The real work for a landlord begins once he’s rented his property out. From that point forward, he must maintain the property and tend to any repair requests the tenants make. Furthermore, he must also work hard to maintain a healthy relationship with his renters.
Below are four reasons why keeping a rainy-day fund is a must for any landlord. While this list is not all-inclusive, it gives you a good idea of the types of repairs and issues that can crop up demanding you shell out a lot of money fast.
1. The Roof/Foundation Needs RepairWhen your tenant calls you in the middle of the night during a driving thunderstorm to tell you the roof has sprung a leak over their kitchen, you have two options: fix it yourself immediately or hire a contractor. Obviously, if you fix it yourself, it’ll be less expensive, but neither option is going to be cheap.
On that same note, foundation issues are another very costly repair that needs to be addressed quickly to avoid massive damage to the property. Again, having a foundation repaired isn’t a cheap fix. Having an emergency fund at the ready will help defray some or all of the costs so your wallet doesn’t take such a hit.
2. Appliance BreakdownIf an air conditioner is going to break down, it’s probably going to happen during the scalding heat of summer. As the landlord, you must act quickly to repair or replace the unit to keep your tenants safe and happy.
The good news is appliances like air conditioners and furnaces break down rarely. The bad news is when they do, the cost is quite high.
3. Bad TenantsYou do your best to rent to high-quality tenants, but there’s no guarantee they will care for the property as if it were their own. While you may charge a security deposit just for cases like this, many times it isn’t enough if your tenants go above and beyond in their quest to destroy your property.
Luckily, instances like these don’t happen often, but when they do, it’s nice to know you have some money set aside to cover the costs of repairs so you can get new renters in quickly to take their place.
4. Vacancy ExpensesThe rent active tenants pay covers the cost, and then some, of owning a rental property. After all, that’s why you decided to become a landlord, right? Unfortunately, when your tenants move out, you become responsible for all those expenses. From the mortgage payment to utility bills, it’s your responsibility to pay it all yourself until you can find new tenants. These expenses can be devastating if you don’t have an emergency fund set up ahead of time to draw from.
As a landlord, you never know when surprise expenses are going to arise. It’s a good idea to always have extra cash set aside to cover these expenses quickly to keep your tenants happy and your property in good shape.