Planning For Unseen Expenses When Investing In Rental Properties

[Gabe Goudreau]

Hello,

I recently listened to Dave Ramsey dissuade a caller from purchasing a multi-family building, and I believe he made several valid points. He said that one of the main issues is that the buyer didn't have the financial means to personally support the property, meaning he couldn't afford any unforeseen capital expenditures or if there was a high vacancy rate that this property would bankrupt him. I know buying a really good deal mitigates this risk, but what are some other ways that you can get past these issues when investing in rental properties with little money?

I am in a similar position as the caller, so I am curious to find a solution to this problem as opposed to simply not buying real estate. Please let me know any opinions you all may have, thanks. 

[Allan Smith]

This year I've had 45 rental units. And yes, unforeseen expenses come up. Roof was 9k. Tree removal was 4k.

when you buy a property, set aside cash as reserves. Simple as that. If an expense uses the reserves, use monthly cash flow to pay it back. 

Unseen expenses to me is a weak reason to not buy real estate. Not sure the angle he's going for there.