Why you need reserves as a landlord
Here is a good case study of why you need good reserves and not to stretch yourself too thin when you're a landlord. There's a property I'm working on with some other investors to buy. The current owner has this rental, but they got themselves involved in another project that for whatever reason, they ran out of money to do. So they were selling the rental property.
Some time after the offer was made, the furnace went out on the property (the furnace was a dinosaur, so it wasn't like this was a huge surprise). I think it's been several weeks now and finally a furnace has gotten put in. Apparently the owners didn't have the money to put in a furnace, so they worked with a contractor to put one in close to closing so they could pay the contractor out of closing!
If you don't know what November/December is like in Wisconsin, then let me tell you it can get COLD! From what I've heard, the tenants have been using small space heaters and boiling water on the stove to keep themselves warm. The temperatures have been down in the 10-15 range, and has recently gotten up to around 40 or so.
Those poor tenants! So be a good landlord, and make sure you have money set aside, so that if something happens like this, you can get the situation taken care of immediately.