How much to keep in reserves

[Jared Baker]

Hello BP,

I am looking for my first rental property and was wondering what people keep in reserve for a deal.  Since it will be my first property I will be able to get it for 5% down, which will only be about $8K, there are closing costs as well but I have the money for that.  Although I have the money for purchasing and the repairs up front, what kind of money should I keep in reserve for after the deal?  

Here is what I am looking at:

Purchase Price: 150-185K Duplex with Garage.

Area Rent: 1000-1200 per unit

Downpayment/Closing Costs: 8-9K

Mortgage Payment(Includes taxes, P&I, home insurance and PMI): 900-1100 per month

Initial Repairs: 2k

Left over Cash: 7K

My thought is to purchase as an "Owner Occupied" (that's how I would get the 5% down).  It is 2 hours north of where I am currently living.  I will be in that area anyway because I have family up there, but I would do the repairs need on the weekends and then as soon as possible get both units rented out.  I figure it will take me approximately 3 months only working on the weekends to get one unit ready.  Ideally the property will have one unit that is in livable conditions so I could get that rented out right after purchase and then update the other unit.  I will continue to rent where I am now and this would end up being purely an investment property.  What kind of reserves would people recommend to have for a first deal?

Thanks for your help!