Where do you guys keep your reserves

Question

Where do you guys keep your reserve funds? It seems like a waste to just have them sitting in a checking or savings account, but other accounts usually either have risk, or make it hard to pull the money out. Does anyone have any clever investments to keep their reserves in?

Thanks,

Teague

Thanks,

Teague

Thomas S. · Answer

My reserves are my HELOC. My monthly rents go in, my expenses come out.

It is a 200K line that fluctuates depending on whether I have a flip on the go or some other short term investment.

Robert E Bogino · Answer

I've asked this question a few times before with many different responses.  I keep my "emergency funds" or anything I think I will need fast for my next deal in a Ally Savings account.  Not like home run interest rates but at least its earning something.

Account Closed · Answer

Lots of good options, I keep mine in the Cap 360 money market account. FDIC insured and they pay 1.35% interest.

Omar Khan · Answer

@Teague Anderson Unless large pools of money (greater than a few hundred thousand), it doesn't make sense to go through all the trouble of finding a higher savings account (with interest rates being so low). Go with your most convenient, liquid option.

For instance, even with $20K at 2% (not many, or any, bank will offer you that high of a rate), you will "earn" only $400/year or $33.33/month or a measly $1.09/day. That hardly warrants the effort.

Trevor Ewen · Answer

@Teague Anderson

As anyone that's had an emergency can tell you, there is a ton of value in keeping your reserves liquid. Given that, I definitely recommend checking out interest rates with Credit Unions near you. They tend to be a solid bet for savings interest rates.

Jack L Reynolds · Answer

I mostly keep it in a bank.

Adam Odom · Answer

It's a catch all for everything for me. I don't consider it "debt" necessarily since my cash is sitting as a principal reduction on the line compared to sitting in a savings account earning squat. I could literally move "cash" into my account in less than a minute through online banking. The only risk I'd say you run is if for some reason the bank freezes the line. I'm a stickler for credit so that helps with the likelihood of it not getting closed out.

Teague Anderson · Answer

For those who use lines of credit, is that only for acts-of-god types of repairs or vacancies, or for ordinary capex, like a new roof?  If the latter, it seems (dare I say?) foolish to go into debt to pay for expected repairs.

Also, will a bank consider a line of credit as a reserve when they're deciding whether to approve your loan or not?

Where do you guys keep your reserves

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