Monthly Repair Costs - Passive Income

[Adam Robinson]

Greetings, 

I always hear people say “it’s not always passive” when talking about real estate investing. 

I’ve seen several posts on social media where they’ll be a downed tree on the property, a few shingles blown off by wind, or some damaged siding, and the poster always says “it’s not always passive”.

My question is: what does everyone do with their monthly repair costs? Do you store it in a separate account? 
When I run the numbers on potential investments in my “monthly debt column” I have; “monthly repair costs”. For my calculations I take 15% of my potential gross income (PGI). So if I have a PGI of $2200, my monthly repair costs would be $330. Now, units don’t always need to be repaired, so I’m stuck on what I do with that $330. Do I add it to my cashflow, or put it into a separate account? And if I do put it into a separate account wouldn’t a downed tree be a nothingburger? If it happens in year one of running a new duplex I can see that it would be impactful, but beyond year 1-2 wouldn’t it just be part of the game? It’s still passive if you play your cards right? Am I missing something?

What do you do with your monthly repair costs? 

Thanks for any help.

[Chris Seveney]

@Adam Robinson

I put it in a separate account at American Express right now where it’s getting 4.5% interest.