Updated about 6 years ago on . Most recent reply
Rental property reserves strategy
Wondering about a couple different strategies for handling repairs, capex, and vacancy. From what I've read and heard from BiggerPockets, it's a good idea to set aside a certain percentage of the rent each month to cover these costs. However, I've also heard from other investors that they simply pull from reserves when dealing with these variable expenses, then filling those reserves back up once they get tapped into. If I had, say $10k I could comfortably set aside for reserves, how should I handle rental money coming in? Should I set percentages of the rent aside in addition to these cash reserves? Or pull variable expenses from that $10k, then add rental income to it and just use it as a big bucket of saving for the next down payment? I still plan on finding the best deal I can, I'm just wondering how to handle rental income once it starts coming when I have these reserves as a cushion. Wondering what the advantages/disadvantages are of each school of thought. Thanks!