Let’s start by admitting it: this is one of the most-overlooked parts of managing a property. Whether you are managing your own investment property or are a property manager for numerous properties, it can be hard to prioritize. First, because it’s routine and time-consuming. We do at least a couple hundred walk-throughs a year. The logistics alone are a lot of work. But it is one of those areas that, if left undone, could cause you to miss issues that cost you pain and suffering at move out time.
You can find out a lot of information and do preventative maintenance. Actually getting boots on the ground is the only way to really find out about what you need to know. We’re going to provide real tips and guidelines on why you need to do walk-throughs, what you’re looking for and even how to have the right conversation with tenants based on what you find.
Why Does the Walk-Through Matter So Much?
An investment property is like having a briefcase full of cash. If you have that briefcase full of cash, tell me you’re not going to check it every so often. You’re going to check that the lock works and that every penny is still there. If you never check it: you’ll never know. Over time, when that briefcase is out of sight, it wears holes and money pours out.
Your investment property represents that briefcase, full of hundreds of thousands of dollars of cash. You could be consistently losing money if you aren’t checking in on your investment property.
It’s easy to get lax, especially if you have long-term, well-behaved tenants. If you don’t check, you’re doing yourself a great disservice. The overall value of your asset is the ultimate determiner of your long-term success as a property manager.
Inevitably, you hear stories like this. We heard one recently. The tenant had paid every month in cash. One day, the feds came knocking on the property owners’ door. It turned out that his tenant had been running a drug ring out of the home. The officials asked if he had checked up on the property. He hadn’t. If he had, he’d realize that the house was full of drugs and it was a serious, criminal situation.
Not every scenario is that serious. But these routine walk-throughs are serious. Even the world’s best tenants could be hiding something or there could be home issues no one notices.
Property Manager Inspection 101
So, what do you actually need to inspect? It’s important to have a system and hit all of these important checkpoints. You may be able to buy a certified inspection, which will give you peace of mind and provide expert insight beyond your scope of knowledge. This can provide ultimate coverage and get into the details that help you make the right choices.
For property managers, performing a visual inspection should be part of your annual routine and plays an important role.
Water is your biggest enemy. Burst pipes, leaks, pooled water and evidence of water damage or intrusion is a very high priority. If you pay attention to and check for this, you’ll cover a lot of potential issues.
Look around doors and windows. Do you notice the paint worn off or softened/rotting wood?
Check garage door seals.
Check condition of siding and any holes.
Look at the lawn and trees. What do the trees look like? Any dead limbs or things dropping on the house? If the limbs are projecting over the roof, that’s a giveaway that the roots are also intruding toward the foundation of the home.
If there’s a septic system, check for any leaks or problems.
How is the tenant maintaining the property?
Expert tip: not every tenant has a green thumb. They also may have never maintained a home or lawn before. It can help to provide some guidance and tips for people.
Scan the ceilings. Look at the seams. You can see stress fractures. Stains are also a clue that there is damage.
Check for warping or waves in the ceiling, walls or floor.
Look for bubbling underneath the paint.
Look at the baseboards and molding.
Look at light fixtures, ceiling lights, fans.
Pay attention to smells (mold, marijuana, etc.).
Do the windows and window treatments function properly? Are the screens tattered or missing?
Open and close all doors. Check locks.
Bathrooms: flush toilets and check out hardware. Run the sinks, cold and hot water, with the cabinet open beneath. Check for water and feel underneath and around the P-trap: notice whether there is moisture on the supply line. Also look at the base of the cabinet to see any signs of leaks.
Look at smoke detectors and check whether they are expired or old. If they’re yellow, they’re probably too old.
See if there are soft spots anywhere on the floor.
Look at the corners of the walls near the shower doors. This is a popular spot for water to go, which can cause damage and rot.
Check air filters.
Expert tip: have a checklist. Even we miss stuff. It happens. No matter how much you understand, a checklist will help you track everything.
