Updated about 10 years ago on . Most recent reply
Holding Repair Capital
Hi All,
I know it's standard practice to count a certain percentage (I've heard 10%) of the rent you get from a property as going towards repairs. However, as I'm sure everyone is aware, these can be very "chunky". You could go several months with no costs whatsoever, and then get hit a $3000 air conditioning bill.
My question regards how people handle this with capital. Is it standard practice to just continually put away that 10% in a special account that's for "repair funds" for each property? Do people just have a capital account that they keep at a certain level and replenish from the rent from all of their properties when it dips below a certain level? If so, how do you calculate what that capital amount is? As a percentage of the assessed value of the properties?
Any insight on this is much appreciated. Thanks in advance for the advice!
Most Popular Reply
Yes. Always stash that percentage away for a rainy day. Keep adding to it. You will need it someday.