How long /much do I save for expenses?

5 Replies

Good Evening,

I am looking for some opinions on when I should stop saving for the expense and vacancy related fees? 

What % or $ values do you look for? At some point, the funds saved should outweigh the risk involved and would probably be better suited for further investments.

I'm planning on saving for 2-3 month of vacancy, however, I see repairs, maintenance and CapEx being a little more volatile.

Thanks in advance for your input.

MT

I have 30+ units and I keep a capex account.  When I hit $20k I stopped then when I take out of the account I build it back up to $20k again.

I do not have a vacancy account, I just transfer the monthly profits into my personal account, whatever they are.  

Brie Schmidt, Real Estate Agent in Wisconsin (#57846-90) and Illinois (#471.018287)

Thanks for the reply Brie, 

How did you decide that $20k was your goal?

I like 6k in my accounts as single family homes. I chose 6k because that is usually the highest expenses for something going out. Water heater, roof, etc. 

Originally posted by @Elizabeth Colegrove:

I like 6k in my accounts as single family homes. I chose 6k because that is usually the highest expenses for something going out. Water heater, roof, etc. 

Thanks Elizabeth, 

Do you maintain a vacancy account? Or, is the 6K for everything?

MT

I self manage and haven't had a vacancy. I will lower the price before a house sits empty. I also have a break lease clause/fee and my tenants give 60 days notice on yearly leases. So honestly to date that hasn't been a concern. So my account is all in one

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