Reserves for multiple units

3 Replies

Anywhere from $100 to $100,000.

Seriously, that number will depend on a ton of factors.

  • Age, condition of the properties
  • Rent rates
  • Mortgage, taxes, insurance, and other expenses
  • Vacancy rates

Those are just a few considerations. Then there are factors like your personal income. If you are living paycheck-to-paycheck, a reserve is very important. If you are a heart surgeon making $300,000 a year and carrying no debt, then a reserve is probably unnecessary because you could probably replace a roof or two without even dipping into a reserve.

It's not easy but you need to put pen to paper and figure out what kind of losses would be "worst case" and how much you would have to set aside to handle those situations.

Originally posted by @Nathan G. :

Anywhere from $100 to $100,000.

Seriously, that number will depend on a ton of factors.

  • Age, condition of the properties
  • Rent rates
  • Mortgage, taxes, insurance, and other expenses
  • Vacancy rates

Those are just a few considerations. Then there are factors like your personal income. If you are living paycheck-to-paycheck, a reserve is very important. If you are a heart surgeon making $300,000 a year and carrying no debt, then a reserve is probably unnecessary because you could probably replace a roof or two without even dipping into a reserve.

It's not easy but you need to put pen to paper and figure out what kind of losses would be "worst case" and how much you would have to set aside to handle those situations.

 Yeah its very tricky.  I once had 25k set aside and nearly went through it when a roof went, then bad eviction.  I think at this point if I can get all the roofs done, then my # can be less.