6 month "reserves" vs capex/maintenance/vacancy
Hi all,
New to real estate investing, looking to invest in a small MFH in Chicago in the next few months. I'm trying to get my numbers together and have a question about reserves.
I've seen the recommendation for X amount of months (let's say 6 months as an example, so PITI x 6) of reserves for emergencies. However, I've also seen investors account for capex/maintenance/vacancy in their deal analysis using percentages of gross monthly rents and considering factors like the age of the home. So my Q is: is capex/maintenance/vacancy part of these emergency 6 month reserves, or should it go into a separate pot that builds up over time? From what I've read, I feel like it's the former; I would just use those percentages for deal analysis but when the capex/maintenance/vacancy expense actually comes up, I'd just pull from my 6 month reserves.
Would love to find out if I'm thinking about this correctly. Thank in advance for helping me get this clarified!