Watch the video now
Repairs are a given when owning a property—especially when owning a rental property. From roofs to appliances, something will eventually need repair. Our guest today is Enrique Jevons. Enrique is the Regional Director for Mynd for the Pacific Northwest and is here to discuss that investors should expect to save for when owning a rental property in Seattle and the Pacific Northwest, overall.
Steve Rozenberg: Hey, everyone. This is Steve Rozenberg with Mynd Property Management and I am joined here today with Enrique Jevons who is the Regional Director of the Pacific Northwest Property Management Division of Mynd. Enrique, thank you so much today for joining me. I appreciate it.
Enrique Jevons: Yeah. Thanks, Steve. Good to be here with you.
Steve Rozenberg: So what I’d like to talk about today is, if I’m an investor and I’m looking at buying a property, what can I expect are the normal things—average that will break in a rental property? Now, I say that with it with a grain of salt because we all know as investors, things break all the time that we don’t expect. But you know there are going to be some standard things that we know are going to be of challenge that maybe we want to put in a reserve amount contingency fund knowing that that’s probably going to be an expense for us down the road. Can you give me a couple of things that you think are standard that are going to need more attention than others in the Seattle area?
Enrique Jevons: Yeah, so a couple of things along those lines. One that I always highly recommend to people is, you have got to make sure you budget in enough money for repairs. Don’t ever think that even—let’s say it’s a single family home where you use your primary residence, you lived in it. And you lived in there for 10 years and nothing ever broke and so you think that nothing’s ever going to break in the future. The reality is, stuff does break. Especially anything mechanical anything that has moving parts.
Steve Rozenberg: If it has an on or off-swing, it’s going to break.
Enrique Jevons: It’s going to break, yeah. So, appliance-wise, my experience is dishwashers, as far as appliances go, dishwashers seem to be the first item to give out. And then I would say, second to that is refrigerators and hot-water tanks. Hot-water tanks definitely have a certain life expectancy. You can’t expect a hot water tank to live on forever. So these things are going to happen. But if you’re budgeting, I would always recommend 5% set aside for repairs and another 2% for capital improvements.
So capital improvements, the roof, the hot water tank, other—flooring, things like that. You always also want to set money aside for that in order to have a reserve available. A reserve can either be cash in the bank. It could be a line of credit. Just make sure that you’ve got it available so an emergency happens, when something big gives out on you, that you have that money to be able to get it repaired.
Steve Rozenberg: Let me ask you this. With all the moisture in the Seattle area, is mold something? Mold remediation. Is that something you have got to be cognizant of when you’re buying a property? And do you get an inspection? Can you explain that a little bit?
Enrique Jevons: Yeah, so definitely mold is something that is probably not necessarily unique, but certainly more of a challenge. And in wet locations like Seattle, you get a lot of rain. And so, as a result, you get more mold than when I was in the Bay Area.
And also water intrusion. So in basements. That is a bit more common of an issue that you’ve got to deal with. Also, mold is now, nationwide, a big issue. So just as, years ago, it was asbestos. Asbestos was the big scare and you had to make sure that you never touched it. Always divulged it, type of thing. Well, now mold seems to be the big issue. And then we get tenants who call and say, “I’ve got black mold.” And we get there, you realize, it’s just surface mold, meaning that it’s just in the shower or wherever—underneath the kitchen sink, a wet location where the individuals allowed condensation to occur. Or maybe it’s a window and they’ve allowed condensation to occur on the window and they don’t clean up.
So it’s really more a matter of educating the tenant on how it’s their responsibility and they need to clean it up so that does not become a problem. But if it’s another source, So, if it’s a roof leak and the water is coming in from the outside or it’s a basement leak and you have got water coming in, then that’s the mold that you start to see on the ceiling, basement, wherever it might start appearing, that you go to attempt to clean it off, it doesn’t clean off, or it’s in a location where you realize that I really shouldn’t be having mold problems, living room type thing, then you have got to make sure you’re remediated.
