Your home is more than just a place to lay your head at night. It's a significant investment — a financial asset with the potential for long-term wealth-building and stability. However, as the years go by, it's easy for the maintenance tasks to pile up. Then, before you know it, your once-pristine property may be showing signs of neglect.
While it's effortless to delay repairs or maintenance issues in the short term, deferred maintenance can lead to more significant problems down the road. It not only diminishes the visual appeal of a property but also poses a severe threat to its overall value and structural integrity.
This post will explore the impact of deferred maintenance in real estate and provide strategies to help you effectively prevent and tackle any delayed upkeep.
What is deferred maintenance?
Think of deferred maintenance like putting off going to the dentist for a checkup. You might avoid it for a while to save time or money, but eventually, you'll have bigger problems. The same goes for your property.
Deferred maintenance is delaying necessary upkeep and repair work on your home. While it may seem like a good idea to put off repairs — due to budget limitations or time constraints — it can lead to more significant issues in the long run.
The consequences of deferred maintenance
Maintaining a home can be daunting, but when the deferred maintenance backlog begins to pile up, severe problems quickly follow. These consequences can negatively impact your home's value, condition, and even your family's health and safety.
Safety hazards: Neglecting home maintenance can lead to increased safety hazards in your home. For example, a leaky roof or pipe can cause water damage, creating an environment for mold to thrive. It can be hazardous to a person's health and cause respiratory problems. Other safety risks include outdated appliances and electrical wiring, which can be fire hazards.
Costly repairs: Another product of deferred repairs is the likelihood of maintenance costs becoming more expensive the longer you postpone upkeep. Studies show delaying maintenance can increase future expenses by as much as 600%.
Decreased property value: Deferred maintenance and repairs can also significantly impact a property's value — and your financial flexibility. When a property is poorly maintained, its value can decrease, reducing your equity. Low equity can make it harder to draw on your home's wealth to fund other projects or investments. It can be especially frustrating if you want to improve your home but feel limited by your financial situation.
Hard to sell: Homebuyers are often wary of significant repairs or visible signs of wear and tear. A flawed home appeal can make it harder to sell a property — in some cases, it could result in selling the home at a loss.
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Strategies for tackling deferred maintenance
1. Audit and prioritize
Auditing your home's backlog can help you take proactive steps toward combatting deferred maintenance.
First, list all the necessary repairs and maintenance tasks that need attention. It can range from small items like leaky faucets to more significant capital improvements like outdated electrical wiring or roof repairs.
Next, prioritize your list based on urgency and maintenance budget. Doing so will help you determine which items to tackle first and how much you can realistically spend on each task.
To keep on track, create a schedule or timeline for completing each task. This will help you stay organized and ensure you're progressing toward achieving your maintenance plan.
2. Start or strengthen your preventive maintenance plan
Once you've addressed urgent matters, it's time to look ahead. Starting or strengthening your preventive maintenance plan is one of the best ways to stop delayed repairs. Preventive care involves taking proactive steps to sustain your home and prevent future problems.
To start, identify the areas of your home that require regular maintenance— such as your HVAC system, plumbing, electrical wiring, and appliances. Be sure to check the manufacturer's maintenance recommendations and ensure you're following them.
Then, create a yearly calendar for maintenance tasks. It can include monthly, quarterly, or annual work orders. Set reminders on your calendar or phone to ensure you remember to complete these essential tasks.
3. Hire professionals for routine maintenance activities
Lack of knowledge and time are common reasons for delaying maintenance. If you're uncomfortable completing some of these tasks alone or don’t have the time, consider hiring a professional maintenance manager. Many companies offer preventive maintenance packages that help keep your home in shape.
4. Secure maintenance financing
Lack of funds and limited resources are the common motivators for putting off routine maintenance and repairs. By securing financing for home upkeep, you can address deferred maintenance as it arises and protect your investment. Some effective options include:
Budgeting
When tackling home maintenance, budgeting is a crucial step often overlooked. Many homeowners are caught off guard by unexpected repairs that can quickly drain their finances – or force them to take on debt to cover the costs.
Instead, factor home upkeep expenses into your budget. Whether saving a fixed percentage of your monthly income or setting aside a specific amount each month, creating a dedicated maintenance budget allows you to secure financing without putting unnecessary strain on your wallet.
Home equity loan or line of credit
Home equity products allow you to tap into the equity you've built to cover the costs of necessary repairs, renovations, or upgrades. One of the key advantages of using a home equity loan or line of credit is the competitive interest rates they often offer compared to other alternatives.
Home equity loans offer a lump-sum payout, repaid in monthly installments over a 5-30-year term. Home equity lines of credit offer revolving credit that can be used over a 10-year draw period. Once the draw period ends, your balance is converted into a loan and repaid monthly.
Home equity investment
Home equity investments (HEI) allow homeowners to access their home's wealth without taking on more debt. You can access a lump sum in exchange for a portion of your home's future equity. There are no monthly payments, income requirements, or need for perfect credit. You can buy your equity anytime during a 30-year term without prepayment penalties.
Personal loans
Personal loans have a straightforward application process and quick turnaround time, which make them a practical option for emergency repairs. They work on a fixed interest rate and structured repayment plan, making budgeting and managing your finances manageable. Unlike home equity products, personal loans don't require using your home as collateral. However, they often come with higher interest rates than secured loans.
Credit card
Credit cards are another convenient way to tackle deferred maintenance. Many types offer rewards programs or cashback incentives, allowing you to earn benefits or save money on home maintenance expenses. However, the interest rates on credit cards can be much higher than other financing options, so it's important to pay off the balance promptly. It's essential to be mindful of your credit limit and stay within it to maintain a healthy credit score.
Final thoughts
Deferred maintenance, meaning delaying necessary repairs, can cause severe damage to your home and your wallet. Instead, it would be best to prioritize your asset by keeping up with routine maintenance. In doing so, you invest in its future and the equity you have built over the years.
Remember, your home is likely one of the most significant investments you'll make in your lifetime, so taking care of it is vital. If you're ready to address the repairs in your home, consider leveraging your equity with a Home Equity Investment from Point.
