Rental property inspections – Crucial to your success!

Rental property inspections – Crucial to your success!

protecting your property investmentWe all know the importance of having an inspection done before you purchase a property, whether you plan to use it as an investment/rental property or your own home. And we’re very aware of the value of preventative maintenance in our own homes and typically conduct regular inspections of the condition of our homes and grounds.

However, as real estate investors, it’s also important to understand that regular, routine inspections and preventative maintenance are also crucial for you and your rental properties’ overall success. Whether you conduct these routine inspections yourself or arrange for them through your property management company or an inspection company, these inspections are key to maintaining your property in good condition, protecting your investment and realizing the best possible rental income.

As a landlord/real estate investor there are four types of inspections that should be conducted on a regular basis: move-in, move out, occasional drive-by, and preventative.

Move-in inspections:

move-in inspectionThese inspections should be documented and conducted with the incoming tenant. The move-in inspection establishes the baseline for the condition of the property between both parties and confirms if there are any outstanding repairs to be completed by the landlord. This document should be dated and signed by the tenant as it is your document establishing the condition of the property upon move-in.

It’s useful to take photos of all rooms/areas, appliances, cabinets etc., especially of any identified damage. Include the photos with the signed move-in inspection document; if you use a property management company this type of inspection would be beneficial to be a part of their services.

Here are two useful sites for move-in checklists that are easy to adapt to your specific needs (note they are written from the tenant’s perspective): sample checklist for furnished suite and apartment inspection checklist.

Move-out inspections:

move out inspectionThe move-out inspection confirms the condition of the property and identifies any damage beyond normal “wear and tear” that occurred during the tenancy. Damage identified at move-out that was not present upon move-in impacts the security deposit – this is why a record of the move-in inspection and photos of the condition of the unit upon move-in are important. A move-out inspection also provides you with the opportunity to identify necessary repairs, replacements or renovations that are the result of expected “wear and tear”. Lastly, the results of the move-out inspection will help you plan repairs and changes that you might wish to address before renting the property again.

These inspections should also be documented and conducted with the outgoing tenant, as they offer mutual protection if there are any disputes regarding the security deposit. Once again, you should conduct this type of inspection or ensure that it is provided by your property management company.

Drive-by inspections:

drive-by inspectionThis is a visual inspection of the exterior of the property and is a useful way to determine if there are an obvious exterior repairs needed, if the property is being maintained as expected, if there are any signs that might prompt you to conduct an inspection of the interior of the property. If you do not live in the location of the property and you make a trip to the city where the property is located you should conduct your own drive-by inspection; it may be good to do this unannounced so that you get to see the property as it would be on a day to day basis.

A drive-by inspection does not require any notice to the tenant, nor can you access the property without prearranging it with the tenant unless it’s part of common property as in the case of a pool or parkade in a strata/condo-titled building. If you’re not conducting this inspection yourself, your property management company should provide this service along with a regular report; you should confirm the frequency of such inspections with them.

Regardless of whether you’re conducting the drive-by or your property management company does regular inspections, I recommend that they be done at least quarterly, preferably monthly.

Preventative:

inspection checklistThis type of inspection should be conducted annually, if not quarterly, and does require notice to the tenant as it includes the inspection of the interior of the property and its systems. It’s important to establish an effective, consistent process for the preventative inspection of your investment properties.

At Strategic Investment Realty, we always require at least an annual preventative inspection as part of the property management company duties for our clients.

When working with a property management company or inspection company for preventative inspections it’s important that you have a clear understanding of what they are inspecting, how frequently inspections are completed and what reports are available or you’ll receive. It’s also important that you review the reports in order to be prepared for planned or seasonal maintenance, appliance and/or systems replacement, etc. Preventative inspections also enable you to create a plan for non-emergency maintenance or replacement in the medium and long-term.

With this in mind, it’s often useful to conduct quarterly inspections in conjunction with the change of seasons.

Here are the items I keep in mind when conducting a preventative inspection and when reviewing reports from my property management or inspection company.

When conducting a preventative inspection remember to use all your senses (although using your sense of taste is optional):

Exterior:

  • Look at all visible surfaces and ensure they are clean and in good repair, fix items at the first sign of damage or wear – don’t wait for them to become bigger problems
  • Check for areas of sponginess, signs of pooling water, cracks or staining
  • Gutters, downspouts and drains should be functional, fit together properly and not have any leaks or other signs of deterioration
  • Ensure exterior windows, doors, skylights, etc. open and close properly, are not fogged up if double paned, have proper seals and/or weatherproofing, are intact and have no moisture, mold or mildew built up
  • Landscaping should be in good order; shrubs and trees shouldn’t impinge on the building, walkways, entrances or services (electrical, gas, septic, etc.); ensure that there aren’t any blind spots that would impact security for the building and/or tenants
  • Paint and/or stains should be intact and any peeling or wear of exterior surfaces should be addressed promptly
  • Look for signs of pests or infestations; take appropriate prevention measures for pest control as warranted
  • Fences and landscaping structures should be in place and in good repair
  • Even if the exterior areas are part of common property, it’s good to have a clear sense of how things look and whether they are in good repair