So you got to get rid of the source of the water. Somehow waters getting in, you have got to first attack that and then make sure you do a good job of cleaning up because the worst thing that could possibly happen is you try and just paint over it, cover it up. Then the individual gets sick. If that individual gets sick, they go to their doctor and they say, “yeah, I reported mold to my landlord.” And the doctor says, “well, yeah, you’ve now got asthma or you’ve got breathing problems as a result of prolonged exposure to mold,” holy cow, you’re going to be in a world of hurt as far as the potential liability of somebody suing. And certainly, having documentation from a doctor that you have asthma now and having documentation that you submitted a maintenance request to have mold taken care of and it wasn’t promptly taken care of…
Steve Rozenberg: Mold definitely has to be taken seriously. I’ve learned there are about 200 different types of mold. Some people say black mold. It’s not normally the black mold that they’re afraid of. But because mold typically is black, it is black mold by color, but it’s not the black mold that everyone is afraid of. However, you’re right. And my recommendation is, and I know we kind of got a little bit off things, but it’s important that if you do have mold or a situation, get a professional in there, in my opinion, and find out exactly where it is. What is the cause of it? Because sometimes, as you know, that comes down rafter lines. And it may not be where you think it is. It may be starting up on the flashing of the fireplace and running down the line. So you’ve really got to be careful. Water, I think, is the most dangerous thing in a rental property that can hurt you and from my experience.
Enrique Jevons: Yeah, no matter where the water is coming from, whether it’s a shower curtain not properly closed all the time and it starts to make the linoleum start turning into a deep purple color and you wonder what’s going on there. Well, that is because you’ve got mold growing on the backing of the glue and such on your linoleum. Which is then a problem because then you’ve got the bigger problem spot underneath.
So the whole moral of the story is, make sure you have funds always available to use that you can take care of these problems and make sure you always attack the problem professionally. Attack it right away. Don’t delay. If your tenant, your property manager contacts you and says, “hey, this salt water tanks leaking,” saying to the person, “well, I need to get three bids on replacing the hot water tank.” You know what? That maybe is not the best decision because maybe you could save $100 here or there, but the reality is, chances are it’s going to be so much more expensive of repair because you didn’t get somebody out there immediately to care of the issue you were trying to nickel and dime.
Steve Rozenberg: You may have a property code issue. Some states have, and some locales have, property code issues of timelines that you have to get certain things fixed in. You don’t have the ability to wait two, three weeks to get bids. I know in, for example, Texas, you have 72 hours when a hot water heater goes out. Otherwise, you have to put them up in a hotel.
Enrique Jevons: Okay, so Washington State is even a little more restrictive in that respect because there’s two things. It’s hot water and heat. The repair must be started within 24 hours. It doesn’t say completed. But those two items, specifically, are mentioned in Washington State law in the residential landlord-tenant act. And so again, you have got to know the law. You’ve got to make sure you take care of things right away. Otherwise, yeah, paying for a tenant to stay in a hotel.
Steve Rozenberg: Well, Enrique if somebody wants to talk to you more in depth about mold or things breaking or having Mynd manage their properties or just have a conversation with you because you’re like the most interesting man in the world, how does someone get ahold of you?
Enrique Jevons: Ah, yeah. I feel like I’ve had everything happen over the years. Right now we’ve got over 900 homes and apartments that we’re managing in Washington State. We’re taking on additional several hundred and in this next year. So I have a tremendous amount of experience. I would say just about every situation. So please do reach out to us. Feel free to email me, I’m at email@example.com. I’m happy to reply to your emails. I know you’ve got a Facebook page going that I really enjoy so you can reach us there, as well.
Steve Rozenberg: Our Facebook group is Mastermynd Real Estate Investment Club on Facebook. Enrique and I are both members up there. We post good information. We have properties on there, hot properties. We break down deals. We do webinars, all of that in there for free exclusive to our group. Again, Mastermynd Real Estate Investment Club. Also, if you want to know more about Mynd Property Management, go to M-Y-N-D.C-O. I am Steve Rozenberg, and I’m here with Enrique Jevons. Enrique, thanks a lot. I appreciate your time today, buddy.
Enrique Jevons: Yeah, thanks.
Steve Rozenberg: Talk to you guys later. Bye-bye.
Enrique Jevons: Bye.
Saving for inevitable repairs and maintenance is the smartest decision a property owner can make. As such expenses are an inevitability, having funds available to make those repairs immediately can save thousands in the long run. And while appliances and other mechanical repairs are inevitable, preventative maintenance can save money, as well. Likewise, as certain repairs, like hot water heaters, have to be replaced or have the work begun within a certain amount of time, every investor should keep up-to-date on laws to stay ahead of the game and keep their tenants happy, overall.