Putting aside for vacancy

[Account Closed]

I notice when I read books on rental properties that they suggest putting aside a percentage of rental income for vacancy. What is the purpose of doing this? - Thank you.

[Frank Wong]

I like 8-12 months of PITI for my reserves that will help with your vacancy. I agree with Jim you don't want to rush into picking the first tenant. It may appear that you are saving money because you got your unit filled right away but it can cost you more in the long run.

Underfunded rental is a common mistake made by new investors. You never want to be in a position where you have to be forced to make a decision based on money.