how much should i save up??

[Stephen Benskin]

Hi, I'm wanting to get into real estate buy buying a 2-4 multi unit here in Colorado springs sometime in the next few years. I was wondering about how much money should I have in reserves if anything happens, for a down payment and closing cost. I currently have about $7,000 saved up I was thinking about using as a reserves fund.

about how much do other people save up for a down payment? or put in a reserves fund for emergency?

[Jeremiah B.]

Will is accurate, and the answer is unique to the person, but here's my take:

First, never ever be cash poor!!! As a buy-and-hold investor, I can't emphasize this enough.

Second, your personal finances should have at least 4-6 months of expenses saved up. This will vary based on the security of your job, sources of income, etc., but is a good starting point.

Once you have your personal savings in place, we can start talking about real estate cash reserves. Using rough numbers, I would say that you should have an additional 15K for your first property (given that it's a multi), with a total savings (personal and real estate combined) of 30-40K. And this should grow over time as you get additional units.

To say it another way, you should plan for 3 big bads. Such as: losing your job, new roof, and a malicious tenant who trashes one unit.

I'm probably on the conservative side of RE investing, but that's my take.

Happy hunting!