In this episode we discuss importance of regular preventative property inspections.
Welcome to Canada's Property Management Podcast, your number one resource for investing, managing, and maximizing the value of your real estate assets. And now, here's your hosts. Carla Browne and Adrian Schulz, Canada's rental property experts.
Adrian Schultz (00:18):
In today's episode of Canada's Property Management Podcast, we're discussing how regularly you should inspect a rental property and why. I'm joined by RPM's, newly appointed president, Carla Browne, the co-host of this podcast. Hi, Carla.
Carla Browne (00:39):
Hi, Adrian. Nice to be back with you today.
Adrian Schultz (00:41):
And congratulations on your new appointment.
Carla Browne (00:45):
Thank you. Thank you.
Adrian Schultz (00:47):
So today we're talking about property inspections. I think every rental owner and every property manager has different frequencies, or maybe not at all for these inspections. What is your opinion on how regularly someone should inspect a rental property or suite?
Carla Browne (01:05):
As usual, I have lots of opinions, but lots when it comes to the inspections. And the inspections, I think people look at inspections, some people call them evaluations, and it has this negative connotation on that we're going in and checking on the tenant. And that's not really what it's all about. So it's back to that common phrase, inspect what you expect. The level of clean that some tenants have, what they think is acceptable in a property may not be what you think is acceptable, even though you've maybe outlined that in the lease agreement or the tenancy agreement with them. So it's just really important that you set that expectation out right when they're signing the agreement.
Carla Browne (01:48):
So right in our agreements, it says that we will be coming into the property on a regular basis. And then I like to explain why. This gives you, as the resident, an opportunity to let us know if there's any small things that need to be taken care of. Because when you live in a property for a period of time, there's always little things. And sometimes a tenant will say, "Well, I didn't call you guys because that's not a really big thing." Well, a little drip under a sink that's dripping for months on end is a big thing. But they don't know that, right, Adrian? They don't know that.
Carla Browne (02:20):
We're talking, they could be new to Canada. Their first time out of the house and mom and dad looked after everything for them. They have no idea what needs to be taken care of. So I'm going on and on ... quarterly inspections is what needs to happen in a rental property in order for you to be able to catch a lot of the things that I think can easily be caught. So now we're dealing with more of a preventative maintenance program instead of a reactive maintenance program.
Adrian Schultz (02:46):
You mentioned the preventative maintenance and checking for water leaks, obviously, which is for both maintenance and insurance. And the insurance can really get you if you have made big claims, right? One of the things that we implemented over the last few years as part of our regularly scheduled inspections, is we actually do a smoke check, right? So we will smell to see, are they smoking in the unit? And we'll mark that down. Because no matter how much you tell, it's not smoking, people will smoke if, it's cigarettes or other things.
Adrian Schultz (03:17):
But the other thing that we do is we use it as an opportunity to do a pet check. So if it is a pet friendly unit, are the number of pets ... do they correlate with the original lease? Or if it's a no pet unit, is there a pet there? And the reason we do that is two part. Number one, to protect the unit and the property, but also to make sure that we are collecting the right revenue for the property. Because if in some provinces where pet registration fee is permitted or charging a premium for having a pet, that's very important to that investment property owner. So doing those inspections lets us check, are the rules being followed and are we capturing all of the potential income?
Carla Browne (04:06):
Yeah. Good points. Another one that we really look at is number of occupants. So you can tell when you're doing an inspection, if this is a one bedroom apartment, if there's one person living there that's on the lease or maybe four or five. It's very common for new to Canada residents to move their families in, but they may have forgotten to let you know that they're moving some people in, which might change lease amounts or might not even be allowed in certain places. So all of these things are a chance for you to have, I would say a stronger communication with your tenants as well.
Carla Browne (04:38):
It's a good conversation to have. What's happening? Talk to them about their current job. Maybe they're going to tell you, actually, I'm going to be leaving the province in about a month or two. Different things come up in conversation, and just having some good communication with tenants if they happen to be there. But I always, in an inspection notice will say, "We're coming in. Is there anything we need to look after for you?" And so I think that's part of the key thing.
