Maintenance, Vacancy, & Cap Ex Savings

[Eric La Pratt]

Hey BP'ers,

A few questions about the amounts you are saving every month for maintenance, vacancy, & cap ex.

1) How do you keep track of it?
2) Do you keep it all in one account? 
3) What do you do with your excess (ie if you have no vacancies for 5 years or your maintenance balance is starting to look like a cap ex balance)?

[Jerry W.]

@Eric La Pratt, if it's your first rental, put all of your income into the bank.  Do not pull anything out.  The return rate is just a way of measuring the effectiveness of your investment.  After you have 3 or 4 or more you can decrease your amount you hold back for vacancy, and sometimes for repairs, as your monthly cash flow will begin reflecting some of those costs coming out every month.  That is not true about cap ex.  Keep putting money away in a fund for roofs and other high priced items so the expenses do not leap out at you all of a sudden.  I have an account that money is added to year end taxes and big dollar insurance costs.  I keep trying to add to that for big expenses.  I also use that money to be proactive and replace ancient furnaces or put a new roof on a house that becoming obvious that needs attention.  Hope this helps.