How Often To Do Walk-Through Inspections
Move-in is the first inspection. We have actually found it’s useful for tenants to do their own move-in inspection. We give them three days from when they move in.
Move-in is the last inspection and should be done as soon as possible. We’ll have an upcoming episode about move outs.
At least one per year.
If you choose to only do an inspection once per year, the first one should be done three or four months into the lease. Don’t wait a year. This gives the tenants enough time to get settled but sets a precedent and lets you catch early problems.
We would suggest that one per year isn’t enough. We do a minimum of two per year but recommend doing four per year.
Scheduling About Walk-Through Inspections
A lot of owners and tenants feel awkward or uncomfortable about walk-throughs. But let’s consider this: if the AC breaks every six months, will the tenant mind you coming in to fix it? Approach it from the mentality that you’re taking care of the home and being genuinely helpful.
Inspections are respectful but ultimately part of a property manager or owner’s legal rights. Here’s how you can tee it up:
Call it a preventative maintenance walk-through (instead of an inspection)
Explain that the goal is to notice issues and keep the property in great shape
Ask in advance if the tenants have any concerns or issues they want looked at
A common question is: how much notice should you give?
Here’s what you shouldn’t do. Don’t show up unannounced at the tenant’s door and insist on being let in. Most states have a statute that cites “reasonable notice.” That can be interpreted to be 24-hours if there is a suspicion. For most tenants, we provide a one-week heads up.
Here’s a good reminder: this is no longer your house. It’s your briefcase full of money. Treat it like that. That detachment will help you react correctly to damage and make objective decisions about whether to improve the property and how to respond to issues.
Walk-Through: Basic Conduct and Standards
As you enter into a walk-through, when you’re actually on the property, here are some basic tips for conduct and standards:
Be professional. You’re going through the home, not the tenant’s stuff. Don’t infringe on their privacy in any way, shape or form. You can, of course, open cabinets under the sink or inspect important areas.
Be smart. If you are suspicious, you can “inspect the structure.” For example, looking in drawers to make sure they’re in good working order. Don’t look under the bed or open the dresser drawers. You can justify in-depth inspections but don’t cross the line.
Don’t make assumptions. Be friendly but realize they may not want you there. Don’t stick around and make it a social visit or engage in excessive conversation. Be respectful of their time.
Expert tip: the tenant doesn’t need to be present for the walk-through. They’re welcome to be there but not required.
Walk-Through Results: How To Communicate With the Tenant
First, talk to the tenant clearly about your shared goal: both of you want the property to stay in good working order.
Common things you’ll need to notice and discuss:
Other people staying in the home
Extra pets (look for accessories/signs of a pet)
A common mistake is to overlook damage and think, “I’ll just take it out of the security deposit.” If you see $200-$300 of damage within the first few months and ignore it, this first tells the tenant that it isn’t a big deal. Second, there will likely be more instances of this before they move out and then won’t have enough security deposit to cover all of the damages.
When we see damage during the course of a lease, we’ll send someone out to repair it and then give the bill to the tenant. This sets the tone early on about how serious and professional you are.
Look out for overt lease violations. These are important, enforceable aspects of the agreement that you need to notice and take care of to protect your investment.
Expert tip: you have every right to know what’s going on with your property, especially when you’re not there. Neighbors can be friendly informants and provide insight. Introduce yourself. Give them your card or phone number. WARNING: some people will abuse this. But generally, it’s a good relationship to cultivate.
Two Walk-Through Tips:
Have a checklist and follow it.
Take photos and store them where you can find them.
Subscribe and Listen to Investment Property Geeks of Charlotte
Routine walk-throughs are just one of many roles of a property manager. If you own a property and are managing it yourself or if you are a property manager, we’ve got the insight and tips you need.
Investment Property Geeks of Charlotte are here to provide expert insight, real world illustrations and high-value action items that can help you manage properties.
Liked this episode?
Listen in to more episodes from this podcast by checking out Investment Property Geeks of Charlotte anywhere you listen to podcasts.