PROACTIVELY REPLACING WATER HEATERS:
One of the unknown, inevitable, and scary parts of owning any property, not just an investment property, is unexpected expenses for repairs and replacements. Sometimes the expenses are small, but other times, they can be quite costly.
Water heaters are an example of a costly expense for many owners. It is our job to help minimize the risk of these expenses. A brand-new water heater is expensive, but some find that replacing them before they go out is better than waiting until they go out. Unfortunately when a water heater goes out, it does not normally just stop making hot water, it starts leaking. Often times the water heater even continues to make hot water while leaking.
To make matters worse, water heaters are usually found tucked away in a closet, garage, or even under a kitchen counter. While this may prevent a bit of an eye sore, it also can prevent residents from identifying the leak while it is minor. While putting in their lease and training our tenant during the move in walk through helps, tenants occasionally fail to notice and/or report leaks in a timely manner. As a result of the tenant-neglect or the fact that the water heater is out of sight out of mind, the leak can cause a great deal of damage that extends beyond the mere replacement of your water heater. That is why some owners choose to proactively replace their water heaters. They would much rather sacrifice a few potential years of use with the existing water heater than pay the huge costs of cabinetry, drywall, or flooring. Another thing to keep in mind is that the potential flood/leak damage increases exponentially if the waters are on the second or third story.
Another cost to consider in this is lost rents. If your tenant doesn’t have access to hot water, this would constitute an uninhabitable property and would result in crediting prorated rent back to the tenants for the days in which it is considered uninhabitable.
Furthermore, many after-hours result in dispatching a vendor with “after hours billing” this is often much more inflated than normal business hour calls. It always seems like these water heaters never go out during regular business hours!
Most water heaters are sold with a 5-year warranty and are said to last about 10 years on average.
But what if you have insurance? While having insurance is of the utmost importance to help mitigate your risk, most do not cover slow leaks. Most policies state they will only cover “sudden or immediate water losses”.
So now you’re wondering, how can I minimize these seemingly inevitable costs? Here’s how:
- Make sure you know the limitations of your insurance policy, better to be proactive than reactive.
- Make sure you know where your water heater is located. First floor? Second floor? Garage? Is there a drain or pan underneath it? Is the pan plumbed to the outside of the building?
- Train your tenants on how to check for leaks and how often.
- Most of all, have a professional annually inspect and service your water heaters to ensure that they are functioning correctly. First Rate Property Management offers this service, among many others, annually in an effort to provide our clients with the opportunity to increase their profit margin by mitigating the risk of expensive repairs and replacements.
Julie Tollifson, Leasing Team Leader