Cash Reserves For Rental Properties

Denver, Colorado
General Landlording & Rental Properties
3moFollow

Cash Reserves For Rental Properties

Zach Anguiano
Member since 2026 · 3 posts · 4 votes

Hello Bigger Pockets! I’m new to real estate investing as I moved into my first house hack ~1 year ago. 
I would like to know people’s cash reserves strategies. What is a good amount that you’ve found works in cash reserve before investing into an additional rental property?

3Reply
254 views

Most Popular Reply

Jonathan Taylor SmithBusiness Member
Rental Property Investor · Durham / Raleigh (Triangle), NC · Member since 2015 · 840 posts · 801 votes
3mo

Hello @Zach Anguiano - At the start of my REI journey, I had access to both cash and credit. I had about $50K set aside and used $18K of that as down-payment for the purchase, and another $9K for the rehab. I was back up to about $50K on-hand when I bought the second one 6 months later. But I also made use of 0% interest financing for things like HVAC and flooring - to preserve my cash and let the property pay for its own rehab expenses from the rental income. Still today I use cheap credit when available, even when I have the cash.

Blue Chariot Realty & Management4.915 Reviews
WebsiteView Page
2Reply
See this reply in the discussion

13 Replies

Jump to latestLatest
  • Jonathan Taylor SmithBusiness Member
    Rental Property Investor · Durham / Raleigh (Triangle), NC · Member since 2015 · 840 posts · 801 votes
    3mo

    Hello @Zach Anguiano - At the start of my REI journey, I had access to both cash and credit. I had about $50K set aside and used $18K of that as down-payment for the purchase, and another $9K for the rehab. I was back up to about $50K on-hand when I bought the second one 6 months later. But I also made use of 0% interest financing for things like HVAC and flooring - to preserve my cash and let the property pay for its own rehab expenses from the rental income. Still today I use cheap credit when available, even when I have the cash.

    Blue Chariot Realty & Management4.915 Reviews
    WebsiteView Page
    2Reply
  • Denise SuppleeBusiness Member
    Realtor · Willow Grove, PA · Member since 2017 · 979 posts · 642 votes
    3mo

    Congrats on the house hack! Personally, I like to keep enough reserves to cover at least 6 months of expenses for each property, plus some extra for unexpected repairs or vacancies. The exact number depends on the age and condition of the property, but having solid reserves has helped me sleep a lot better at night. I'd rather grow a little slower than be forced into a tough situation because of a surprise expense.

    Spark Rental Co-Investing Club577 Reviews
    WebsiteView Page
    1Reply
  • Mohammed Rahman
    Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes
    3mo

    There's no perfect number, but personally I'd want at least 3-6 months of expenses per property set aside before buying the next one. By expenses, I mean the mortgage, taxes, insurance, utilities you're responsible for, and any other recurring costs.

    If you're newer to investing, I'd probably lean closer to 6 months. Things always seem to break at the worst possible time, and having reserves can make the difference between a minor inconvenience and a major headache.

    I also like thinking about reserves in terms of actual events. For example, if the water heater dies tomorrow, the roof needs a repair next month, and you have a vacancy right after that, could you comfortably handle all three? If the answer is yes, you're probably in a pretty good spot.

    Since you're house hacking and only about a year into your investing journey, I'd personally rather have a little too much cash than be stretched thin chasing the next deal.

    Always happy to connect and answer any further questions. My DMs are always open!

    1Reply
  • Jules Aton
    MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
    3mo

    Hi it depends on your situation and whether you are talking about an emergency fund kept liquid or having access to credit cards and taxable stockmarket funds. If your money is tight it would make sense to have a few grand set aside for each property in addition a credit card or two. If you have cushion I am not a fan of sitting on a lot of low interest earning cash. 

    1Reply
  • Aaron ZimmermanBusiness Member
    Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
    3mo

    3-6 months of expenses is what I'd budget for. If there's any big upcoming capex items, then I'd say you'd want to add that to the reserve too

    [email protected]
    Brick House CPAs53 Reviews
    WebsiteView Page
    1Reply
  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    3mo

    @Zach Anguiano

    Congratulations on your first hack! As far as I am concerned, the amount of money I would like to keep for each of my properties is at least 6 months worth of expenses, plus some additional cash for emergencies like a new heating system or new roof. While having reserves will limit your growth rate, it will allow you to rest easier.

    Good luck!

    [email protected]832-776-9582Podcast Guest on Show #469
    NETWORTH BUILDERS5236 Reviews
    WebsiteView Page
    1Reply
  • Jeff WhiteBusiness Member
    Realtor · Denver, CO · Member since 2016 · 278 posts · 371 votes
    3mo

    @Zach Anguiano Congrats on getting your first house hack, that's the hardest one to get!