Interior:

  • Stand in the unit’s entrance and take a moment to smell the air and look around; unusual or unexpected smells may indicate the need for further investigation
  • Tenants should maintain their home and your property in a sanitary manner and there should be access to emergency exits or equipment such as fire ladders or escape stairs
  • Check the lights in each area; light switches should be in good working order, flickering lights should be checked out, switch boxes should be installed properly and not loose or broken
  • Cabinets and built-ins should be level, drawers and doors should open and close properly, hinges, latches and hardware should be in place, functional and not loose; shelves and cabinet bottoms shouldn’t sag or bulge
  • Appliances should be clean and in good working order, remember to check appliance lights, clocks and switches to ensure they are working; make note of the overall condition of each appliance and estimate when it might need to be replaced; ensure appropriate preventative maintenance is conducted. If your property has a dishwasher that is ten years or older you should consider replacing the hoses as they can become brittle and cause a leak.
  • HVAC systems require routine maintenance and may need professional servicing and/or inspection from time to time. Conduct a visual inspection of items such as the furnace, air conditioning, duct work, etc. Here’s a DIY checklist for furnaces that I find useful. Hot water tanks should be checked for signs of leaks, rust or stains – typically hot water tanks have a lifespan of about 10 years(don’t wait till it fails to replace it); ensure the drain and/or drain pan is in place. Don’t forget to check ceiling fans, bathrooms fans and fan hoods to ensure they are working and filters are clean and in good repair.
  • Smoke detectors, carbon monoxide detectors and similar types of safety equipment including fire extinguishers (as required) should be in place and functional
  • Interior doors, windows, etc. should open and close properly, be level and in good repair including hinges and locks
  • Check countertops for damage, stains and cracks, as well as sponginess around sinks. Check the underside of the countertop around the sink to see if there is discolouration as this could be a good indicator that something is beginning to leak around the sink and the caulking may need to be replaced.
  • Check flooring, stairs and transition strips – they should be level, sturdy, and there shouldn’t be any cracks, damage, squeaks or creaks regardless of the type of floors or surface. Consider replacing worn or outdated surfaces.
  • Overall, look for signs of leaks, stains, mold, disrepair, damage, as well as unusual smells or sounds; this is especially important in the bathroom – check the tub surround for sponginess, failing or discoloured tiles, grout and/or caulking
  • Ensure all plumbing shut-off valves are functional and in good repair and no water stains below them
  • If your property is rented furnished then household items and furniture should also be inventoried, inspected and repaired or replaced as needed

Each property may have unique features to consider so you’ll have to adjust this list as required.

Ask your tenants

Get Tenant FeedbackRemember during a preventative inspection you or your property management company should ask yourtenants if they have any issues with things not working properly within the property or suggestions for improvements as they can be one of your greatest resources. Your tenants may also help you identify concerns early on before they become major problems.

Inspections – working with a property management company

If you use a property management company you should discuss their inspection process and/or obtain a copy of their inspection report for your unit/property. You may need to request this type of report as it’s not generally automatically sent; most companies will send reports only when there are issues or requested. My list above of general items to consider will be useful as you review inspection reports from your property management company. There may be gaps between this list and the service provided by the property management company, identifying such gaps will enable you to adjust your contract with them or arrange for additional inspections as required.

Conducting routine drive-by and preventative inspections are key to:

  • protecting and maintaining your investment property,
  • showing your tenants that you are an involved and aware landlord who cares about the unit,
  • providing a safe environment for your tenants,
  • developing a preventative maintenance plan,
  • planning for larger repairs, renovations and/or replacement, and
  • keeping your property up-to-date.

With some forethought and planning you can take positive steps that will enhance your tenants’ and your experience as a landlord and real estate investor.

Final Thought:

Here’s a more extensive Rental Home Maintenance and Safety Checklist PDF that I find quite useful and is in PDF format for easy download and printing.

Sources: www.biggerpockets.com/renewsblog/2011/11/04/importance-rental-property-inspections/; www.samplechecklist.com/apartmentinspection.html; ezinearticles.com/?Apartment-Inspection-Checklist&id=57323; www.free-rental-property-investing-info.com/rental-property-maintenance.html/; www.landlordparttime.com/rental-maintenance/inspecting-rentals-once-a-year.aspx; www.rentalpropertyreporter.com/annual-gas-furnace-inspection-checklist/;

 

By Andrew Schulhof
26 Jun 2014