Rental Emergency Fund Calculator
Every rental owner should have at least 5% to 10% of the total value of your
rental properties in a reserve rental emergency fund to cover any unforeseen
major expense that could occur. For example, you may be stuck with an
extended vacancy, or property not producing income for 3 to 6 months due to the inability get a new resident or the inability to get a "non-paying" resident out. Or a major renovation may be necessary, like a new roof or heating system that was not anticipated.
Many rental owners have been forced out of the rental business prematurely,
because of unexpected expenses and lack of funds. It is therefore suggested
that you contribute monthly (or annually) to an emergency fund from gross
rents received so that you can always cover yourself and stay in control.
Hopefully you have some funds available now that can be designated to be
placed into an emergency fund that we suggest you establish (as a separate
account). It is also suggested that you set aside enough (recommended
percentage of 5% to 10% of total property value) into this reserve fund within
the earliest time frame possible (perhaps within 3 to 5 years). Use this
calculator to determine if you are setting aside enough money each month (from
rents collected) to establish minimum funds in your RENTAL Emergency Account
within a certain time frame to better cover yourself.