Why You Need a Maintenance Fund for Your Investment Property in the Austin & Central TX area
This article was written for another area of the country, but the same holds true if you own investment/rental property in the Austin and Central Texas Aeneas. It's not a lot of pain to take 10% a month out of your monthly rent checks but it probably is if you have to write a $1K or $2K check. Be pro-active and owning an investment property will be even easier in the long run.
Whether you have one investment property in Montgomery County, MD or several investment properties in Montgomery County, MD, it’s important to create a maintenance fund if you haven’t already.
A maintenance fund is exactly as it sounds, a monetary reserve set aside specifically for repairs and maintenance expenses associated with your investment property in Montgomery County, MD. Without one, you’re setting yourself for disaster.
As any experienced investor knows, maintaining an investment property throughout the years can add to up to big costs. Some repairs will be minor and inexpensive, such as paint and small fixture replacements (like knobs on your kitchen cabinets). Then out of the blue, you’ll be hit with a plumbing issue or HVAC replacement. Either way, you will appreciate having this fund to dip into for repairs, leaving room on your credit line or in your checking account for other things.
How much money should you put into your maintenance fund? I recommend setting aside 10 percent of each month’s rent and putting it into a separate account. If the property is older and/or you know it has certain issues, you may want to set aside more than 10 percent.
The biggest challenge with keeping a maintenance fund will be resisting the temptation to use the money in this account for other things, especially once the balance starts to accumulate. While more experienced real estate investors in Montgomery County, MD may have the will-power to preserve this fund, new investors might be a little more inclined to take shortcuts. These shortcuts will inevitably lead to problems down the road.
If you feel like a maintenance fund is unnecessary because you are relying on a line of credit, remember that those credit lines can be reduced at any time without any notice. In fact, many property investors in Montgomery County, MD have run into this very issue when creditors and banks began clamping down on consumers and raising interest rates. Long story short, a credit line may not always be there but a maintenance fund will.
Emcee Arah of the EMA Real Estate Group is both a Certified Investor Agent Specialist (CIAS) and a Certified Distressed Property Expert (CDPE). Contact Emcee online or by calling 301.452.5252 if you would like to search for investment properties in Montgomery County, MD. Don’t forget to leave your comments below and/or on the Facebook page!
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