Short Term Rental Riches 18. Having Reserves
Mar 16, 2020
Real estate can be predictable, but surprises like fires or HVAC failures can quickly change that. The critical role of financial reserves is discussed, emphasizing how they protect short-term rental investments. Budgeting for wear and tear caused by guests is essential. Personal anecdotes highlight the need for proper planning and preparedness for unexpected expenses. Learn practical tips for managing risks and ensuring seamless property management.
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Keep Reserves Mandatory
- Always maintain reserve funds to cover unexpected expenses in real estate investments.
- Lenders often require proof of reserves, so keep savings ready to avoid stressful situations.
Costly Roof Repair Anecdote
- Tim Hubbard shared his experience buying a nine-unit apartment building with a $60,000 roof needing replacement.
- He negotiated a $20,000 credit after the insurer denied a claim for hail damage on the roof.
Budget Reserves for Major Repairs
- Keep reserves to cover major repairs and deductibles like roof, HVAC, or natural disasters.
- Consider reserves reduce per property as your portfolio grows due to risk diversification.