How much should I have on reserves for my first deal???

[Ramon Flores]

Hello everyone I am in the process of making my first deal. It is an out of state deal, it is a duplex that is selling for 79,000. I have around $17,000 for investment and $6,000 personal emergency cash in case anything happens. The gross income on the property is $14760. There are no utilities to be paid. In my opinion it looks like a good deal. However my realtor says that I SHOULD have $5000 ready in case we have to fix the property. Here is my question... how much money on reserve should I have for a property.

Here is what I believe I will more than likely have to put down.

down payment is 25% of 80000 = 20,000

4% closing costs = 3,200

repairs     = 5,000?

Total=   28,200

In my opinion I can purchase the property but it me seems that it is cutting it close. Any thoughts and opinions would be helpful. 

Thanks!

[Andrew Postell]

Ramon, if you are receiving a loan the system that a Loan Officer uses should tell you how much in reserves you should have for lending purposes.  It's usually 2-6 months of all of the mortgage payments you have.  Your credit history and the amount of homes you own will determine whether you need 2 or 3 or 6 months of reserves.  From a pratical position having 6 months is ideal no matter what a "system" tells you.  Also, if you are using conventional money and need more reserves you do have the option of using 20% down or 15% if you need to.  20% is better but 15% is an option out there.  Not every lender offers 20% down and 15% down so look around if you need to find those options.  Good luck!