Key Concepts: Deferred Capital Maintenance – What Investors Need to Know | Ep. 177

In this episode, we discuss another difference between investing in small towns and larger cities – deferred capital maintenance. Every investor accepts (and hopefully budgets for) the fact that their properties will require maintenance throughout the year. However, we also know that from time to time investment properties will require capital maintenance, especially if the property is older.  This could be the replacement of a roof, painting the outside of the property, rewiring the house, or some other major works. These are often not budgeted for and the payment for these works are often made by leveraging the property.  But, the cost of this maintenance is more expensive (as a proportion of the house price) for properties in smaller towns than in large cities. That means that a small-town property that appears to be cashflow positive can actually have a poor cashflow once this capital maintenance is factored in. We also mention the Property Investors Quiz, this 7-question quiz will give you a 'yes', 'no', or 'maybe', answer as to whether you are in a position to invest in property right now. 

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