Cash Flow is a Misnomer for Investment Properties - Expect the Unexpected
Yesterday while Stephanie was at an open house in Northern Liberties, we received a call from one of our 
tenants for a property we own in Bridesburg. Water and sewage was backed up and coming into the basement ! They were freaking out and upset (deservedly so) .
Stephanie called me to let me know the problem. Both of us did not get upset. She made calls to a couple of contractors we know. One was able to go to the property right away. We found out that the sewage line from the street to the house was clogged and broken. Basically, needing to be replaced !! The sidewalk needs to be dug up under the stairs of the house into the basement !!!
Without quoting numbers, this is not going to be a cheap repair. However, The quote that we got was great though. Fortunately, we have some strong relationships with a couple of contractors. Permits will get pulled tomorrow and the work will get started on right away.
It is important to note that due to this repair, the cash flow for the entire year will be gone for the most part. It is what it is. The flip side is that the property will be immediately improved for the future and our tenants see that as landlords, we respond fast and swift to an issue.
Some investors only look at cash flow numbers without the bigger picture of real estate investing. But more often than not, real estate is not just a numbers thing. As a real estate investor, it is important to expect the unexpected - be prepared for it. A major repair for the year, a vacany, a potential eviction...etc. Without planning for things like that, investors can get in over their heads per se. Or they will immediately think they made a bad investment choice as the "numbers" now do not work. It is important to have a long term horizon and to be ready for and prepared for any potential repairs or issues that may come up to your investment properties.
The big picture is that the better you take care of it, the more it will be worth when you sell it. Further, the quality of tenant will always remain high and at the same time, build a strong reputuation for yourself as someone who knows what they are doing and remains calm under pressure !!!
If interested in buying or selling investment properties in the Philadelphia area, contact Chris and Stephanie Somers at 215-400-2612 or thesomersteam@yahoo.com
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