Beware of Leaks and Unbudgeted Home Expenses

If the last two years have taught us anything, it’s how to roll with the punches. The world remains an unpredictable place, so it’s best not to get bent out of shape when life throws you a curveball. 

That said, I do think there’s one area where a little forethought can make life much easier for property owners. 

It was brought home to me by some water dripping in my hallway.

Pipe nightmare.

What I thought was a minor roofing issue after spring rainstorms turned out to be something much nastier.

The polybutylene pipes originally installed by the plumbing contractors during construction were failing. It’s a systemic issue caused by this type of plastic pipework, which was a popular choice from the 1970s to the 1990s. As soon as I discovered this, I knew I was in for some serious maintenance.

Non-action was not an option. I had to spend the money to maintain the value of my home.

If you faced a similar issue, would you be able to find tens of thousands of dollars in a hurry?

Here’s an idea: think like a body corporate.

Every multi-dwelling building with a body corporate is legally required to create a long-term maintenance plan. It’s a tool to help the owners budget for necessary expenditure, so the money is there when it’s time to replace the roof or repaint the exterior.

Private homeowners rarely bother with this sort of forward planning. This hands-off approach can leave them caught short when they realise they need to replace their water pipes to forestall serious damage.

What can you do? One idea is to budget 1% of the property’s value every year for ongoing maintenance. You could invest this to earn a return, or simply make sure you have the ability to borrow at an affordable rate rather than paying over the odds for an emergency loan.

If you’re really organised, you could put together a long-term maintenance plan. The goal is to identify the likely costs of your building over the next decade or two, and put some dollar sums on what you might need.

In other words, think like a body corporate. Here’s a template you can use to get started.

It’s worth it.

Spending big bucks on structural maintenance is not a fun purchase. It’s not like renovating your bathroom or creating a kitchen fit for a glossy magazine. But it’s well worth the investment.

I think of it as the flipside of the stellar capital gains we’ve enjoyed recently. Without doing anything, property values have gone up. They’re worth more, so it’s worth spending money to maintain the value of the asset.

You might even consider releasing some of the equity via a refinance to fund a sensible long-term maintenance plan. We can help you with that.