If you plan on being a buy and hold investor, you need a plan for minimizing costs associated with property maintenance and repair. As a landlord, your goal should be to provide a clean, safe, functional house for you tenants that generates an acceptable cash-flow stream.

The following are a few tactics you should consider which will help you reduce re-occurring maintenance and repair costs. My real estate partners and I invest in Arizona, so some of these principles might not apply for your geographic location, but most will. Also keep in mind that we focus on lower middle income single family housing that generates cash-flow, not high-end furnished rentals or multiple unit rentals. Some of the principals don’t apply if you’re trying to attract tenants interested in luxury or posh rentals.

 1) Eliminate the nonessentials systems – Eliminate any nonessential mechanical system that is costly to maintain and is likely to fail. This includes water softeners, reverse osmosis systems, those fancy shower heads, wall mount AC units, evap coolers (assuming that you have an central HVAC system), Malibu lighting, security systems, swing sets, and fancy blinds. Every nonessential system is just a liability waiting to steal your time, energy, and money. If you can’t charge more rent because the fixture/system is present, remove it! Few renters notice things like water softeners or Malibu lighting during the inspection. However, if those systems are in place when they move in they’ll expect you to maintain them.

2) Pools – As a rule, we avoid pools like the plague. They’re a tremendous liability (accidental drowning), costly to maintain ($85-$100 per month in chemicals and maintenance) and they don’t help the property rent faster or attract a better class of tenant. If you already have a rental with a pool heater consider removing the pool heater, diving boards, and slides. And make certain you meet all city and state codes related to pool barriers.

3) Away with carpet – Do away with carpet in the home. Sounds crazy, right? You wouldn’t think of living in a home without carpet. Not true for tenants. We find that carpet is generally good for 1-3 tenants (3 years tops). Carpet gets smelly, stains, and rips. Ever wonder why hotel rooms have that commercial grade, short haired, multi-colored carpet? It because people are hard on carpet. At a minimum carpet needs to be cleaned between tenants. That’s another $200-$400 a year in lost cash-flow. Consider replacing all carpet with a natural tile, even in the bedrooms. We’d never had a tenant so no to the property because of tile in the bedrooms. If you can’t bring yourself to do tile in the bedrooms, find a ceramic tile that looks like wood. If you can’t bring yourself to tile period, then consider an engineered wood floor. Ceramic tile is easy to clean and will last 10-20 years. The initial cost isn’t that much more for tile and it will put another $4000 to $8000 in your pocket over a 20 year period.

4) Landscaping – Do away with high maintenance landscaping. If you have a choice, install rock vs. grass in the front yard. Grass has to be mowed, another $50-$100 a month. If you have a grass lawn you can try and make the tenant responsible for landscape maintenance. But how many tenants come with a lawnmower and trimmer? Eliminate the hassle and the cost. Install rock (i.e. desert landscaping in Arizona). Treating the rock twice a year with a good pre-emergent will keep the weeds form coming up and will keep the city inspectors, or worse HOA inspectors, off your back. If grass is a must do a cost comparisons with real grass vs. synthetic grass. We did this at one property which needed grass in the back. Breakeven was 2.5 years for synthetic grass.

5) Roof Repair – The only thing harder on a house than a tenant, is water! Make sure you have a solid roof on the home. If possible avoid, flat or low pitched roofs, they’re trouble! Repair any unnecessary openings in the roof. Example; many homes built in Arizona in the 1950 thru the 1970 had roof mount units. At some point the home owner has usually upgraded to split system ground mount units. Problem is… they typically only covered the roof hole with a piece of sheet mental. Remove the old access hole and patch the roof correctly. Sky lights are another problem area. They’re a magnet for roof leaks. Again, they don’t make you more money, they only cost you money! Remove them and patch the roof.

6) Block Access to unauthorized areas – Few tenants that plan on renting for a year need access to the attic space. Nothing up there but a place for them to store junk (which turns into your junk when you get the property back). Again, I’m speaking about the small, non-finished, 150 degrees during the summer, attic space we see here in Arizona. If you have a shed on the property that you don’t want them using, put a lock on it. If you don’t want them messing with the electrical panel, install the type of screws that take a special tool to undo. If you don’t want them tinkering with the AC unit, secure it. If you have an automatic drip watering system that includes a timer clock that you want running on a regular interval, secure it. If you have sewer clean outs, make sure they’re covered and secured. We once had a tenant’s child fill the sewer line with rocks because child was able to remove the clean out cap by hand. $1500 lesson!

7) Home Warranties – Home warranties are basically insurance against major cash outlays for repairs. We have 30 single family rentals, and we have a home warranty policy and each and every one of them. Each year during our annual budget meeting, we analyze the cost of the policies against what we would have paid if we didn’t have the policies. I’m always looking for a reason to cut costs and every year the partner that handles the property management duties shows me that it’s a net cash benefit to have the policies in place. Each policy costs around $300 a year. If two AC units die in a given year, we’re money ahead. In some cases, home warranty companies will do a ‘cash-out’ meaning they pay you for the labor and materials as if a third party were doing the work, but you can do the work yourself and pocket the money saved on labor. It you choose to place home warranties on your rental, make sure your ready to be aggressive and persistent with the home warrant company. Be prepared for the run around sometimes. Be persistent, keep calling them. If you disagree with the assessment from the repair vendor (HVAC company for example), ask for a second opinion. The only time I wouldn’t recommend home warranties is if your rental pool was an average of less than 10 years old. Homes built in the last ten years are not going to have the same problems as houses that are 30-40 years old.