Cash vs Investments? What ratio?

Question

Hi All!

I've been wondering what an appropriate cash to investment ratio is. I currently only have one deal (a small sixplex purchased at $380k), so my current goal is to keep enough cash to cover the expenses for six months if I lose half my rent (roughly $15,000). This is independent of my personal emergency fund.

I also want to have a nice chunk of cash available to invest when opportunities come up, but it's hard to be ok with a large chunk of cash just sitting there growing at 2% or less.

Would love to hear everyone's thoughts on how much % of your money is tied up in investments vs accessible cash, factors that contribute to this (such as how much you're leveraged), etc. Thanks in advance!

Bjorn Ahlblad · Answer

@Jennifer Jackson Congrats on your six unit and keeping reserves and other funds available. I don't know if there is a ratio of cash to investments per se; although I am sure a financial planner could come up with one.

I keep enough ready cash on hand so I can quickly respond to a deal (lately I am starting to doubt if I will ever see a 'deal' again in my market). ;<)

Jake S. · Answer

Hey @Jennifer Jackson I wanted to start out by referring to "I only have one deal" , Congrats on that! you are so much farther ahead than 80% of the speculators out there who never get started. AND the fact that it's a sixplex is huge!For your cash that you want to utilize a bit more, I'd just find a high yield account that you can park it in and keep accumulating, something of low risk that won't fluctuate much.I like to keep liquid a certain % for my personal emergency fund, funds to cover expenses on properties for a few months, and then I like to accumulate enough to go in on an apartment deal that I put together, to show my investors that I also invest in what I'm pitching them