The 5 Secrets to Always Have Money for Rental Property Repairs

Honey, we received the rent payment from our residents. All the bills are paid this month, let’s take the kids and go to Disneyland this weekend.”  Not so fast…...

STOP! And let’s see if that’s in your rental property plan.

Don’t fall into this habit. As landlords, it’s easy to use the money that comes from your rental property to fund other stuff. This is setting yourself up for stress when your rental property needs repairs or a new roof $15,000.

Here are the 5 Secrets for success and to always have money for repairs.

1) Set up a rental checking savings account. This account is separate from your personal checking account.

* If you own more than one rental property you can combine them all in one account.

2) When you open the checking account, open it with $1,000 to $5,000. At minimum enough to make your mortgage payment from it.

3) Use this account to pay mortgages, property taxes, insurances, and repairs for the rental properties.

4) Have the rental payments deposited directly into this account. Avoid sending it to your personal account to prevent second thoughts on transferring the funds.

5) When your taxes are completed, ask your accountant how much you got back because you own a rental property. Whatever the amount is, transfer it from your personal account into the rental checking savings account.

As rents come month after month, year after year, they go directly into that account. The account grows. Before you know it, you have enough money in the account to pay for the new roof and take a vacation.

Treat this rental checking account as your IRA and don’t touch it.

Myth Buster:

“If I raise the rent, the resident will leave.”

We’ve proven this myth wrong. Over the last five years, we’ve been actively raising rental rates to compete with the current rental market.

Annually, we raise rents on approximately 500+ properties. In 2024, 8 residents moved due to rental increases. That’s only a 1.6% turnover. We are not price gouging; we are bringing properties up to the current market value within the amount allowed by law.

For example, one property was rented for $1,425 in 2021. In 2022, we raised the rent by $269, in 2023, we raised the rent by $125, and in 2024 we raised the rent by $200. Now, the property is closer to market value.

With that said the laws have changed on the amount you can increase. We can still accomplish the same thing, but just use a different strategy the law gives us.

Now to get your rent up to market rental rate before the law passes on rent control, we do the following.

If your rent is more than $500 below market rate, we would use a process thar raises your rent up to market rate immediately and then raise it each year thereafter on what the law allows.

 Enjoy the Journey as you buy several properties over time

Your rental property should be funding itself. If it’s not, then let’s talk. We are happy to review your situation and see what’s working and what’s not.

Residents today will pay for value; they are not the residents of 30 years ago. We know we’ve rented over 11,000 houses.

Maybe you’ve been a softy and not raised the rent like you should.  Sometimes, we get so caught up in our everyday life and the grind that we forget to stop and evaluate things.

Just like you must have insurance on your property, you have to properly manage the cash flow of your rental property, which we just went over.

Over the last forty years, we have helped thousands of people with their journey of owning rental properties.

Our goal is for all our landlords to enjoy the journey of owning a rental property or properties. Have less stress, more fun, and build generational wealth for you and your kids. We can help, give us a call. 

This chart breaks down how rents compound over the years and you can see how quickly you can accumulate cash in your rental checking account. Call for appt now!