Every building has a maintenance backlog. The question is whether you know about it, how big it is, and what it's costing you.

We audited a 24-unit building last year for a potential client. The owner believed his building was in "good shape." His PM hadn't flagged any major issues. Occupancy was at 92%. On the surface, everything looked fine.

The maintenance backlog we uncovered was $67,000.

Twenty-two deferred work orders. Three HVAC units past their expected useful life. A roof with two active leaks that had been "patched" four times. Gutters pulling away from the fascia on the east side of the building. A parking lot with cracks wide enough to catch a tire. And a water heater in the common laundry that was original to the building, installed in 2004, running on borrowed time.

The owner didn't know about most of it. His PM hadn't told him. And every month that backlog sat unaddressed, it got more expensive.

What a Maintenance Backlog Actually Costs You

Deferred maintenance doesn't just sit there waiting for you to deal with it. It compounds. Like bad debt with a high interest rate.

Here's how the compounding works:

A $400 problem becomes a $4,000 problem. A small roof leak that could be patched for $400 is ignored for 18 months. Water infiltrates the decking. The decking rots. Now you need a $4,000 section replacement. Wait another year and the damage reaches the ceiling of the unit below. Now you're looking at $8,000 in restoration, a displaced tenant, and an insurance claim.

A $1,200 problem becomes a vacancy. The HVAC unit in Unit 12 has been struggling for two seasons. It cools the apartment to 74 degrees when it's 95 outside. Not great, but functional. The tenant has complained twice. Both times, the PM sent a tech who cleaned the coils and said it's "working within spec." The tenant's lease comes up. They don't renew. In the exit survey (if anyone bothers to do one), they cite the AC as the reason. One turnover: $4,100 in vacancy, make-ready-process-that-gets-units-leased-in-7-days), and leasing costs. The HVAC replacement would have been $4,800, but at least the tenant would still be there paying $1,050/month.

Deferred maintenance lowers your property value. If you're running a building at a 7% cap rate and you have $67,000 in deferred maintenance, a buyer is going to discount their offer by at least that amount. Probably more, because they'll add a risk premium for what they might find that you didn't disclose. That $67,000 backlog just cost you $80,000 to $100,000 in sale price.

The Three Categories of Maintenance

Not all maintenance is created equal, and confusing the categories is how backlogs grow.

Reactive Maintenance

This is the "something broke, fix it" category. Clogged toilet. Broken window. Leaking faucet. Blown circuit breaker.

Reactive maintenance is unavoidable. Things break. The goal isn't to eliminate it. The goal is to respond quickly, fix it right the first time, and document it.

The problem with a reactive-only approach is that you're always in firefighting mode. Every repair is urgent. Every call is an emergency. You never get ahead of the building because you're too busy chasing the building.

Preventive Maintenance

This is where most PM companies fall short and where most of the money is.

Preventive maintenance means servicing systems before they fail. It's the oil change for your building. Here's what it looks like:

HVAC servicing (2x/year): Clean coils, check refrigerant, replace filters, inspect electrical connections. Cost: $85-150/unit. A well-maintained HVAC unit lasts 15-20 years. A neglected one lasts 8-12 years. On a 24-unit building, that's the difference between replacing 24 units over 20 years versus replacing them over 10 years. At $4,500 per replacement, that's a $54,000 difference in capital expenditure timing.

Plumbing inspections (annual): Check for leaks under sinks, inspect water heaters, test pressure relief valves, check for slow drains that indicate buildup. Cost: $50-75/unit. A water heater that fails catastrophically can cause $10,000-25,000 in water damage. A $50 annual inspection catches the warning signs.

Roof inspections (2x/year, spring and fall): Walk the roof, check flashing, clear drains, inspect penetrations. Cost: $200-400 per inspection. Catching a failing seal at $200 prevents a leak that costs $5,000 in interior damage.

Gutter cleaning (2x/year): Cost: $300-500 for a 24-unit building. Clogged gutters cause water to pool at the foundation, leading to basement leaks, foundation cracks, and landscape erosion. The $500 cleaning prevents $5,000+ in foundation repair.

Pest control (monthly or quarterly): Cost: $75-150/month for a 24-unit building on contract. Reactive pest control (calling an exterminator after an infestation) costs $300-800 per treatment and often requires multiple visits. A preventive contract costs less and prevents the infestation from happening.

Total preventive maintenance cost for a 24-unit building: approximately $12,000-18,000/year.

That sounds like a lot. It isn't. It's $500-750/unit/year. On a unit generating $12,600/year in rent, that's 4-6% of gross revenue. And it prevents capital expenses that are 5-10x larger.

Capital Maintenance

These are the big-ticket replacements: roofs, HVAC systems, parking lots, siding, water heaters, appliances. They happen on a schedule whether you plan for them or not. The question is whether you're ready.

A capital reserve study tells you when major systems will need replacement and how much to set aside annually to fund those replacements. We recommend reserving $300-500/unit/year for capital expenditures on B and C class multifamily. On a 24-unit building, that's $7,200-12,000/year in reserves.

Owners who don't reserve for capital end up in one of two situations: they defer the replacement until the system fails (creating an emergency and a higher cost), or they scramble for capital when the bill comes due, usually at the worst possible time.

How to Audit Your Maintenance Backlog

If you don't know the size of your maintenance backlog, here's how to find out. You can do this yourself or hire someone to do it.

Step 1: Pull every open work order. How many maintenance requests are in the queue right now? How old is the oldest one? If you have work orders sitting for 30+ days, that's your backlog.

Step 2: Walk every unit. Schedule interior inspections (with proper notice to tenants). Look at HVAC systems, water heaters, plumbing fixtures, windows, doors, flooring, and appliances. Note the age, condition, and expected remaining useful life of each major component.

Step 3: Walk the exterior. Roof, gutters, siding, parking lot, landscaping, lighting, fencing, common areas. Document everything with photos.

Step 4: Build the list. Every item goes on a spreadsheet with:

Description

Urgency (immediate, 6 months, 12 months, 2+ years)

Estimated cost

Consequence of deferral (what happens if you wait)

Step 5: Prioritize by impact. Address items in this order: 1. Safety and habitability issues (immediate, no discussion) 2. Items that are actively causing damage or revenue loss (this quarter) 3. Items approaching end of useful life (plan and budget) 4. Cosmetic and quality-of-life improvements (when budget allows)

The Conversation With Your PM

If your PM isn't proactively reporting on your maintenance backlog, something is wrong.

Every month, you should be receiving:

A list of completed work orders with costs

A list of open work orders with expected resolution dates

A ratio of reactive vs. preventive maintenance (if it's 90/10, your PM isn't doing preventive work)

A capital needs update (quarterly, at minimum)

If you're not getting this, ask for it. If they can't provide it, they don't have the systems to manage your building properly.

Your maintenance backlog isn't a mystery. It's a number. Know the number. Address it systematically. And stop letting deferred maintenance eat the returns you should be collecting.

If your properties aren't performing the way they should, let's talk. Reach out at Tanner@TopTierInvestmentFirm.com or visit toptierinvestmentfirm.com.

Tanner Sherman is the Principal and Managing Broker of Top Tier Investment Firm in Omaha, Nebraska. He co-hosts the Freedom Fighter Podcast with Ryan of Avara Investments.

Why Your Maintenance Backlog Is Eating Your Returns