Cash Reserves(PITI/Cap ex)
Greetings All,
I am a newbie investor and am currently living in the first property I plan to rent upon moving out. With this unit and future investment properties, one of the questions on the forefront of my mind is cash reserves. No one wants to lose their rental property or not be able to fix it. I struggle less with how much to keep in cash reserves because it seems like from what I have read 6 months P.I.T.I and depreciating the cost of major repairable items to a monthly expense based on their useful life in months will suffice. What I struggle with is the fact that this is a sizeable amount of money to have in the bank losing money to inflation.
My question is are there any better ways to put this money to work than a bank account earning 1-2%? I thought of putting this money into the mortgage and increasing my cash flow a bit through a non-refi amortization adjustment with the bank and then HELOC if I need it later. However it seems from reading other posts on the forums that this may not be a great idea regardless of having a fixed or adjustable mortgage interest rate? I would be interested to know how the seasoned REI of bigger pockets put these cash reserves to work or at least stop them from losing money to inflation. Any advice or creative strategies employed by other investors would be appreciated and very helpful.
-Jim