Question:
Hello Tony,
I’m talking to my JV partner and I think it’s a good idea to do annual property inspections. He thinks it will cost too much money and the tenant will give a list of things they want fixed during the inspection. Do you have someone do regular inspections on your property? If so, how often?
Sincerely,
MM
Answer:
This is a touchy area indeed. But, a system we have had in place for many years and we follow a very specific routine with a detailed list of items we inspect, interior and exterior, from the FIRST walkthrough inspection with the tenant BEFORE they move in on the first day of the tenancy. We tell all of our applicants that they will be signing a lease or monthly rental agreement that includes a quarterly (NOT yearly) ”Health & Safety” inspection. This means a representative from our company will be inspecting the interior and exterior of the house every 3 months. THIS TAKES TIME AND COST MONEY, SO WHAT? Now, why? Two reasons:
1- PREVENTION- If they are such good actors that they get under our screening radar, and they are actually problematic tenants such as – sell drugs, rob banks, are hookers, grow pot, have uninsurable dogs,( Pit Bulls, Rots, etc.) or they are just plain pigs, they will never agree to these inspections and move on; that will save US from a future costly eviction.
On the other hand, “Normal” tenants are typically very happy to hear that we will be staying on top of items under the category of “health & safety”
2- PREVENTION -Should you ever find yourself being threatened with a lawsuit or actually being sued for some item such as a fire due to smoke detectors that did not function properly because of battery removal by the tenant because it kept going off every time she burns dinner, or some tenants kid cutting their jugular while climbing through a broken pane of glass on a window they broke because they forgot the key to the house. It will be pretty tough to prove that you as the landlord are responsible due to deferred maintenance seeing as you have an established system that goes beyond anything any property management company has ever done to prevent problems.
Of Course we video record every inspection which includes recording the whole conversation with the tenant and the list of questions about any problems or required repairs (NOTICE I WROTE REPAIRS NOT IMPROVEMENTS) as well as have the tenant sign a sheet which indicates no problems were found during the inspection and they are happy with the condition of the property, or you both agree that the window was in perfect order when they moved in(as evidenced by the VIDEO and signed inspection sheet from the initial move in inspection) and they are responsible for the cost to repair the problem. Or the problem is a slow drains, or plugged up toilet due to the lovey child putting his plastic toys or bar of soap in the toilet (which would be on the tenant) or constant problems with sewer line backing up due to tree roots consistently blocking the main sewer line in which case it’s on YOU, the landlord, to repair before you spend 50% of your yearly rental income on Rotor- Rooter.
Inspections or the threat thereof is all about PREVENTION! As a matter of fact- GOOD property management is ALL about developing systems to PREVENT the expected and the UNEXPECTED possible potential nightmares. It’s about developing and implementing systems that help you identify minor issues BEFORE they can become HUGE disasters.
You don’t even have to keep them quarterly- once you confirm that the tenant is not problematic then BACK OFF! Just drop by every 6 months or yearly if you like- BUT you have gotten them to agree to quarterly which usually means THEY are probably pretty good people with not much to hide.
I like doing the inspections anyway because it also builds rapport with your tenants; they appreciate a landlord /management company that cares about taking care of maintenance items that make their lives difficult. So you increase retention.
The comment we hear most is either “we love you people because you’re always there for us” or “we hate you people because we can never get a hold of you when we have a problem,” which tenant do you think actually stays longer?
If you are more concerned about saving pennies on doing repairs that NEED to be done or items you anticipate tenants requesting, you have never been stung by the wasteful costs of litigation and you are headed in the wrong direction as a property owner. Dealing with tenants is an art form more than a science. When your decisions are based on fear of tenant requests, you’re out of control; YOU have to be in control of that conversation. BTW-Make sure you have GOOD insurance and READ the fine print on your policy- many will NOT cover if you can be proven to have contributed to the deficiency that caused the end problem /liability by the slightest neglect; some even require fire extinguishers in at least the garage.
Anyway, I think you get my point. Whether you decide to utilize yearly, monthly, quarterly or whatever inspections, it’s more about WHY you’re doing them. The end reason is what will help you design a detailed & complete system based on the outcome you desire or problem or situation you want to prevent. Inspections without a SOLID focused reason and subsequent systems are just a waste of time and money. Inspections based on well thought-out preventative reasoning, dictate their own process, make the costs negligible and are irrefutably INVALUABLE!
There are only two ways to manage real estate: With well thought out proven systems or by the seat of your pants; both are equally effective at delivering you to a predetermined end result.
If you want to learn more about how we have managed our stuff for the past 30 years, including surviving dealing with over 100 Section-8 tenants, two fires, a shooting resulting in a fatality on the front lawn of one of our rentals, a young child’s death while sleeping, dog bites, burglaries and a host of other problems- without filing insurance claims or litigation – watch for the property management class I will be teaching in 2014 and make sure your ass is in one of those seats.
Hope I’ve been of service! 😀
TA