Adrian Schultz (05:03):
Carla Browne (05:03):
You talked about insurance. So a few years ago, cannabis became legal in Canada. And this was a big thing in the rental market industry. All of Canada was scrambling. How do we put together proper legal phrases into lease agreements so that we can protect investors or protect the property? Because we didn't want the growth in the property. So that was easy. But then, how do you monitor that? So I didn't know much about cannabis. So I had to go on this big learning curve to learn about it. And what I learned is that the cannabis growth cycle is 90 days. Perfect. That coincides with quarterly inspections.
Carla Browne (05:39):
So now we're going in and this is how I talk to our investors. I'm like, "We want to go in every quarter so that we can go in and check to see if there is any growth that's happening." So when you go in, you're checking for all the things that you and I have already mentioned. You need to get in under the cupboards, you need to open up those closet doors. You need to go into the garage. It is not enough just to do a nice walk through of the property. You have to actually go through the steps of inspecting them.
Carla Browne (06:03):
And then, legally, you have to be doing some smoke detector checks. And in the different provinces, that could be anywhere from quarterly to monthly. So making sure that those things are done. Checking the furnace filter, which could save the life of your furnace and air conditioner. All of these things can easily be taken care of in a simple hour of a visit to the property. So quarterly inspections is something that I talk very, very, very openly with the investors. And I think it has to be happening for both the investor and for the tenant.
Adrian Schultz (06:32):
Yeah. And when you speak of inspections, I know that the proprietary property inspection app that we use here at RPM, in fact, also has the ability to take photos of areas that require some sort of improvement. Which creates a very good trail for insurance, and sometimes a rentalsman or tenancy branch issues, right? That you've got, not just written, but also photographic information on things that had to be addressed from that inspection.
Carla Browne (07:08):
Yeah, 100%. The photos ... a picture says a thousand words. Isn't that how the saying goes? And it really is true. It can really help, so that you can try to work with a tenant if maybe they need to do some cleaning up, or there is a notice of remedy that you need to send out to them. And then now you have a paper trail that you can be using later on if they don't actually do the correction there. So the inspections, I just can't talk enough about them, honestly. They're so important. If an owner is not wanting to do inspections or authorizing their property management company to go in and do them, then I always say, "How can I protect? I can't protect what I can't see." And that it really is the only way.
Carla Browne (07:47):
So if you have a tenant that has damaged a property ... or the horror stories that you see in the media. Because the media definitely plays up the tenants that might have done a lot of damage to a property. I'll guarantee, there is no way, or very little way that that would happen if we're in there inspecting every so many months. That is because a tenant was left alone to do whatever they wanted for six, eight, 12 months or more, and has damaged the property beyond regular repair. And then we're talking about a major, major, major loss for that investor, which is heartbreaking when we see it.
Adrian Schultz (08:22):
The one thing that we haven't talked about yet is the benefit of those inspections, on how they can actually help you preventatively prepare for unit turnover, right? If you know from those inspections that the suite needs painting, that it needs fresh flooring, whatever it might be, that can then be quoted out and the work scheduled in advance.
Adrian Schultz (08:46):
And you know what? Sometimes if a tenant says, "I'm moving out in three months." And you say, "Hey, we noticed in our last inspection that the suite needs a quick coat of paint. Would you mind if we came in and did it? We have someone available." Boom, right? You've really improved your unit turnover timing. And who doesn't want to live in a freshly painted suite for the last three months, right? Those are all little titbits.
Carla Browne (09:13):
Yeah. There's so many great things about it. And tenant education isn't even one that we talked about. But when you're in that property, it gives you also an opportunity to teach that tenant on how to maybe better look after the property. Or show them how the furnace works or how the air conditioner works. What this switch is for. Different things that you might not have had that opportunity in move in, or might not have been top of mind. So too many benefits to just list them all in one podcast. I think we could go on and on, on this one.
Adrian Schultz (09:39):
Carla, we've done it once again. This is truly, Real Property Management.
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