Maintaining Responsible Capital Reserves

[Nick Gray]

I'm a 26 year-old real estate investor from New Hampshire and, as I grow my current 22-unit multi-family portfolio, I need to ensure that I maintain sufficient capital reserve funds. Under usual economic conditions, how much of a capital reserve fund is sufficient for a multi-family investor? 

For purposes of this discussion, let's describe capital reserve fund totals in $/unit, # months of scheduled income, or # months of fixed expenses. Let's also assume that these capital reserve benchmarks are for relatively well taken care of properties that are without major deferred maintenance.  

A further question is whether the minimum required capital reserve fund changes with the size of one's portfolio. For example, my sense is that, once an investor has more units and greater economy of scale, he/she can afford a slightly smaller capital reserve fund in $/unit because he/she is less reliant on a given property's income versus say a new investor who only owns a duplex.