House Hacking Tip – Reserves Are Key!

House Hacking Tip – Reserves Are Key!

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As a House Hacker or Real Estate Investor, it is important to always set aside a nest egg of reserves before purchasing a property. You never know what type of maintenance issues will be required to maximize the cash flow of your property year over year. Recently, Dana and I, had our first, unexpected issue arise that we were not planning on addressing until after the summertime. 

ENTER THE INSURANCE INSPECTION #1…When Dana and I, closed on our first multi-family property, we had great insurance coverage at an amazing price until they came out for our follow-up inspection post-closing. There were no major concerns outside of the items they knew about (multi-family home, type of dog, and living near water) until our home popped up on the historical registration list. Apparently, we hit the “hard to insure” list and we later received a cancellation letter from our carrier. 

ENTER THE INSURANCE INSPECTION #2…Because we have a multi-family, are on the historical registration, are located near water, and have a Pit-Mastiff; finding insurance was challenging. We have a great insurance broker on our team, and he was able to find one carrier that would cover us, but we still needed an onsite inspection. 

ENTER THE IMPORTANCE OF RESERVES…Words, you never want to hear, “We won’t insure you unless you repair or replace your boilers!” Although our boilers were old, they still worked, and we had heat all winter but unfortunately, they needed to be replaced. After research and a handful of conversations, we decided to go with a tankless, combo unit (pictured above) that houses the boiler and hot water heaters. As we continue to build our portfolio, we will focus on having a strong foundation of reserves to address any and all problems that arise. 

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