Hi all, what is the typical maintenance reserve you set aside when analyzing a deal or maintained in the bank account? I believe I read somewhere 30% of the gross monthly rent but it seems fairly high. I would like to be conservative however I want an accurate representation. I appreciate any insight. Building we're considering was built in 1967 and has some deferred maintenance.
Depends on how many properties you have, their type and age.
Once I got to 6 properties I didn’t bother with reserves. But properties in Las Vegas are newer, have tile roofs and stucco sidings. In 20 years with 14 properties I’ve never had a repair over $1,000 water heater or $2,500 ac unit and even with 14 properties it might be 1 per year. But if you have asphalt roofs or cedar siding, or boilers you have to plan for them. This is more important when you have 1-3 properties and little non-rental income.