Maintenance vs. Capital Improvement
With rising material costs what should you do?
by Josh Bibeau on June 11th, 2021
Last year found many property managers working remotely, opening hours for appointment only, and limiting maintenance during the height of the COVID Pandemic. Private landlords also limited interaction with tenants to curb the spread of COVID. This could mean that after a year of deferred maintenance and more tenants staying at home we will see an increase in maintenance calls this summer. People are finally leaving their homes to travel and would love that issue resolved when they come back. The summer is a typical time to resolve non-emergency maintenance issues, and this summer will be similar. Two things are very different about this summer, literally every material cost & labor shortage.
Whirlpool announced an up to 12% increase in appliance costs¹. Lumber prices are up in some places 288%!² Copper is close to doubling cost since before the pandemic.³ Sherman Williams announced paint prices to increase across the board by 7%.⁴ The cost of maintenance work is more expensive than ever, but average rent in Montana is higher also! If you have not addressed rents since 2019, they may be in store for an increase. Rent in Lewis & Clark County saw an 11.32% increase in 2020.⁵ Typically we see 1% each year, a percentage lower than inflation! As you look at maintenance costs, I urge you to view them as capital improvements, and raise rent accordingly. People want to live in nice places, and only landlords have the ability to provide quality rentals. Tenants will pay what a place is worth! Let’s make the investment worthy of the rent collected!
Thoughts?: josh@bigfootmg.com
¹https://fortune.com/2021/06/10/lumber-prices-2021-chart-price-of-lumber-production-wood-supply-costs-update-june/ ²https://fortune.com/2021/06/10/lumber-prices-2021-chart-price-of-lumber-production-wood-supply-costs-update-june/ ³https://www.cnbc.com/2021/05/06/copper-is-the-new-oil-and-could-hit-20000-per-ton-analysts-say.html ⁴https://www.cnn.com/2021/06/09/business/paint-prices-sherwin-williams/index.html
