Don't Let a Little Maintenance Stop You
Don’t let the fear of future maintenance put you off investing now...
Howdy. One thing I’ve noticed a when talking people about property is this growing fear of future maintenance.
Not actual current maintenance, such as “hey that wall has a hole in it we’ll need to get that fixed”, rather future potential maintenance like “that tap might leak one day and we’ll need to call a plumber but I’m already busy and oh my god”. I think it's tied to how busy our lives have become and how we are always responding to something now.
It feels like the idea someone living in a property and wearing out a vanity over several years of paying you rent, to the point where you need to get it replaced, has become such a future drama in our minds that we put it ahead of earning tens of thousands in cashflow and hundreds of thousands in capital gain over that time. A vanity is a few hundred dollars plus someone spending a morning swapping them over for you. If you have a property manager you don’t even need to be involved (more on that in a few paragraphs).
Property has some massive advantages to my mind over other investment classes, the two main ones are:
- Leverage - other people’s time AND money
- You can improve the value of your asset
I tend to think of renovating as using #1, leverage of the bank's money and other people’s time, to achieve #2. Some people do their own work to save money but you don’t have to.
I’m typing this from a cafe after visiting a house that I’m getting done up. The money to buy the house came from the equity in other properties (leverage), the cash for the renovation from built-up cashflow, a builder is running the whole job (leverage) and a designer came up with most of the important stuff (leverage). The value of the house should finish up about $80-100k more than I have put into it (value add).
Back to maintenance… I just skimmed my last month’s PM report. There was an issue with a washing machine (fixed) some extra garden work (done), a new heat pump and fan for HH for one rental (installed, invoice on its way). They sorted the healthy homes reports and some cleaning work the tenant needed to do they have checked off. Properties are in Wellington, the cafe I am in is in Rotorua. Maintenance goals achieved for another month.
A note on new builds. I think they’re great. You are paying current construction costs but you get everything modern, high standard, easy, usually a central location. If new builds work for you cashflow-wise and you can keep investing, then go for them. If they don’t, then don’t. Just pick your strategy based on your long term property goals, not a short term fear of having some lino wear out within 5 years and eventually needing stick in a new fan in the bathroom… I can attest that others will do that for you and you PM can sort it all.
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