Originally posted by @Jd Martin: The spread on the rent to investment is what makes this work; if rents were to decline by 15-20% it would cause some serious damage to profitability, if it were even still profitable at all.This is the part that would worry me the most - when you put in what I would consider to be 'real' expenses (not the first 3 years after a full rehab numbers) and drop rents to what I would think would be realistic for any one of the recessions that could happen in the next couple of years....all of a sudden you're staring down the barrel of multi-million dollar triplexes that are bleeding money, and likely in a market that could make them tough to exit from at what you expect right now.

If you do pay for sudden expenses out of your pocket, have the business reimburse you as soon as possible.

All of a sudden they are NOW cash cows!!!

So suddenly it matters if your rent is 1% of $100k or 0.5% of $400k. 

Someone who depends on their investments for income cannot afford them to suddenly dry up.

All of a sudden, you've got to replace a $4k air conditioning unit, you've got about $5k in plumbing repairs to do, and another $3k in electrical repairs.  

Institutional lenders tend to deal much more harshly with them.Depending upon the specific area of the country, non-owner-occupied house loans are virtually non-existent or difficult to get.Bankers seem to have a blind spot when it comes to the interests of the speculator in EXISTING houses.While it might be routine to make 100% construction loans to builders and developers (although these, too, are drying up rapidly), the thought that someone might want to make a 90% or 80% loan to purchase an investment turns otherwise jovial Mortgage Loan Officers into pinch-faced misers.They suddenly forget long standing banking relationships and outstanding credit histories, mumbling about money being tight and bank policy being restrictive at the present time.What then is the solution?

My question is, my credit isn't great right now, and I know that banks are suddenly choosy about who they will open up a checking account with, let alone a business account.

Several months later drama arises between the first 2 and the new 3 and the first 2 move out suddenly leaving an unpaid hydro bill which doesn’t get paid and hydro is cut April first.

To protect against any sudden or accidental damage caused by the perils outlined in the policy wording (including water escape).