The rental property investment game is an interesting one. There are always the minor upkeep repairs here and there, but occasionally we need to open up the wallet and shell out the big bucks unexpectedly.

About 3 weeks ago the utility department called me and said I have a water leak between the main and the meter in my house. I went to the property and sure enough there is a big, VERY green area in the yard that is soaking wet with water. This is my responsibility to fix and the utility depth wants it done asap, so I called Joe Plumber and 2 weeks later I have a brand new 1" copper service line running to my rental at a $2400 out of my pocket expense.

OUCH!

Over the years I've replaced one other water line, 1 sewer line, roofs of course after hail damage, HVACS that have gone out, etc. These costs are all part of the game we play. The tenant is buying us a house while we assume all the risks.

What are some of your major "unexpected" expenses you've come across?

Two weeks ago, I called every roofer in the Yellow Pages and got quotes for a new shingle roof (tear-off) which was approx. 25 squares. Quotes range from $6,000 to $8,000. I think I will just continue to patch the existing roof which has 2 layers of shingles on it.

What makes things worse is when you have 14 houses and 7 of them need new roofs. I still have not figured out how to deal with this. Whenever a tornado touches down, it always hits someone else's house just down the street.

I have new roofs (1-5 years old) on all of my properties right now, except my house. I dread the thought of hail season coming up...

We lost or had major damage to 8 roofs during Hurricane Matthew. Because it was a named storm deductibles were doubled. OOP about $23,000 so far. No insurance pay off yet, but it won't be much because we are replacing with 30-year wind-rated shingles, and insurance doesn't pay for those...

I'm pretty sure we replaced two or three HVACs last year too, or late 2015 anyway.

Last year it was one new roof AND three new HVAC systems.

You plan for the biggies.

I try to look at it as just another tax deduction (something one needs to hunt down when they don't have mortgages on the rental properties).

My dear Mickie: (Of course I am reading this,...I always read your responses,..LOL)

In the last 5-7 years, I have replaced 6 roofs on my rental houses,...all 6 roofs were metal too due to lesser replacement cost.

The roof I am referring to in this post has two layers of worn out shingles on it that really need to be removed so that weak spots in the underlying decking can be repaired. Plus, this is one of my few 'nice houses' that attracts tenants who can afford my highest rents ($775.00). My gut tells me to spring for a new dimensional shingle roof (higher appraisal value?) than a cheap looking metal roof.

I'm still not sold on the metal roofs yet. I just don't like the way they look compared to traditional asphalt.

Shame on you! If you run a taxi service, you're not going to bring you cabs to Sears or Joe the Mechanic down the street!

It's the same in the rental business. Get several estimates and ask friends for recommendations.

Almost 40 years ago I needed a new 1" water main run from the meter to the house regulator. My first two estimates were $1,200 and $1,500.

I went to the local supply house and estimated the cost of type "L" copper pipe and fittings were around $120. So I got two helpers at $7.50 per hour to dig up the old water main pipe and installed the new one myself. Cost with helpers and material, $225. Had I got a skilled helper to sweet in the pipes for me, it would have cost an extra $200. Still 1/3 the normal price.

Shame on you! If you run a taxi service, you're not going to bring you cabs to Sears or Joe the Mechanic down the street!

It's the same in the rental business. Get several estimates and ask friends for recommendations.

Almost 40 years ago I needed a new 1" water main run from the meter to the house regulator. My first two estimates were $1,200 and $1,500.

I went to the local supply house and estimated the cost of type "L" copper pipe and fittings were around $120. So I got two helpers at $7.50 per hour to dig up the old water main pipe and installed the new one myself. Cost with helpers and material, $225. Had I got a skilled helper to sweet in the pipes for me, it would have cost an extra $200. Still 1/3 the normal price.

Q,

Good post!

My reaction: There is no such thing as an "unexpected expense". Casual LL have "UNPLANNED expenses".

Water heaters, AC, roofs WILL and DO go out. Gotta have a maint budget set aside at all times. No matter how optimistic we are that XX year old furnace will not last forever!

We've been at this long enought I am replacing roofs and furnaces we replaced earlier. Those beautiful new kitchens and baths we installed are now XX years old and tired.

Side note: MY 63 year old furnace is still runnign strong. It's the newer ones we are replacing.

At Convention a few years ago a speaker showed how each house must produce $XXX/mo cash flow after mortgage/ins/taxes to cover a long term "sinking fund" for major components. Most LLs are caught off guard, pay it from savings or job income.

A few years ago after a hailstorm we replaced 57 roofs, each with $1,000 deductible. A LL friend had all her homes under one blanket policy so she paid one $1,000 deductible for her XX roofs.

The good news: I contracted one roofer at a great discount and saved over $1,000 per roof so we fared OK.

Side note: over our 39 years of LLing, even with all those roofs and a few house fires over the years, we have paid waaay more to ins than we collected.

BRAD

Sounds like I have you all beat on waterline expenses.

I had to upgrade the water line to my apt building. A 1 and 1/2" line cost me $15,000!

And that was much cheaper than other quotes.

This just isn't in rentals, of course. I've always told folks who wanted to buy their own home that they should not accept the amount of credit the banks wants to give them. These days that is up to 45% of their income!

Because they WILL need to do maintenance. Maybe not right away but major systems are expensive and must be done immediately when a problem DOES occur - so you've got to have cash in the bank when disaster hits.

Code changed.

Also electric mask or panel boxes.

Recently mobile home underbelly and skirting... Put on a new metal roof also.

... during Hurricane Matthew. Because it was a named storm deductibles were doubled. ...

Nicole:

"NORTH CAROLINA HURRICANE DEDUCTIBLES

Hurricane deductibles are percentage or dollar deductibles that are higher than for other perils, or causes of loss.

They are calculated as a percentage of the dollar amount of coverage on the dwelling.

The trigger for hurricane deductibles, or the point at which they apply, varies by company. Triggers have some common characteristics: they generally go into effect only when the National Weather Service issues a hurricane watch or warning and remain in effect for a specified amount of time after the storm has passed. The intensity of hurricanes may also affect the trigger. Hurricanes are classified on a scale of 1 to 5, with 5 as the highest intensity. If the policy has mandatory deductibles, this means the insurer will not sell homeowners coverage without a hurricane deductible. When a deductible is optional, policyholders may choose a higher deductible for a premium credit.

Mitigation credits apply to qualifying homeowners in the state’s beach and coastal territories (18 coastal counties).The credits provide premium discounts for wind and hail coverage on homes with qualifying construction features that help mitigate damage and insurance losses.

The North Carolina Joint Underwriting Association (FAIR Plan) insures residential and commercial properties statewide where the homeowner has not been able to find property coverage elsewhere except in barrier islands adjacent to the Atlantic Ocean. See website for details.

The Coastal Property Insurance Pool (CPIP), formerly known as the Beach Plan, offers commercial, homeowner and dwelling windstorm coverage and homeowner coverage in the 18 eligible coastal counties of North Carolina.

Named storm deductibles in the FAIR and Beach Plans range between 1 and 5 percent.

Information Sources:

North Carolina Department of Insurance

The WMh: that seems wrong, it should be the other way around! Your deductible should be less!