Hello, I'm trying to plan for repairs and vacancies for an upcoming purchase. However, it occurred to me that once you reach a certain number of properties then the standard amounts don't apply. ( 3-10% vacancy, 5-15% repairs Etc ) For instance if we own 10 properties then the chances that all of them will be vacant at the same time would be slim. The same is true for repairs. What is your system for making there is enough money in reserves to service your properties without having to stock pile cash?
@Patrik Kusek I agree. I set aside $5,000 for my first investment. For the second investment, I only set aside $2,500 which gave me $7,500 total. I continued to set aside $2,500 per unit until I reached $20,000 which works out to about $1,000 per unit (I have 19 units). I can handle multiple vacancies and multiple major repairs all at once without touching my regular income, credit cards, or savings.
Your reserve may also take into consideration your personal finances. For example, I renovated an apartment for $5,000 and used the regular rent income for that month. I didn't have to touch my reserve fund. If you are a surgeon making $200,000 a year then you can probably pay most major expenses out of your monthly income.
Everyone's financial situation and risk level is different.
Thanks for your insight Nathan. It sounds like a good strategy. I hope to get there some day soon!
Anybody else want to share?