Landlords Need to Be Maintain Emergency Fund

A landlord’s job does not end after renting out the property to a tenant. It rather begins from there as he will now have to look after the repairs and maintenance requests that the tenants would make. Alongside, he also has to make efforts to maintain a healthy relationship with the tenant. To be a successful landlord in the long term it requires you to be diligent while handling repairs and maintenance requests of tenants. This not only helps to maintain a cordial relationship with tenants but also helps to upkeep the property in a very good condition. This again, would help to get a well paying tenant in a much shorter time frame.

Some common and unanticipated expenses that you can expect include:

Repair a leaky roof / foundation problems

These problems usually require a considerable outflow.

Breakdown of appliance

Electrical appliances like air-conditioner or furnace is usually uncommon. But whenever it happens, it requires considerable cash and needs to be handled with urgency.

Vacancy costs when there is no tenant occupying the property

Such situations are financially draining as it may have to bear for the mortgage cost as well as other routine costs out of the pocket. Hence it is important that to save money for such unplanned events. Else, there are likely to be occasions when it may not have enough funds in the hand to handle these requests with the same urgency as would be desired.

There are two ways to deal with this situation these are:

Maintain an emergency fund

A few landlords create an emergency fund out of the monthly rent that they collect. A predetermined proportion of the rental collection is usually set aside for such a fund. The emergency fund is deposited in a bank and is not utilized for anything else but to meet such unanticipated expenses.

Arrange for bank credit

If you are into this business and have faced this situation often you can look to get a line of credit arranged for yourself. This can help to meet such expenses without bothering to always maintain enough cash balance in the account. Usually the cost of credit or the interest rate is quite low and it would never pinch the finances which are saved.