Today’s REI Classroom Lesson

In the classroom today, Pete Neubig breaks down how to handle general maintenance requests so it’s clear up front to everyone what is supposed to happen.

REI Classroom Summary

By having your maintenance policies inside of the lease, it will help the tenant know how to submit maintenance requests and a clear description of how each type of maintenance will be handled.

Listen to this REI Classroom Lesson

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Pete: Hi, my name is Pete Neubig, Co-Founder of Empire Industries Property Management located in Houston, Texas, and I’ll be your host of the REI classroom. Today’s topic is how to handle general maintenance requests.
Mike: This show was sponsored by
Pete: So this is probably the most frequent and most difficult challenge that we come up against as a property management company. The owner of the lease request should be handled one way, the resident request should be handled a different way, and of course, we’re the kind of the stopgap firewall in the middle. This class only talks about general maintenance requests and not emergency requests. So let’s go ahead and dig in to the maintenance requests.
The best way to prevent challenges on the back end is to prepare for them on the front end. So have a policy on how you’re going to accept maintenance requests and stick to that policy. If that policy that they should all be in writing and they need to be emailed in a specific email address, then do that and don’t take them through text. Email is an acceptable form in most cases, but it is your rules that dictate how they send in a request.
Make sure all of your rules are in the lease agreement because the lease is where you set all the rules. So at Empire, we have a software that allows residents to enter work course through their portal. In the lease, we state that all requests have to be in writing through the portal. Your policy should also talk about how certain challenges are handled, how you’re going to handle a mold clean, if the AC is out. In Houston, we have AC problems because it gets hot down here. In other areas of the country, maybe heat. We should have a policy on how you handle certain requests and you should also set everything up in the front end on the lease so that the residents understand what the rules of the game are.
Any updates that a new resident wants should be entered in the lease. So we have people that signed the lease, they get ready to move in, they move in and all of a sudden, they want a bunch of paint done. It only gets done if they put it in the lease before they sign the lease. So let them know before they sign that lease. If they really want this property, they’re going to get it as-is. If they want some extras, they need to put that in the lease before they sign so that those extras will be done.
Position the resident at move-in that you’re not going to do any cosmetic changes. If they want to paint a wall, that’s fine as long as they paint it back to the color that was leased to them. You’d be surprised how many requests that we get where the resident wants cosmetic changes done to the property. That is not the owner’s responsibility and that should be at least explained in the front end with your policy and procedures at move-in.
Another tool that we use is we charge a maintenance deductible. So we have an addendum, we have a maintenance deductible. In Texas, the Texas Association of Realtors, the lease used to have a deductible written in the lease but it became such a sticking point that they removed it. So we put it in our lease and if you’re going to charge a deductible, you must put it in the lease. Do not call it a trip charge, as this can be misconstrued for something different. Call it a maintenance deductible. The maintenance deductible is a tool that prevents residents from entering a bunch of unimportant cosmetic maintenance requests.
So if you want to limit request, you want to go ahead and put a deductible in. But do not make a deductible so high that the resident doesn’t call. If they don’t call on something that can cause more damage to the property, you’re going to have a maintenance that was maybe $200 to fix, well now, it might be $2,000 to fix. So you want to keep it at a small amount, like $100. Do not charge a deductible on any water-related items. That’s typically what get’s you at the end is water-related items.
Also, know what you can and cannot charge a deductible for. So, for example, here in Texas, there is certain maintenance that is covered under the property code and cannot be charged back to the resident. For example, a hot water heater, you cannot charge a maintenance deductible. Also, know the property code on how long you have to respond to a maintenance and how long you have to fix a request. Again, for example, in Texas, we have only seven days to respond to a maintenance request. And so to keep yourself out of litigation, know your property codes, know your local property codes.
Another tip, do not let residents fix their own issues. Use a professional to fix maintenance issues. So once you give resident money off rent to fix an issue, they start fixing items that really don’t need fixing, and they short pay you on rent. So then all of a sudden, they don’t even call you anymore, all they do is short pay you $100 to $200 buck and say they fixed items. So don’t get caught up in that, always use a professional.
Use the golden rule. The golden rule is to treat others as how you would want your mother to be treated. Not how you would want to be treated, but how you want people to treat your mom? Ultimately, you want to treat your customers how you or how you would want your mom to be treated. I cannot stress the number of times an owner not want to fix something that ultimately was not the resident’s fault.
You’ve got to remember, guys, as investors, you only make money if your customer, your client, the customer is the tenant and that tenant is happy. If that tenant is happy, that tenant will pay rent, that tenant will stay in the property a lot longer. So you want to . . . don’t be difficult on fixing items. Go ahead and fix items every once in a while that may be cosmetic every once in a while so that you are having a happy tenant.
Again, another example might be critters accessing the home comes to mind. The owner may want to enforce that maintenance deductible, but is it really the resident’s fault that possums are coming into the home because there’s a hole somewhere? You got to remember, the residents are the ones who ultimately pay your mortgage and pay down your note.
So those are my tips and tricks. My name is Pete Neubig. I’m with Empire Industries Property Management here in Houston, Texas. If you’d like to call us, 888-866-6727 or shoot me an email at [email protected] Thank you.
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