In the current economy, or any economy for that matter, we are all looking for ways to improve the performance of our investments. Your Arizona rental property should be no exception. One of the easiest ways to improve profits on your rental property is to spend money on maintenance.

How can that be you ask? There are a lot of reasons this makes sense. By the way, it even makes sense if you are an accidental landlord (you didn't want a rental property, but couldn't sell because of the current market). This is something sophisticated investors have know for a long time: Well kept properties are usually more profitable. That being said, in tough economies, even that savviest of investors have to remind themselves that pinching pennies around maintenance can cost them dollars of revenue.

We all have trouble with this concept. It is, in a sense, human nature. We have probably all said things like “I am not putting one more penny into that property” or “I used to live there, and I lived with that maintenance deficiency, so why can't the tenant.” These are all reasonable statements. However, the reason you need to focus on the bigger picture is the market. Whether you are rental property business for the long or short haul, your biggest expense will always be vacancy. Yes, it is bigger than maintenance costs. The number one way to improve profits on your rental property, is to prevent loss of rent.

Let's take a simple example. You have a 3 bedroom, 2 bath home, that should rent for $1000. Every day that home is vacant, it costs you $33. Obviously, in 30 days that costs you the whole $1000, in 2 months $2000, and so forth. Let's say there is some work that needs to be done for around $200. This may be a thorough house cleaning, or some obvious small repairs. If you perform the maintenance and get it rented 6 days earlier because of it, the maintenance paid for itself! That's right. That is only 6 days of rent!! In most cases, you will actually make money because you got it rented much faster. Properties that need maintenance can take twice as long to rent or more!

This lingering maintenance is probably something that causes prospective tenants to pass on the home and find something else. Why? Because there is a large amount of rental inventory out there. And let's face it, if you were looking at something to rent, wouldn't you want it clean the first time you looked at it? The condition a home is in when it is viewed is what the prospective tenant assumes the service and care will be during their residency. While in some other type of investment, you could postpone the maintenance until the first income is received, in this case (first month's rent) you cannot do that or it will cost you dearly.

The same concept should be considered if your property is occupied, and maintenance needs to be done. There is a tendency to “let the tenant live with it”. But remember, vacancy is our biggest cost! Residential rental property's best tenant is one that stays for a long time, and keeps our property occupied. If we neglect a small maintenance item, that would have kept the tenant in the property for another year lease, and avoided a month's worth of vacancy loss, is that worth performing the maintenance? You bet it is! In fact, if that tenant leaves, you will still probably need to perform that maintenance to get it re-rented.

We are not talking about cosmetic maintenance (like granite counters), mind you. But we have seen a bit of an epidemic of property owners shooting themselves in the foot, by not cleaning properties or making minor repairs. This is somewhat understandable in this economy, but always try to look at the big picture. Maintenance also improves the value of your property. When it comes time to sell, maintenance will of course need to be done in order to sell. Delayed maintenance can really add up at the time you try to actually get it all done, so it is best to perform it as needed.

So remember, while maintenance improves value, vacancy costs you dollars for vacancy time that you will never be able to recover. Be a sophisticated investor, make your rental property more profitable, and keep it in shape!