What to do with monthly Cash Flow

Question

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!

Ashley Kehr · Answer

@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.

Robert LaPrelle · Answer

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!

Christopher Copley · Answer

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.

Robert LaPrelle · Answer

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 · Answer

@Ashley Kehr @Christopher Copley @Anthony Dooley Thank you for your feedback this is very helpful and valuable as I'm expanding. Thanks again!

Anthony Dooley · Answer

Keep enough to handle  emergencies, repairs, taxes, insurance, etc in cash. Invest the rest.

Brandon McBride · Answer

@Robert LaPrelle this is really good feedback and solid details for me to know! Thank you. If you don't mind me asking, where are you rentals? I'm looking for long term rentals but ideally want to stay below 100k and have some cash flow.

Thank you!

What to do with monthly Cash Flow

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