How to avoid expensive maintenance on investment property

How to avoid expensive maintenance on investment property

Don’t let repair bills ruin your return on investment

Investment property repair and maintenance bills can crucify your returns. In this article, I’ll discuss why so many beginner property investors get crushed on their first property investment. You’ll discover how you can avoid making the same mistake. And I’ll let you in on the strategy I use to avoid expensive maintenance on investment property.

All is not as it appears on television

Inexperienced property investors regularly get caught out by how expensive repair bills can be. They watch television programmes such as ‘Homes Under the Hammer’ and get duped into believing that making a killing in property is easy.

The formula they propose is simple: buy a run-down hovel, spend a few thousand and the odd weekend doing it up, and rent out or sell the resulting modern mansion. The job was done. No fuss. No hard work. Just tens of thousands in profit.

What these programmes don’t explain is the unexpected issues, and cost and time overruns. Rising damp that hadn’t been spotted. Floors and walls that must be replaced. Problems with water pipes that hadn’t been foreseen. The need for a complete re-wiring. Suddenly, a £7,000 becomes £27,000 bill.

Is this type of investment property worth buying?

Almost completely ignored is the hard slog these investors have put in. Twelve and fourteen-hour days, seven days a week, as they ‘save’ money by doing the work themselves.

It’s not an investment; it’s a full-time job.

And with all the problems, a six-week project takes six months. But this is okaythe investment property increased in value by £50,000. That’s a £33,000 profit in six months. Not bad for two people working 90-hour weeks for six months! Works out at around £7 per hour. You could earn more working in McDonald’s.

If you invest in this type of property, not only have you got to know what you’re doing, you’ve got to be prepared to get your hands very dirty. Oh, and find a pile of extra cash to pay for the unexpected.

Five tips to avoid a repair and maintenance migraine

If you insist on buying to renovate and refurbish, here are my top five tips to avoid a repair bill nightmare:

1.      Never underestimate the work that might be needed

Understand that when you buy a house that needs repairs, they’re probably going to be more expensive than you estimate. Never buy without a comprehensive property survey. It costs a few hundred pounds but could be worth every penny. They’re professionals and trained to spot every potential problem.

2.      Avoid some properties

If your survey mentions any structural issues, then don’t buy. A problem with foundations is the start of a money pit to be avoided when investing in property.

3.      Assess the repairs professionally before investing

Okay, so you’ve found the ‘ideal’ property, and you’ve had it surveyed. There’s a mould issue. Getting rid of the mould could be simple, but it could also be difficult. And difficult could be spelt with lots of £ signs. The problem could be caused by a small leak or a major issue in the foundations of the property. So get a mould expert in to fully assess – if you get rid of mould in a home, the effort will be for nothing if you don’t prevent it from returning.

Old electrics are another common problem often overlooked. Ignore these at your peril – old wiring is a fire hazard. The light switch that keeps tripping the fuse box may not be the easy fix you anticipate. If the electrics need to be replaced, the cost could be in the thousands.

The big thing here is to bring in the experts before you invest. Electricians, plumbers, and gas technicians. Know exactly what it is you’re buying before you sign on the dotted line.

4.      Older investment properties cost more to repair

The older the property, the higher the repair bill is likely to be. You may also encounter problems with lead-based paint and asbestos.

Many investors flinch at the new build premium. However, in my estimation, there are around 35,000 reasons to laugh at the scary new build premium – and each one of them is a £ sign.

5.      The more repairs needed, the longer you must self-fund property investment

One of the greatest advantages of investing in property is that other people’s money pays for it. But costly and time-consuming repairs could destroy your investment before it is let.

The longer the repairs take to do, the longer you are the one paying the mortgage and other bills. Your return on investment could be trashed for years by a few months’ delay in renting. (And, existing property tends to rent at a lower price than new.)

I don’t encounter these issues because I no longer invest in existing, older properties. I learned my lesson early in my property investing career.

I bought a refurbishment property, and it nearly cleaned my out. The issues were more than I had anticipated. The refurbishment slipped behind on a weekly basis. Costs overran and then overran some more. To contain those costs, I had to commit every spare minute of my life to helping with the repairs. After almost eight months, I was relieved to sell the property and lose only a few thousand pounds.

By investing only in new build and off-plan property, I avoid all the potential horrors I’ve highlighted above. Sure, the property costs a little more; but I can let it quicker, and there’s more competition from prospective tenants – pumping up the rental valuation. Oh, and don’t forget that new build properties benefit from NHBC guarantees.

Contact one of our team today on +44 (0)207 923 6100, and discover how investing in off-plan and new build property could be your key to hassle-free passive income and outstanding capital gains.

Live with passion

Brett Alegre-Wood

About the Author

Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Gladfish. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids.

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