The real cost of looking after properties long term is so overlooked. It’s a crucial yet often overlooked aspect of long-term property investment and it frustrates me to see investors who fail to properly consider the inevitable need for property refurbishment over time. Some base their numbers on the initial purchase and some refurbishment but no follow up costs for the medium to long term.
KEY TAKEAWAYS
- Consider long-term maintenance and refurbishment costs: Investors should factor in the inevitable need for property refurbishment over time, including major expenses like boiler replacements and roof repairs.
- Mitigate costs through dilapidations clauses: Landlords can protect themselves by including strong dilapidations clauses in leases, ensuring tenants are responsible for maintaining the property’s condition.
- Take deposits and set expectations: Collecting deposits from tenants and setting clear expectations for property upkeep can help cover wear and tear costs when tenants vacate the space.
- Establish a sink fund for maintenance: Setting aside a portion of rental income for a sink fund can help cover big-ticket maintenance items like full property refurbishments in the future.
- Stay proactive with maintenance: Regularly maintaining the property, addressing issues like water damage promptly, and keeping communal areas in good condition can help prolong the need for major refurbishments and preserve rental income.
BEST MOMENTS
“It just frustrates me a little bit that people don’t really think properly about long-term investment.”
“There’s some really cast iron dilapidation clauses.”
“At some point you’re going to need a chunk of change for a full refurb.”
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