Getting to ‘The Price Is Right’ – Taking the ‘Guesstimates’ out of Home Repairs
There’s a fun challenge on ‘The Price is Right’ where contestants need to guess the price of a product and the closest one to the actual price wins. Well, really most of the challenges on ‘The Price is Right’ revolve around this central theme. It’s one thing to mistake the price of a can of soup and lose out on winning a year's supply of that soup on a national TV show, but it’s another to fail miserably at estimating the price of roof repairs and be out of pocket several thousand dollars.
Many industry experts such asmortgage-data firm HSH Associates suggest you should set aside money yearly for repairs to the tune of 2% of the property’s value. Variables such as the age of the property, location, the weather patterns found in that region, as well as whether it is a single-family, townhouse or condo or multi-unit property all play a part in this calculation. For the most part, townhouses and condos include insurance costs in the HOA fees, therefore helping with repair fees.
Property is a solid investment that grows in value as time passes, but this type of investment is only as solid as the amount re-invested in general maintenance and upkeep. Really, it’s unavoidable and to neglect to take care of this will only result in having to pay more as the situation intensifies. What starts out as an easy to fix problem in a housing unit could worsen over time and result in even more money out of pocket to take care of it.
But can you work towards becoming accurate in estimating how much home repairs will cost? Many call in the help of experts, which is advisable in some circumstances, however, developing the knowledge to be able to assess the costs as a property investor is a skill well worth honing.
Use Reference Guides
Gather a good collection of guides and check these against the local pricing in your area. It’s good practice to estimate a bit on the high side and build in a bit of a buffer to protect from any errors or areas you may have overlooked.
Leverage Digital Resources
Research and you’ll be able to find tools such asHome Advisor’s Home Repair Cost Guide or thehome cost spreadsheet created byDennis G. Stearns, a financial planner in Greensboro, N.C. These are but a few suggestions for useful resources that can help you obtain accurate estimates.
Accurately Assess What You Can and Can’t Do
There’s no need to be a hero or to try to save money by adopting the DIY mentality when it comes to repairs. There are times when it’s best to admit that we’re not experts at everything and rely on the help of others. In some cases, this kind of thinking may result in having to spend additional money out of pocket to repair one’s well-intentioned repairs as well as the additional time it may take to do the job of a professional. Yes, it’s a bonus if you can do some of the work, but don’t count on it and it’s best to calculate based on not being able to.
Keep a list of all of the maintenance work you foresee having to do for each of your rental properties. Use this list as part of your records for each to ensure you have a complete file containing all receipts, invoices and relevant paperwork. Create a checklist to be used for each property when you conduct regular inspections and use the results to set reminders in your calendar for when to schedule or conduct this servicing.
Admittedly, we’re slightly biased in our belief that professional property management companies such as Renters Warehouse are providing a valuable service to property investors, not only to help take the guesswork out of home repair estimates, but to maintain and repair investment properties. With a wide network of reputable and experienced suppliers to call upon, the cost and time savings that outsourcing this area of your business provides will pay for itself time and time again. There’s no ‘guesstimate’ about that.