How much to save for PM, repairs, CapEx, Vacancy

3 Replies

Im currently saving 10% of gross rent for property management (altho self managing), 10% vacancy, 10% repairs and 10% CapEx... My actual current rent income is $3413 but when we move out of this unit I'm estimating gross income of $5813. So saving 10% of gross income for each of these reserves is $581/mo for EACH reserve (total of $2325/mo)... Am i saving way too much for reserves?!

Should i be saving 10% each of current rent income or 10% each of what i could potentially be getting in rental income when we move out?

@Camille Joos-Visconti I want to be clear, is this a duplex where you are currently living in one of the units but planning to move out so both units are rented?  I just want to be clear I am following.  Thanks!

@Rick S. Its a triplex, we are renting 2 units and living in the 3rd. Planning on moving out of the 3rd and renting all 3 units out.

Are you currently cashflowing? I'm guessing not or little if youre living in a unit, what about when you move out? What is the condition of the property like? Do you ever plan on using a PM? If youre cashflowing with these numbers now I don't see a reason to save less. Its always good to have those reserves if you have a major expense come up or don't want to self manage anymore.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here