How much Cashflow should I keep?

Question

I have a portfolio of 8 long term rentals. Last year I had a great cashflow (after maintenance, repairs, mortgage, insurance, taxes, vacancy, etc) - I did have a good year of limited vacancy expenses. My Question is, How much of a percentage of cashflow should I figure to keep for myself year in and year out, accounting for the capital expenditures/expenses and different vacancy every year?

Drew Sygit · Answer

You should be asking, how much you need to keep in reserves - the rest would go to you.

How many months of mortgage payments?

Cap-Ex?

Maintenance?

Thomas Mannil · Answer

Personally, I'd keep 60–75% of cash flow in reserves and only spend the rest. Boring? Yes, but the investors who become truly wealthy through real estate usually aren't living off the cash flow—they're leveraging appreciation, refinancing, and scaling their portfolio with accumulated equity.

Ryan Spath · Answer

This is one of those "it depends" situations. How much do you currently have in reserves now? We have a similar size portfolio (a dozen rental doors) we have a sizeable amount of cash on the sidelines and never allow this amount to get below a certain amount. Our gross rents are ~25k a month and we save ~2k a month for repairs, capEx, vacancy etc.

I am still actively working as an agent, and we have other income also. If we were relying on the RE income 100% we may save a bit more. One thing to consider, how old is your current housing stock? How old are the major components (roof, hvac, appliances, etc)

How much Cashflow should I keep?

Most Popular Reply