How much cash to keep in reserve?

[Kelly N.]

Hello all,

We are just staring out, closed on our first rental property in January and waiting to close the second. Our plan for the the first year was to purchase two cashflowing properties, then use the cashflow from those and anything else we can scrape together (income we don't spend and toys and equipment we can sell) to make purchase #3 in year 2. With interest rates this low and property prices rising in our area, we are anxious to move on to #3, especially if we happen upon another good deal!

My question is, how much money should we keep in reserve? We have been keeping about 6 months worth of personal expenses as a reserve, should we be looking at 3-6 months of expenses for each of our rentals too? 3 to 6 months of PITI only? Enough for a few months and a fund for big ticket maintenance items like a roof? My husband's job is very secure and we have a decent retirement fund but we'd rather not borrow from that.

Thanks in advance for your advice.

Kellu