Real Estate Investing - Be Prepared for the Unexpected !
Real Estate investing has many benefits: cash flow, appreciation, tax benefits and sometimes immediate built-in equity. In this real estate market, there are ample opportunities to sock away some investment properties for the long term. We have several. It is important to know that there are always risks and always will be. One of the things to be prepared for is the unknown and that is large repair costs.
For example, I just got hit with a plumbing bill that will be over $7,000 for a sewer collapse. The tenant called me saying that the sewage was beginning to back up at the property. I immediately had the plumber go out and snake the line from the house to the sewer line with the City. We initially thought it was a City problem but it was determined that it was a homeowner issue.
Ouch ! That is many years of cash-flow gone !
That is part of the game of real estate investing.
Of course whatever you do with your property, when you make improvements such as plumbing, roof, interior, you are constantly improving your asset. That is one advantage of owning real estate versus the stock market as your asset is tangible. You can touch it and see it. However, when you have to shell out a bunch of cash unexpectedly it is a bit painful.
The lesson here is be prepared for the unexpected. Have reserves ready in case something goes wrong with your properties whether it be roof, plumbing, heater, water heater, etc... Also consult with your insurance agent up-front to have the right coverage in place from the beginning. Do not get the cheapest policy or you will regret it as you will not be covered for anything when unexpected events like this happen.
Good luck !
If you have questions about this topic, feel free to contact us or email us or share your experiences in the comments below.