    It depends on your situation. The number one goal of housing hacking is to reduce or eliminate your housing cost, so if you did that from your first one, that's a great first step.

    Step 2 involves looking at the big ticket items in your current house hack  - roof, sewer, HVAC, plumbing, electrical, etc. If everything is old, then I would budget probably 10-20k in a reserve account to handle those expenses as they come up. 

    If they are fairly newer, then I would budget closer to 5-10k. 

    If you are still working your W2 or 1099 job, that helps too. 

    For any additional rental, I usually stay around 5-15k per property depending on the age of those things I mentioned, and then once you get to about 50k, you can have that as your reserve account. 

    1Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    3mo
    Quote from @Zach Anguiano:

    Hello Bigger Pockets! I’m new to real estate investing as I moved into my first house hack ~1 year ago. 
    I would like to know people’s cash reserves strategies. What is a good amount that you’ve found works in cash reserve before investing into an additional rental property?


     Most lenders want to see at least 3 months minimum however having 12 months with anticipation of repairs/vacancies certainly helps

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
    WebsiteView Page
    1Reply
  • Jim Johnson
    Real Estate Agent · Memphis · Member since 2026 · 558 posts · 326 votes
    3mo

    I don't think there's a single number that works for everyone, but I've always looked at reserves in terms of risk rather than unit count.

    A few things I'd consider:

    • Age and condition of the property
    • Vacancy risk in the market
    • Monthly mortgage and operating expenses
    • Upcoming capital expenses (roof, HVAC, water heater, etc.)
    • Your personal financial cushion outside of the rental

    For newer investors, I've generally found it's better to have a little more cash than you think you'll need. Unexpected repairs, vacancies, and turnovers tend to happen at the worst possible time.

    Before buying another property, I'd want confidence that I could comfortably handle:

    • A major repair
    • Several months of vacancy
    • An unexpected turnover

    without feeling financially stressed.

    1Reply
  • Jared CraftPro Member
    Lender · MI · Member since 2025 · 16 posts · 6 votes
    3mo

    Congratulations! You are already doing great with a successful house hack and thinking on how to stabilize finances before scaling. 

    The right amount of reserves really is different for each property and each investor. Most will say a rule of thumb is 3-6 months or 6-12 months, but the reality is that the reserves are going to differ for a new construction property vs an early 1900's property. The reserves will also differ for two different investors that own identical properties, simply based off of their individual financial profile, and comfort zones. 

    The best thing you can do to find the right number for you is to invest in a property inspection, get a timeline of maintenance and repairs along with cost estimates, analyze your overall financial picture and comfort levels. 

    [email protected]313-512-9454
    1Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    3mo

    Hey Zach, welcome to BP and congrats on the house hack! As others have mentioned and recommend somewhere between 3-6 months of operating expenses per property is probably good for what lenders require, but you might want to lean toward the higher end when thinking about things like HVAC, roof, plumbing, and vacancy so you can have a comfortable cushion.

    One thing to make sure you're doing from a tax perspective that could help you build that cash reserves is making sure you've got your tax strategy set up correctly so you're not missing out on any opportunities to save for example you maybe able to write off a portion of mortgage interest, property taxes, insurance, repairs, depreciation, and utilities on the rental portion of the property. Those savings can be redirected straight into your reserves and help you get ready for that next deal.

    If you're planning to really grow your portfolio, it's definitely worth looping in a CPA who understands real estate to make sure you're capturing everything available to you before you scale. And even worth learning about which type of next investment might be best for you and your overall financial situation (for example, many high W-2 income earners or business owners lean toward STRs because they can turn that income non-passive and offset those other non-passive taxes). Good luck and happy to connect!

    [email protected]941-914-7779
    INVESTOR FRIENDLY CPA®5241 Reviews
    WebsiteView Page
    TaxMD® | AI-Powered Tax Planning
    WebsiteView Page
    1Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    3mo
    Quote from @Zach Anguiano:

    Hello Bigger Pockets! I’m new to real estate investing as I moved into my first house hack ~1 year ago. 
    I would like to know people’s cash reserves strategies. What is a good amount that you’ve found works in cash reserve before investing into an additional rental property?


    If you're living in the property, get a HELOC that you can tap for emergencies.

    Then you can use your savings to expand.

    [email protected]248-209-6824
    Logical Property Management4.9458 Reviews
    WebsiteView Page
    1Reply
  • Zach Anguiano
    OP
    Member since 2026 · 3 posts · 4 votes
    3mo

    Thank you all for the variety of fantastic responses! I've learned a lot in this post. Much appreciated, community!

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free