money to draw from.

Maintaining rental property can be expensive. Luckily there are some programs that can help offset some of your costs. The Department of Energy has a database of rebates, incentives and low-cost financing for purchasing energy efficient appliances, HVAC systems, and for other energy conservation projects to your property. Also check with your local utility companies for additional low to no cost programs and services. These can add up to additional savings should the need arise.

The Internal Revenue Service (IRS) allows certain tax deductions for maintenance and repairs, credits for renewable energy and efficiency upgrades. In some states, there are also tax credits for deleading a property.

Rental Property Maintenance Tax Deductions & Insurance

Costs to improve and maintain your rental property are deductible. However, rental property tax benefits are different from routine maintenance or repairs as opposed to long-term improvements to a property. While rental maintenance costs can typically be deducted from your taxable income, property improvements often need to be depreciated over time.

Tax Deductions and Depreciation

Maintenance, cleaning, and repairs are considered a normal, ongoing part of operating the rental property, and can be deducted from rental property income. Improvements, however, are considered long-term benefits to the property and are depreciated between five years and 27.5 years.

Depreciation is a rental property tax deduction for the hypothetical wear and tear on your building as if it were an expense. Even if you’re taking deductions for the actual maintenance costs, accounting principles allow you to take advantage of the future costs through depreciation. It’s important to keep accurate records and work with your CPA or tax professional to ensure you’re aligned with IRS guidelines.

Rental Property Insurance

While landlord insurance may help provide protection against some unexpected losses, not every situation will be covered. Maintenance and equipment breakdowns are typically not covered. Your insurance may help pay to replace your refrigerator if it’s damaged in a fire, but if it breaks down due to normal wear and tear, your insurance likely won’t cover the cost of a new one.

Keeping your property well-maintained and keeping maintenance records, including photos, will help you show that the property was in prior good repair if you need to file a claim for repairs from unexpected property damage.

Bottom Line

Maintaining rental property requires financial planning, scheduling of routine and preventative maintenance, knowing what to do when tenants change or unexpected issues arise. Hiring contractors and outsourcing rental property maintenance to a management company can save you time and money, as can an understanding of the tax benefits and insurance.

When thinking about rental maintenance consider using Avail’s landlord maintenance tracking. Avail has in-app instant messaging, allows you to upload photos of the issue, and offers suggested contractors, Avail makes maintenance easy. Landlords can also manage their first property for free with Avail and get access to resources to help them grow their portfolio or manage properties more efficiently.

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