Managing Repair and Maintenance Reserves

2 Replies

I'm a new rental investor and will hopefully be closing on my first property in a couple of weeks. I pieced together a deal analysis spreadsheet and did my best to estimate the repair and maintenance items that would likely come into play over time, but I'm writing to find out practically speaking how people manage those funds. I realize different folks will have different practices, but...

- Do you all set up some sort of separate account or escrow for each property?

- Or do you pool funds from multiple properties and manage roughly what should be there with a spreadsheet or something similar?

- If you reach a certain threshold of reserve funds for a given property, do you pause saving until some significant capital or maintenance expenses occur?

I've tried to estimate high for most expenses, sort of planning for the worst, so I anticipate over time I might be saving more than is necessary. Just curious how others manage this aspect of investing. Thanks!

Good questions, I wonder about how different investors do this as well.  I have heard that some put all of these funds together for all their properties, and some who don't.  

Hi Steve,

It also comes down to comfort levels of whether you like to micro or macro manage your funding pools as well as your own personal financial auditing style.

You also need to keep legality in mind as to whether the property is setup under a personal or corporate entity in order to protect yourself or your personal assets etc. 

Two people you must have to consult with:

1) A real estate / corporate real estate lawyer.

2) A chartered accountant.

Thanks,

Amit