Advice on how much cash to have on hand for House Hacking

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Advice on how much cash to have on hand for House Hacking

Danny Sanchez
Member since 2023 · 4 posts · 9 votes


Hi everyone! I've been saving up for my first property purchase, specifically aiming for a duplex. This summer is when I hope to purchase. I've been doing some research for a while, but I'd really appreciate advice from people who are already house hacking. After buying the duplex, how much money should I have set aside? Let's say the duplex costs $240,000, and it's in a decent neighborhood, but it's not in perfect shape, maybe around a C+ shape. (assuming because that's what that price would most likely get you) How much extra cash would you recommend having on hand AFTER buying the duplex? What should one be ready for and what is something to have in mind?

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Charles Granja
Rental Property Investor · Kansas City/Chicago · Member since 2021 · 126 posts · 113 votes
2y

At least 3-6 months of reserves.

Expect to lose probably 2 months of rents when you close, 1 month vacancy, 1 month leasing fee, and to spend 1-2k to make the unit rent ready. 

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  • Charles Granja
    Rental Property Investor · Kansas City/Chicago · Member since 2021 · 126 posts · 113 votes
    2y

    At least 3-6 months of reserves.

    Expect to lose probably 2 months of rents when you close, 1 month vacancy, 1 month leasing fee, and to spend 1-2k to make the unit rent ready. 

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  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    2y

    I never count reserves in months because I think about what could break or will need repair. For a lump sum, I would have 20-25k set aside as a just in case. 10-15k is ok, but if a furnace breaks and you need a new roof, that is done and over.

    Basically, have as much as you can, and never below 10k.

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  • Ryan ThomsonBusiness Member
    Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
    2y

    @Danny Sanchez If you have the money for the downpayment you may already be set. Here is why I say that. You should look into finding a down payment assistance loan on your primary house. In Colorado Springs, I work with lenders that will offer a 0% loan on almost all of the down payment. If you could find that in your area then using the 3.5-5% you saved for the down payment as a reserve fund would be more than enough. 

    You could also get a home warranty for the first two years for a couple hundred bucks. This will protect you while you wait to build up your reserves to a higher amount. 

    The reserve amount will also depend on inspection. How bad were the large items that might need to be repaired in the future (roof, furnace, sewer line, etc).

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  • Jake AndronicoBusiness Member
    Realtor · Reno, NV · Member since 2019 · 1k+ posts · 938 votes
    2y

    @Danny Sanchez

    Great question. I've house hacked twice in Reno, NV and cash reserves have saved me multiple times. 

    Water heaters, furnace, plumbing leaks, replacing a roof, replacing the main water line, tree trimming, microwave replacement, etc. 

    $20-25K would be awesome but you can likely get by depending on condition for $10-15K. 

    Congrats on preparing and asking the right questions!! Best of luck to you. 

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  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    2y

    As others said 15-25K is ideal. Might need more if the property needs more work. Have enough to float you by a few months and if a repair pops up

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  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    2y

    The problem is every property is different. Some properties are turn key, others are gut jobs.

    You need to decide how much money to put aside excluding the down payment and closing costs. That will determine what kind of property you buy.

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