New RE investor - Reserve Fund

3 Replies

Hello BP community. I'm looking for my first MF rental (not opposed to SFH) and wanted some advice on how much one should have in reserves when going into a deal. I'd also appreciate any advice on finding off market deals (wholesaling, probate list etc). In an ideal case I'd like to find something that I can BRRRR in order to recoup my capital and accelerate me towards my next deal.

Thanks for your help.

@Terry Scipio Great topic, I love number crunching. I suspect you will get 100 different answers from 100 people but...The way I always calculated my reserve fund was the think through the "worst case scenario...within reason". What I mean by that is...let's say I'm buying a 3/2 single family home for 200k. What could go wrong? It might not rent for 2 months ($2,000) I might have to evict a tenant ($3,000) The a/c or heat could go out ($1,500) I might have an insurance claim ($1,000). So in this case, I would reserve approx $7,500. Everyone will have a different take on this but to me, that makes sense and always worked. 

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