Reserves: The forgotten expense item

Reserves: The forgotten expense item

When an investor is looking at marketing packages as they shop for their next CRE (Commercial Real Estate) investment property they may note a critical item missing from most Income and Expense statements, reserves. It is a common flaw in most CRE investment marketing packages that reserves are not accounted for. An experienced investor knows every aspect of a building has a life span and at some point the HVAC, roof and other items must be repaired and or replaced. The factors for reserves vary for each property type, use, even location and weather are elements to consider. So every time you consider future real estate investments be sure to include the types of reserves required for the duration of your anticipated ownership.