WATER VS THE REAL ESTATE INVESTOR
With inflation speeding out of control, many people are looking for ways to control costs. Have you heard of P.I.T.I? These are the most basic costs for every real estate investor: principle, interest, taxes and insurance. The first 2 are your mortgage payment (not today’s topic). Municipal taxes are on the rise for many in Canada, and likely beyond our control. But can we control insurance costs?
Well, we don’t have any secret back-door connections for low insurance rates – sorry! But preventing insurance claims can help to keep this particular expense down. Even better, preventing claims goes hand-in-hand with preventing Repairs/Maintenance bills.
Did you know that in Canada the leading cause of home insurance claims is for water damage? And on this Earth Day, there is much speculation about ever-increasing severe weather events. So what’s a real estate investor to do?
As we approach Spring Inspection season for our rental properties, here are a few suggestions to get you started:
- If you have Poly B plumbing, consider replacing it. YES, all of it. Yes, the drywall patches and subsequent painting are a nuisance. But that’s nothing compared to the water damage if a significant leak happens. Many people believe that houses with Poly B have now reached an age where it’s a question of WHEN, not if, the plumbing will fail.
- Do you know where your water shut off valves are? Do your tenants? Even better, are the shut offs clearly labelled (because a big leak often causes a big panic!)
- Look up! Are there any weird ceiling stains? A roof leak might first show up as an unusual mark on a ceiling. And just a reminder, water issues can turn into mold issues very quickly.
- Do you monitor water usage? Monthly? Biannually? Most real estate investors do. This is a good way to pick up on leaky toilets, and sometimes excessive sprinkler use.
- Do your tenants know that water leaks require urgent repairs? Sometimes they are a true emergency. Do your tenants have a contact number for a plumber, or an emergency contact number?
- How’s that sump pump? Has it been a while since you or an expert has checked? Especially in Calgary, it’s ideal to check that sump before the June rains begin.
- Pay special attention to water’s favourite hiding spots. Under kitchen and bathroom sinks! Under hot water tanks. Washing machines, dishwashers. And a reminder that high humidity can cause water damage too—are those bathroom fans still working?
- Outside was there any evidence of ice dams throughout the winter? If so, when was the last time those gutters and downspouts were cleaned out.
- And while we’re thinking outside the 4 walls, just a reminder that Spring and Fall inspections ideally include a “walkabout” outside the house. Ideally the grading was part of a home inspection when the house was purchased. But has anything changed? Look at all sides of the roof. Also look for any evidence of critter homes – which can compromise the building envelope (eg. siding after a woodpecker found a new home).
- Consider water detection devices. These are often placed near a hot water tank. It’s kind of like an early warning system. Many devices can wirelessly link to your phone, or they may come as an “extra” with a security system.
- Our final suggestion is to pay a certified plumber when doing a renovation. AND get that plumbing inspection. It is absolutely NOT a guarantee, but having an independent extra opinion on all those plumbing connections is extra piece of mind and prevention.
As real estate investors, there are real limits to what we can control and prevent. Climate change and spring flooding (or any other season) are beyond the scope of most investors—although we all have personal responsibility. In contrast, at least twice a year, we can assess our properties’ risks for water damage, and take corrective action as early as possible. A little TIME spent on inspections, can prevent large maintenance expenses, which ultimately results in more significant Financial Freedom.
Now, Mother Nature, bring on Spring!!
