The “repair or replace” dilemma pertains to many of the components of rental housing from plumbing fixtures to roofs. Whether to repair or replace is a complex economic decision based on estimated remaining life of the component, replacement cost, previous repair history, life cycle costs, the effect on tenant relations and aesthetic concerns.
When receiving a call about a non-functioning appliance, first determine whether the appliance is covered under warranty. On rental properties, we recommend getting warranties because the wear and tear by tenants typically doubles that of homeowners. Next, review the history of the unit: have other repairs been made? The amount and type of previous repairs will help you determine if you want to keep spending money on that appliance. Then, obtain an estimate of the cost to make the current repair. Innovative Property Solutions (IPS) always obtains multiple quotes, if possible.
The rule of thumb for solving the replace or repair dilemma is whether the estimate is less than or more than 33% of the cost of replacing the part with a new appliance. We at IPS use the 33% rule to help us decide. We use the 33% rule because the advantage of new appliances have become very persuasive. Those advantages include the following: (1) the cost of new appliances have dropped dramatically in the last ten years, (2) the energy of efficiency of the appliances pays for the cost of the appliances (even if the tenant pays utilities you still reap the benefits: a tenant is more likely to be attracted to rentals with lower overall utilities rates), (3) an aesthetically pleasing appearance, (4) better reliability, (5) minimizing tenant calls and (6) safer operation (i.e., electronic ignition for stoves). The key to solving the repair or replace dilemma is knowing that every decision should be made on a case-by-case basis considering all the above factors.
Our team at Innovative Property Solutions will be there to guide you. Call (904) 321-9020 to speak with us.