Yeah, vacancy rates can really sneak up on you... I've seen people underestimate them and end up scrambling. Do you usually keep vacancy separate from maintenance buffers, or lump it all together for simplicity?
"Do you usually keep vacancy separate from maintenance buffers, or lump it all together for simplicity?"
I used to lump them together thinking it'd simplify things... until one year I had three tenants move out at once AND the HVAC decided to retire early. Lesson learned—now I keep 'em separate. Anyone else been burned like that?
I learned a similar lesson myself a few years back. At first, combining vacancy and maintenance funds seemed like it would streamline things nicely. It felt logical to have one general "emergency" fund rather than multiple smaller accounts. But reality eventually caught up with me in a pretty uncomfortable way.
A couple years ago, I had two units become vacant almost simultaneously. Normally, that wouldn't have been too big an issue—I'd planned for vacancies, after all—but then the roof decided it had reached the end of its lifespan at precisely the same moment. Talk about timing... Suddenly my combined buffer didn't look so healthy anymore, and I found myself scrambling to shift funds around and cover unexpected expenses.
Since then, I've kept separate reserves for vacancy and maintenance. It's slightly more work upfront when setting up budgets and tracking each account, but the clarity gained is worth it. Knowing exactly how much is earmarked for each type of expense helps me sleep better at night—and believe me, peace of mind is priceless when you're juggling multiple properties.
You're definitely not alone in experiencing this kind of wake-up call. It's one of those lessons most landlords seem to learn sooner or later—but once learned, it sticks with you. Glad to hear you've adjusted your strategy accordingly; sounds like you're on the right track now.
"Knowing exactly how much is earmarked for each type of expense helps me sleep better at night—and believe me, peace of mind is priceless when you're juggling multiple properties."
Couldn't agree more with this point. I've seen plenty of clients run into similar issues when applying for DSCR loans. Lenders typically want to see clear, well-defined reserves for specific purposes—vacancy, maintenance, capital expenditures, etc. Having separate reserves not only helps you manage your properties more effectively but also makes your financial profile much clearer and stronger when you're applying for financing.
One thing I'd add from experience: lenders often scrutinize how organized your financial management is. If they see clearly defined funds and a structured approach to budgeting, it can significantly improve your chances of qualifying smoothly and quickly. On the flip side, if your reserves are lumped together or unclear, it can raise red flags or at least slow down the underwriting process.
I had a client last year who initially had everything in one general emergency fund. He was financially solid overall, but the lender kept coming back with questions about how he'd handle simultaneous vacancies or unexpected repairs. Once he separated his reserves into clearly labeled accounts—one specifically for vacancy coverage and another for maintenance and repairs—the lender's concerns vanished almost immediately. It was a small change on paper but made a huge difference in practice.
Also worth noting: some lenders have specific reserve requirements based on property type or loan size. Keeping separate accounts makes it easier to demonstrate compliance with these guidelines without having to constantly recalculate or justify your numbers.
Sounds like you've already learned this lesson the hard way—like most of us do eventually—but it's definitely something worth emphasizing for anyone else reading this thread who's considering DSCR financing.
Totally agree on separating reserves—lenders love seeing clear buckets for everything. Had a client once whose paperwork was a hot mess...took forever to sort out. Lesson learned: tidy finances = smoother approvals (and fewer headaches).
