How much to keep/invest

Question

Hello! My husband and I just bought 17 units last month. We are receiving roughly $4,000/month cash flow. Now we’re trying to formulate a plan going forward. Is there a generally advised ratio of what percentage of that to re-invest in another property vs what to hold on to? Like I said, we are brand new but always learning and big planners, so we’d like to start setting our next goal! Thanks!

Ruth Abdulai · Answer

A good book that helps with figuring that out "Profit First" by Mike Michalowicz

Todd Rasmussen · Answer

@Kaybreh Mathis

So... there's a lot of variables to consider. I think you two should look at age of your units, capital expenditure projections, credit accessibility and personal risk tolerance at a minimum and come up with what amount you feel comfortable having on hand. There are rules of thumb that people use, but really it's a very subjective answer. I think there is value to being cautious while you build a little financial history with this addition to your portfolio so just error on the side of caution.

Our portfolio is almost all SFH's. We have access to about 100K through credit as a backup, but I start to get nervous when cash on hand gets below 75 to support our 20 property portfolio.

Once you figure out what your comfortable number is, then I would save 100% of your net until you were at that number and then I would reinvest 100% of net income after that.

David Richter · Answer

I second the book Profit First!

Kaybreh Mathis · Answer

@Todd Rasmussen Both, I think. I was looking for advice along the lines of “save 50%, reinvest 50%” but was wondering if there was an established percentage that was generally recommended for both. As it is, we don’t want to overextend ourselves, but also don’t want to lose out on more investment opportunities. Thank you!

Todd Rasmussen · Answer

@Kaybreh Mathis

Are you asking what % to take out of the investment? Or what % to hold for reserves?

How much to keep/invest

Most Popular Reply