Cash Reserves for First Deal

2 Replies

I am preparing my finances in hopes to purchase my first buy and hold Single Family Rental in the next few months.  My goal is to purchase as close to a  rent ready property as possible that will require minimal repairs. (no more than $5K)

What are your recommendations on how much cash I should have set aside incase of emergencies, repairs, vacancies?

This cash would be in addition to the cash I will use for the 25% deposit, home inspection and 5% closing costs.

I am planning to use a property manager and save all cash flow, along with the set aside costs (cap ex, maintenance, etc.). but this will take a while to build up so I want to make sure I am prepared for the worst case scenario.

Thanks,

Originally posted by @Justin B. :

I am preparing my finances in hopes to purchase my first buy and hold Single Family Rental in the next few months.  My goal is to purchase as close to a  rent ready property as possible that will require minimal repairs. (no more than $5K)

What are your recommendations on how much cash I should have set aside incase of emergencies, repairs, vacancies?

This cash would be in addition to the cash I will use for the 25% deposit, home inspection and 5% closing costs.

I am planning to use a property manager and save all cash flow, along with the set aside costs (cap ex, maintenance, etc.). but this will take a while to build up so I want to make sure I am prepared for the worst case scenario.

Thanks,

I like 3-6 months of payments per property in general.  Obviously if I buy with a 3 year expected life on a major roof or mechanical cap ex, I'd add that.

Funny you mentioned PM and cash--flow in the same sentence.  A 1st year PM will run you about 16% with placement fee.  I'd self-manage if in my backyard.  Good luck out there!