At what point do you stop saving for capex, vacancy and maintenance? I know everyone has different savings goals so I’d like to hear a few opinions.
Personally, for the life of my ownership of the property.
@Amer Mallah for instance if you get to a total of 10k for capex, will you keep going or stop there and start over once a huge improvement needs to be made?
While I'm working out the numbers at the beginning of a rental, I take all the cap ex items and give them an average lifespan and replacement value (that is appropriate for the property value). That creates a schedule. If I have enough to replace something that is past its lifespan, I do.
@Kwame Darko it's a very personal decision. Are you living paycheck-to-paycheck with one rental under your belt? Are you a cardiologist, 65 years old, no debt and 10 rentals that net $5,000 a month?
You have to consider your personal financial situation and what you can tolerate. I have a good paying job, good credit, a big line of credit, and an account with $20,000 or more. There's no need to continue saving because my roof could blow off tomorrow and I can write a check for it without batting an eye. Half my properties could go vacant and I could still pay the bills.
Just take the time to sit down with pen and paper and pencil out what you could honestly tolerate, then save up to that amount.
Not everyone sees rental maintenance the same way. I don't save rent up to a certain point for capex or maintenance, as your question implies. I calculate cash reserves when I purchase the property and set that aside. Eventually you get to enough units where you don't need cash reserves per property but rather one lump sum and for the most part rent from other units pays maintenance on the one that needs a roof.
but if you wanted a cheap answer, I'd say save up until you have about enough to replace the roof and stop there. If HVAC needs replaced, save up again after that.
I keep 6 months of expenses in cash per property, that is mortgage, taxes and insurance. I agree with @Nathan G. it depends. I generally keep at least 20K. Roofs are going to be the biggest expense. I employ the BRRRR method so most properties have had extensive rehab. Less maintenance issues.
I don't save anything specific. I have enough net cash flow every month to handle the unexpected. All my LTRs were paid for in cash. I have a single mortgage and that is on my VRBO Lake house.
I also own houses in my self directed IRA and since I can't touch that money there is always cash in that account to pay for any repairs. When it builds up too high I buy another property.