Cash Reserves

[Hunter Estess]

Can y'all tell me what the typical amount of cash reserves are needed to keep for random capital expenditures? Is it based on gross rent? I know older Units will require more yearly maintenance. Is there a formula for this?

[JD Martin]

As much as humanely possible :)  

I see numbers tossed out all the time - 5%, 10%, etc - I don't believe there's a one-size fits all. If I had to make a grand proclamation, I like to have at least enough cash on hand to weather a catastrophe and avoid losing my assets, wherein I had expenses and no income for a significant amount of time. I consider significant over a year, so that's my minimum guidepost. If you only have enough cash on hand to make one mortgage payment if the renter goes awol, or can't afford to replace the roof after a storm, you probably don't have enough cash on hand.