Tuesday, December 19, 2017

Why Your Repair Deductible is Doing More Harm Than Good

When talking to a potential client, we are often asked, “Do you charge a tenant for a repair deductible when they submit a maintenance request?” The simple answer is “NO!” - here‘s why repair deductibles actually do more harm to the preservation of your rental property than they do good.

Benefits to forgoing the repair deductible:

Preservation of your investment.

The idea of repair deductible is great. The purpose is to prevent a tenant from calling frequently about frivolous issues such as burnt out light bulbs or loose door handles. However, what actually ends up happening is that the tenant will see something like a small drip under the sink and will put off reporting it to the landlord to prevent being charged the repair deductible. What was originally a small drip that could have been easily repaired with a service call by the plumber has now turned into a cabinet replacement and possible mold concerns from the ongoing leak that was never initially reported. The simple solution: don’t give the tenant a reason not to report the problem!

The tenant is basically the grounds-keeper of your property. They are there almost every day to keep an eye on the day-to-day functionality of your investment and when something goes wrong, you want them to let you know! Having an effective property manager to sort out the frivolous calls will prevent you from spending unnecessary repair dollars, and in turn, alleviating the concern that drove you to the repair deductible in the first place.  It is important to mention that excluding the repair-deductible requirement from your lease does not open you up to paying for damage caused by the tenant. If you send a plumber out to repair a garbage disposal and they find broken glass inside to be the cause of the failure, your tenant should still be held financially-responsible for the cost.

I can’t say this enough: It is important that the landlord maintains an open line of communication with the tenant in order to ensure the preservation of the investment. No one likes to get a maintenance call, but it is what we sign up for when we purchase as rental property.

Increased desirability to potential renters.

When a potential renter is choosing between similar properties, one having a rent deductible and the other not, which do you think they’ll choose? Ensuring the tenant that they will not be held responsible for normal maintenance/repairs of the house will give them peace-of-mind and will make your property more marketable.

Positive tenant-landlord relationship.

The tenant will appreciate not having the feeling of being nickel-and-dimed at every turn during their residency. While the allure of having extra cash to reduce your maintenance expense is tempting, a good landlord will think long-term and know that the tenant will end up staying longer in a home where they aren’t charged every time there is a common repair.

SUMMARY: The imposition of a repair deductible will make the event of a preventable and expensive maintenance nightmare much more likely. Keeping an open line of communication with your tenant will not only prevent small issues from becoming expensive ones, but it will also strengthen the relationship with your tenant and will result in a much more positive experience overall.

Lauren Ford
Advanced Property Management, Inc.

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