Why you should think twice about trying to save a buck.
The Watch Story
One of my mentors told a story of how he and his friend were both in the market for watch. My mentor went ahead and bought the better quality, higher priced watch which ended up lasting him 10 years or so. The friend who thought he got the better "deal" at the time by going cheaper and less quality, had actually bought multiple watches over the 10 year period which ended up costing him 3 times more! Some of the same principles apply when you are working with an investment property.
The Renewal Rate Matters
This is actually one of the most important metrics when looking at the overall performance of an investment property. When the resident renews it obviously reduces vacancy time (no income), but it also saves on full make ready costs and a higher lease fee. So, we have to ask ourselves, what goes into the resident renewing? Well, the number one reason they don't renew is because of maintenance. So, when property owners are reluctant to fix items, the resident feels the property is not being taken care of and they are more likely to not renew. So, what could have just been a couple of hundred dollar repair turns into thousands of dollars of costs to turn the unit for the next resident.
The Patch Up Job
A lot of times when there's a cheaper solution to "patch" repairs on big ticket items IE the HVAC, appliances, etc. so we tend to want to defer the costs of a full replacement. At some point the number of "patches" surpass the total of the full replacement. Not only do the residents get disturbed during the tenancy multiple times, which can cause frustration, but ends up costing more in the long run. Also, when we find someone to get a job done quickly for cheap, the quality usually suffers and we have to go back again to get it done right (See blog post here about the value triangle). More time and money went into the work than just doing it right the first time.
We all want to reduce expenses not only in life, but with our properties as well. That said, we have to consider all aspects when making that decision. In the long run it may end up costing us more time and money than it should have.