All Forum Posts by: Stevan Stojakovic

Quote from @Joe S.:

Quote from @Stevan Stojakovic:

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?

 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.

 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!

Quote from @David Peschio:

For those comfortable with some risk, a common approach is to have three months' rent per unit in reserve. For those seeking more safety, six months' rent per unit is recommended, which also aligns with typical bank expectations. The optimal amount can depend on factors such as the unit's age, systems, and forecasted repairs or upgrades.

Additionally, some investors set aside an extra 10-20% of rent to cover maintenance, capital expenditures, and potential vacancies, in addition to their cash reserves.

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!

Quote from @Caleb Brown:

I think each case is different. If you are a newbie I would go conservative at least 6 months of reserves. If you have properties and lines of credit you can be slimmer. You should always have cash set aside as reserves, going all in is very risky and foolish regardless of the investor. I think flips need more reserves than a rental. Size of a flip will change things too. One other thing is your income. If you make 6-7 figures and have excess income you can cover things, gives you room to invest more. If you are doing a rental with a 50K salary you need larger reserves. 

 Caleb, great perspective. I agree reserves need to flex based on experience, property type, and income. Your point about flips needing more cushion is a crucial one that new investors often miss. Appreciate how you layered in different scenarios.

Quote from @Josh Lewer:

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

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.

Quote from @Mackaylee Beach:

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.

 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.

Quote from @Patrick Lismon:

Great question. Honestly, the first thing I look at totally depends on the story the property is telling me.

If it looks like a project with lazy management (a value-add play), I go straight to the rent roll. I'm looking for a big mess—huge differences in rent for the same kind of unit. That mess is where the profit is. We just analyzed an 8-unit where that gap was over $21k a year... that's the number I care about first.

But if the property is already clean and supposedly making good money (turnkey), then the first thing I need to see is the real Net Operating Income (NOI) from the T12. I don't trust the broker's marketing numbers. I need to see the real profit to calculate the real cap rate.

So yeah, it's not always one number; it's about finding the number that proves the strategy.

Patrick, love how you dissect the story behind the deal. That rent roll mess you described is exactly the kind of hidden upside that turns average returns into great ones. And you're right: NOI from the T12 is the only thing that really matters in a turnkey. Broker pro formas can be wildly off. Your approach of picking the number that proves the strategy is sharp and flexible.

Thanks for the great perspective,

Stevan

Quote from @Eric Gerakos:

None of the above. The first think i look at is area and tenant pool. If the locals are broke, the other numbers won't matter. This is why D properties look great on paper, until the tenant stops paying rent.

Totally agree, Eric location and tenant base can make or break a deal, no matter how strong the paper looks. I’ve seen plenty of D-class properties with killer cap rates that end up draining cash due to constant evictions and turnover. It’s easy to get blinded by numbers without considering who you’re actually renting to. 

Thanks for grounding the conversation with real-world logic,
Stevan

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