How Much Cash Do You Really Keep in Reserves?

Question

When you buy rentals or flips, what’s your comfort level for reserves — a few months’ expenses, six months, or do you go all in and keep cash deployed?

Mackaylee Beach · Answer

It's important to strike a balance between having adequate reserves and ensuring your capital is working for you. Many investors prefer to keep at least three to six months of expenses in reserve to cover unexpected costs such as repairs, vacancies, or market downturns. This cushion provides peace of mind and financial stability, allowing you to handle unforeseen events without stress. However, the exact amount can vary depending on your risk tolerance, the stability of your rental income, and the condition of the property. While keeping cash deployed in new opportunities can maximize potential returns, maintaining a reasonable reserve ensures you're prepared for the unexpected and can sustain your investments over the long term.

Wesley W. · Answer

Thanks, ChatGPT!

Matthew Thornton · Answer

As little as possible..

Joe S. · Answer

I’m assuming people keep less cash than they would like to say publicly. Notice the posts prior to mine… Folks talking about theory, but nobody’s saying what they actually do. Lol.

Stevan Stojakovic · Answer

Joe, I laughed reading your reply. You’re not wrong, lots of theory, light on personal numbers. I respect the transparency. Truth is, most investors probably adjust their reserve comfort level depending on how the market’s feeling that month.

Always a good reality check!

Josh L. · Answer

Good question @Stevan Stojakovic I would lean towards 3-6 months as well, per property or whatever helps you sleep at night.

Stevan Stojakovic · Answer

Josh, thanks for chiming in. I like how you tied it back to whatever helps you sleep at night, that’s really what it comes down to. Everyone’s threshold is different, and peace of mind is worth a lot in this business.

Stevan Stojakovic · Answer

Mackaylee, your answer was spot on. Balancing reserves with deployed capital is really the key to sustainable investing. Three to six months feels like that sweet spot, enough to ride out issues but not so much that your money sits idle. Appreciate your clear breakdown.

Stevan Stojakovic · Answer

David, I really like your tiered approach, three months for the risk-tolerant, six for the more conservative, and the extra 10–20% for CapEx and vacancies is a smart add-on. Helps frame a well-rounded reserve strategy. Appreciate the insights!

Jules Aton · Answer

@Caleb Brown nailed it. Early on when I wasn’t making much at my W2 and had multiple rentals I kept more cash. Now that I have fewer properties that are also in better condition, higher limits on credit cards and a high paying W2 job I don’t really keep an emergency fund. My TSM index fund would be what I would deploy if there wasn’t enough in my checking, next few paychecks or credit cards couldn’t cover but that is highly unlikely.

How Much Cash Do You Really Keep in Reserves?

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