My partner paid all cash- Set aside $ for vacancy?

[Caleb Anderson]

Hey BP Community!

My partner paid all cash for the buy-and-hold we are working. Without getting too far into details, he's providing capitol and I'm managing the deal and tenants. I have been estimating putting 5% towards vacancy funds, but that was before he decided to do all cash. We worked our arrangement out to where he gets the equivalent of a 20-year loan payment every month after base cash flow. Is there any reason now to put cash towards vacancy expenses that I'm overlooking? I was thinking yes, because it would make sense for him to still receive his "20-year loan" payment even if there is no tenant. 

Thanks, Caleb.

[Alyssa Paros]

I would still include vacancy because, as you said, he will still be receiving a payment monthly and if you're not able to make said payment, there will be some animosity if it can't be paid. Best to be safe.