How to Distinguish Between Wear and Tear vs. Damages for a Tenancy

2. You can charge to patch and paint holes for the satellite dish, the cost of which will be minimal, but why do it? The new tenant’s installer will probably put the new dish in the same spot. I would do nothing to correct this and stipulate to the new tenant that their dish mist be installed at the same location. No cost to their security deposit.

5. Dog smell is another issue. You need to identify the source of the odor. If it is simply doggy odor, it should go away with a good carpet cleaning and new paint. However, if it is because of urine in the carpets and padding they may need to be replaced. If that’s the case, life expectancy of carpet will vary from five to 10 years, depending on the quality. You will need to check with the carpet dealer or manufacturer to determine that and prorate the replacement cost against the useful life.

As a landlord you need to resign yourself to the fact that you are going to be hit with expenses when someone moves. It used to cost me $1,500 for carpets whenever someone moved from one of my 3 bedrooms, so I spent twice that for vinyl that looks like hardwood and I don’t have the problem anymore. You learn to shop around and find vendors who specialize in paint, flooring and repairs for rentals that are quick and cheap but that stand up over time. They are out there. You just have to look. You’ll get the hang of it. And remember, the rent you’re collecting is not intended to be 100% profit. Part of it is intended to cover costs like this, so don’t forget, you can afford to maintain your property.

In the first one, deposit 5% of your gross rents every month. That money will be set aside to help cover large and unanticipated repairs and maintenance that come up out of the blue such as a broken water heater, air conditioner, etc. When you get hit with one of those expenses, the money will be in your reserve account and there will be no or little hardship paying it.

For the second one, calculate the cost of your large or one time annual bills related to the rental – property tax, insurance, business licenses, tax accountant, etc., and divide them, by 12. Take that amount from the rent and put it the second account each month. When it comes time to pay those big bills, you won’t be scrambling for money.

After you cover your expenses in those two accounts, what’s left over from the rent is yours. Personally, I maintain a third account just for that remaining money and it stays there in case a major emergency comes up involving the rental. Only and the end of the year do I take my owner’s draw and empty most of the account, leaving just enough to operate on for the new year.

A lot of it comes from trial and error. For example, I lumped a lot of your nicks and gouges in with the paint. Perhaps they were more than normal wear and tear and did result from tenant negligence. But, the painter is going to patch them as part of his work. The additional cost for those repairs is negligible and you will find the time and energy necessary to separate those costs, put them to paper within the time required by law for a landlord to justify security deductions and then fight with the tenant, isn’t worth the few bucks and aggravation involved. Unless there is major damage, you just eat those costs.

Similarly, landlords may try to nickel and dime major repairs by purchasing the parts and materials themselves and paying a professional to install them. But remember, you bought the parts, so the installer is not going to guarantee them. if a part breaks down, you have to pay the professional to come out, diagnose the problem and remove the defective part. It is then incumbent upon you to take the part back, wait for a warranty replacement and then pay the installer to come out and install the new one. One bad part can cost you more than if you purchased the entire job (parts and all) from the installer.

Thanks L-1, that’s really helpful. I guess I just wasn’t ready for all the "maintenance" cost, especially for a brand new home. I would imagine a brand new home wouldn’t require as much maintenance, especially after one tenant. But I’m learning. Also, I was very lenient on the tenant, reduced the rent when he requested and did not really fuss on the late payment when he ultimately paid (which was close to 80-90% of the time, and paying late 2-3 weeks), thinking I was building goodwill with the tenant so that he wouldn’t damage my property. But when I went for the pre-walkthrough, it was so much worse than I imagined, so now I’m just trying to maintain and recoup my costs/asset.

I made another post about having a mediation clause that any disagreement the landlord or tenant may have regarding the lease they have to go through mediation. Would you be able to advise how strong that clause is ie if we do not go through mediation due to disagreements on the move out clause/security deposit and the landlord or tenant goes directly to court without going through mediation, would the judge still listen to the case, or would the judge ask the tenants and landlord to go back and try to resolve through mediation?

I can’t speak to mediation and security deposits. I imagine Mr. K will be along to do that. My best guess is that the Civil Code gives tenants certain rights with respect to security deposits, particularly regarding timeliness of refunds, and providing receipts and explanations for deductions. I suspect that requiring them to waive those riughts and submit to mediation may violate public policy and not be enforceable. If that’s the case and you miss the deadline for making a refund or explanation for denying a refund, you may be on the hook for refunding all of the deposit plus an additional 200%. You don’t want to be in that position.

Sometimes its easier to hire a management company to rent and manage the property for you. They handle all the headaches for a simple fee. I have two rental properties, a SFR ion a high end neighborhood and a section 8 fourplex in a bad neighborhood. Both are managed by the same company. They charge me $125 per month to handle the SFR and 4% of my gross to handle the Section 8 fourplex. The only repairs I do is to change the locks on the properties when new tenants move in, because i can buy brand new locks on eBay a lot cheaper than a locksmith charges to rekey them. It is so much nicer not to get calls in the middle of the night when toilet gets backed up, a water heater leaks or the air conditioning goes out. I have no idea who to call, but the management company does and they are right out there to fix things. They also take care of late pays, evictions, problem tenants, etc.