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.
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Being an investor as well I have seen this a number of times, new sewer, new septic, and a few other surprises. Biggest thing is as you say "be ready for the unexpected" so that you can take care of them quickly and keep your investment in good condition for what ever you future plans are.
On a holiday weekend, I've had a leaky hot water heater (tenants turned off water and I've e-mailed my plumber) and one house with NO AC; however, there is a pool nearby and the family will camp out there until I can get AC issue addressed on Tuesday....PLAN for the UNEXPECTED!
Robby - Exactly ! What happens also is that more often than not, your tenants see that you are on super on top of it and really appreciate it. They will be thankful and talk about that amongst their friends and family so if you have other properties you will be known as "one of the better landlords in the area" . Reputation goes a long way ! This is even that much more important being an investor AND a Realtor in the community.
OUCH! Even though that outlay of money hurts, you know you are increasing the value of your asset. This post is a great reminder to real estate investors to always keep their reserves funded.
Yep, investments are not for the squeamish. You do have to be prepared for the unknown, but if you buy wisely and at the right time, it can pay off big time. Use the services of a professional real estate agent like Christopher and Stephanie in Philadelphia.
Wallace - That is a good back-up plan for the holiday weekend. It is great to have those special relationships with contractors who can do work for you over the holiday weekend or at least the next morning.
Peggy - Definitely a great reminder ! Because what if you cannot ? Then you have a deteriorating asset and tenants walking and screaming out the door, you are collecting NO rent and your reputation goes "down the drain". Nice pun on words : )
Christopher and Stephanie, This is good advice for investors. They should have some money for unexpected expenses/
Chris out here in the burbs Aqua is always puching the insurance to cover repairs to sewer and water mains. with so many trees it is not a bad idea, just another cost of investing as your example shows it can be costly if something goes wrong.