Cash Reserves/ Rainy Day Fund
In case you missed it, the online rent payment company eRentpayment has had major issues when their payment processor filed Ch 7 bankruptcy and casued a lot of investors rent to not get deposited. This started quite the spirited debate about cash reserves in this thread: https://www.biggerpockets.com/forums/52/topics/499...
At the suggestion of Dima Kassim, I figured this topic deserved its own thread.
How do you determine how much cash to keep in reserve for each property and do you change it as you buy more properties?
There are a lot of great blog posts on this and here are just a few:
https://www.biggerpockets.com/renewsblog/2011/04/0...
https://www.biggerpockets.com/renewsblog/2012/12/1...
https://www.biggerpockets.com/renewsblog/2015/05/1...
I'll start the ball rolling: I use the very unscientific metric of three months of expenses and what the two most expensive repairs on the property would cost. I try to follow Warren Buffets rules of investing: " Rule Number 1: Never lose money. Rule Number 2: Never forget Rule Number 1."
What about everyone else?