Reserves on first MFR

[Michael Andrews]

I am under contract on a 12 unit MFR and trying to more accurately estimate reserves for maintenance and capex. I am tentatively planning to buy-and-hold the property to build up the downpayment on the next property and continue growing until I have 50 units. Obviously this can change with new opportunities to trade up, so I am not sure if I should factor reserves based on a longer term approach or try to capitalize on income from a well maintained property to grow my portfolio.

The property is very well maintained and has 12 1-bed units, common halls (carpeted), and a common area (carpeted) with some seating and small kitchenette. Each unit has newer laminate wood flooring, newer water heaters, new vanity/sink-top, newer one-piece tub/shower surround, and older but immaculately kept appliances. The roof and gutters are brand new, the exterior is 90% brick in great shape, and 10% vinyl siding that looks brand new, there is a small parking lot, and the common areas are dated but in great shape. Unfortunately it is baseboard heat throughout (including common areas). All the tenants are 55+ years old and take exceptional care of their units. GRI is $5,785.00, purchase price is $412,000.

For reserves I am wondering if I should try to shoot for a certain dollar amount based on a percentage of rents, or based it off the value of the property?  Should I continuously set aside fund each month forever or maintain that fund at a certain dollar amount?  Or maybe some other method that I am not aware of?  

I have tried reading through the forums to get a consensus, but after doing so I feel like there is no consensus and everyone has a completely different approach and metric so I'm fairly confused as to which direction I should point myself.