@Dawn Curry - I like to make sure I have 6 months of PITI for each property to help with any conventional financing I get.
Outside of that, I generally put 5-10% aside of capex. I don't put aside anything for maintenance as I have enough properties and cash flow it all evens out for me at the end of the year. I do usually budget 10% for maintenance when I analyze deals though.
Great topic. 4 months of my mortgage payment, insurance and taxes on seems to work for me. I add extra for upcoming cap-ex.
Okay just for an example.. if my PITI is approximately 1k.. you’re saying that once you hit 4-6k in your bank account, you’re taking next months cash flow for yourself, another deal, etc?
What if a heater goes in the mid of winter? Or if a pipe leaks and you have to tear out entire floor? You’re saying 4-6x your PITI would leave you with enough cash on hand to get it done... without the chance of vacancy?
If the PITI are as low as the $1000/month example add $5000 extra on top making it $10k.
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