Cash Reserves & Scaling.

[John C.]

In looking to scale, do lenders largely expect you to maintain reserves (~6 months) for stabilized properties you already own when looking to underwrite future deals? 

Obviously, it benefits them to do so to mitigate their risk. However, if you're very actively looking to scale and extrapolate this out, at some point you're sitting on a pile of idle cash. Maybe a silly question, but asking it regardless.

[Robin Simon]

Quote from @John C.:

In looking to scale, do lenders largely expect you to maintain reserves (~6 months) for stabilized properties you already own when looking to underwrite future deals? 

Obviously, it benefits them to do so to mitigate their risk. However, if you're very actively looking to scale and extrapolate this out, at some point you're sitting on a pile of idle cash. Maybe a silly question, but asking it regardless.

 Its going to be very important to have those reserves for qualifying for loans as you scale so I would say the answer is Yes But you can engage in some cash management strategies where you really only need to have that cash in reserves at the point of getting a new loan, so at other times you can draw it down as needed