What to do with monthly Cash Flow

7 Replies

What should I do with my monthly cash flow? I like to be more on the conservative side, I don't like overextending myself. Should I just stock this money in a bank account for that specific property? 

Thanks in advance!

It really depends. I would definitely recommend having a reserve, but I would NOT recommend having a separate reserve for each property. One of the advantages of scale, is that even though you need a bigger reserve in total, it can be smaller per unit. When I owned a single unit, I kept about $5,000 - $10,000 in reserve and I think that was a little risky. I have about 25 units now, and only keep about $25,000 in reserve that I never even use. When one unit is empty and needs repairs, the cashflow from the other units will usually make up the difference. I keep the reserve in case there is a bad storm and I end up needing 5 new roofs in a single month.

Also, I guess it should be said: always pay down high interest loans (like credit cards) first!

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I am mostly in southwestern Virginia. My bread-and-butter used to be duplexes, but its getting harder and harder to find a good deal. The market is getting flooded with townhouses and people aren't that willing to pay extra for their own yard.

Good luck with your search!

@Brandon McBride have to agree, great advice from

@Robert LaPrelle. There are also a lot of high yield savings accounts out there for your reserves. You can find at least 2.3% at an online bank or 2.02% at a local bank. It’s at least something for cash that is sitting.

As others have said, you can set it in a high yield savings account. Depending on the amount and consistency of your income, you can also look at establishing a CD ladder. You'll lock money away for longer, but over time you'll earn more and can have CDs expiring at a set interval in case you need to fund some repairs or a new purchase.