Deferred Maintenance – the practice of postponing maintenance activities such as repairs on both real property and personal property in order to save costs, meet budget funding levels, or realign available budget monies.
That is the definition of deferred maintenance according to Wikipedia. My definition, as it relates to income producing investment properties, would be a little less subtle and much more emphatic. If you defer maintenance to save dollars, you might as well place that money in a box next to your fireplace to use as future kindling. Your cash flow is going up in smoke!
Deferred maintenance can be an absolute killer for an investor looking to build a reliable passive income. What makes deferred maintenance particularly worrisome is when an investor purchases a property without knowing there is deferred maintenance and that puts future cash flow at considerable risk. Two recent incidents brought this topic to the fore front and served as inspiration for this article. One had nothing to do with real estate…but raised the term deferred maintenance in a whole new light for me. The second was very related to real estate and spoke volumes of why there may be an epidemic of misinformation and likely lost cash flows to come.
Read more...Deferred Maintenance – A Silent Cash Flow Killer
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