Investor · Mission Viejo, CA · Member since 2013 · 48 posts · 14 votes
Hi,
I have been reading the posts and have set aside money for an emergency funds for our rental properties. The funds are currently sitting in a bank savings account earning close to 0.01% interest. I am wondering if there are better places to earn a higher yield but still have the funds semi-liquid in case a repair comes up. Any suggestions?
Real Estate Investor · Sebastian, FL · Member since 2014 · 812 posts · 432 votes
12y
@Dean Suzuki My thinking revolves around probability. How likely is it that I will need $1000? Answer, extremely. So I keep $2000 in my savings account at virtually no interest as my short term float. How likely is it that I will need $5000? Less likely, but it will happen. OK, so $5,000 in easily liquidated investments such as CDs, split into $1,000 increments of rotating maturities. These get a whopping amount of interest, also, but better than savings accounts. As my portfolio grows so will this amount. Then I keep at least $20,000 in investments that are not very liquid, but ones I can use as collateral if I need the money in a hurry. That currently involves an unleveraged property, so that part of my reserves is also earning real money. But this also depends on knowing ahead of time where the money can come from so you can get it quickly. The income from this property is also tagged to replenish the liquid reserve funds, as needed.
Good point therefore run out and open an account with vanguard/fidelity and deposit 1 penny so you can timestamp you account. So in 2019 you can employ this strategy.
I like your thinking lol but each segment of money has a 5 year timeline unfortunately.
Real Estate Investor · chicago, IL · Member since 2012 · 1k+ posts · 231 votes
12y
i have $ in a local credit union. i also took a line of credit vs my primary home doubling the amount of reserves just in case. i pay $65 each year for the fee but i sleep really good at night.