Are you confused about what counts as normal wear and tear versus property damage? Don't worry—our guide will help clear things up!
As a property manager, you know rental units won’t stay perfect forever. Minor issues will arise over time. But how do you determine if it’s just normal wear and tear or actual damage? Understanding this difference is crucial because disputes over damages can lead to legal issues, hurt your reputation, and cost you money.
In this guide, we'll break down the key differences, offer tips on managing wear and tear, and give advice on preventing damage.
What Is Normal Wear and Tear?
Normal wear and tear is the minor deterioration that happens just from everyday use. As a property manager, you should expect some wear and tear, and tenants shouldn’t be responsible for it.
Examples of normal wear and tear include:
Faded or chipped paint
Frayed carpets or curtains
Minor scuffs or marks on walls or floors
Nail holes in walls
Loose doorknobs
Factors affecting wear and tear:
Length of Stay: Longer rentals usually mean more wear and tear.
Number of Residents: More people often lead to more wear.
Age of Residents: Young children can cause more wear.
Pets: Pets can speed up wear and tear.
Property Age and Quality: Newer properties or recent refurbishments handle wear better.
What Is Property Damage?
Property damage is more serious and goes beyond regular wear and tear. It’s usually caused by negligence or carelessness, and tenants may need to cover the cost.
Examples of property damage include:
Doors ripped off hinges
Broken windows
Damaged appliances or furniture
Severely stained wallpaper
Holes, stains, or burns in carpets
Large holes in walls
Deep scratches on floors
Unauthorised alterations
Property damage often requires professional repairs and can lead to tenants losing part or all of their security deposit. In severe cases, you might need to take legal action.
How to Plan and Budget for Wear and Tear
Wear and tear is inevitable, but you can manage it with some planning:
Set a Budget:
50% Rule: Allocate half the rental income to taxes, repairs, and maintenance.
1% Rule: Spend 1% of the property’s value annually on upkeep.
Square Footage Rule: Budget $1 per square foot for yearly maintenance.
Routine Inspections: Regularly check the property to catch issues early and prevent major problems.
Know Lifecycles: Track the lifespan of appliances and furnishings to know when replacements are needed.
Plan for Big Repairs: Don’t forget exterior maintenance like repainting or roof replacement. Plan both the timing and budget for these.
Communicate with Residents: Keep an open line so residents can report problems early, and you can schedule inspections or maintenance as needed.
How to Prevent Property Damage
While you can’t predict damage, you can take steps to minimise risks:
Periodic Inspections: Check the property when residents move in and out, and every three to six months during their stay.
Screen Residents: Do thorough background checks and contact previous landlords to avoid problematic tenants.
Educate Residents: Provide guides on using and maintaining appliances, and explain how to report problems.
Inventory and Document: Keep a detailed list of furnishings and their condition to avoid disputes.
Choose Durable Materials: Use hard-wearing materials and furniture that can withstand regular use.
Review Pet Policies: Have clear pet policies and screening processes to manage increased wear from pets.
Invest in Technology: Tools like Minut can help monitor noise levels, occupancy, and other factors to manage risks.
How to Handle Property Damage
If damage does occur, follow these steps:
Assess the Damage: Inspect and document the damage with photos and videos.
Inform the Residents: Notify them in writing with details and evidence of the damage. Explain their responsibilities as per the lease agreement.
Repair the Damage: Get quotes, set repair timelines, and keep records of all costs.
Deduct from Security Deposit: Provide a detailed list of deductions to residents, following local regulations.
Contact Insurance: If you have insurance, file a claim with the necessary evidence.
Seek Legal Advice: If residents dispute the claims, consult a legal professional with your documented evidence.
Stay Proactive and Minimise Risks
Effective property management is all about prevention. Stay on top of repairs and address issues promptly to keep your property in great shape and your residents happy.