“You’re Not a Bank. Stop Acting Like One.”
This one’s simple, but it’s costing people big. In a coaching call a client casually mentioned they’d fronted nearly $10,000 for a repair on a single-family rental. Not because they wanted to but because the owner didn’t have reserve funds. And this wasn’t the first time.
They’d gotten into the habit of covering major expenses upfront, hoping the client would reimburse later.
That’s not partnership. That’s subsidizing.
Here’s what I told them:
You are not a bank.
Your job is to manage property, not finance it. When you let owners operate with zero reserves, you’re creating risk that isn’t yours to carry. You’re also setting a precedent that they can defer decisions, drag their feet, and let you hold the bag.
That’s a moral hazard. And it bleeds your company dry. Here’s how we fixed it. We added two things to the new management agreement:
- Minimum Reserve Requirement
Every owner must maintain a reserve account — we recommended $500 to $1,000 minimum per unit. That number might go up depending on property type and age.
- Authorization Thresholds
We set clear rules: above a certain amount (for example, $500 or $1,000), the client has to approve. Below that, you’re empowered to act. No more back-and-forth over routine fixes.
But that’s not enough. You’ve also got to communicate the “why.”
We drafted a short policy update letter explaining the change.
We didn’t say “new rule.”
We said: “This ensures faster service, fewer emergencies, and better outcomes for you and your residents.”
Because that’s the truth.
Running a property without reserves is a liability. For them. For you. For everyone involved.
If your business is constantly cash-flowing repairs for clients, you’re not managing their assets. You’re underwriting them.
And that’s not the business you signed up for.
Draw the line. Put the policy in place. And protect your company.
