vacancies and reserves

[Troy Forney]

So I have heard of the 50% rule and also 40%.   I am currently working on my 3rd SF in less than a year and am closing on a 4th in a couple weeks.  I have so far completely rehabbed all properties.  I don't want a problem when I have tenants occupying the property.  I would rather do it while it is vacant.    What is every ones opinion on the amount I should be setting aside.  Occupancy is stable within these areas.  

[Sabrina Calnan]

I addition to what John said above, I would keep at least 1 - 2 months of mortgage payments aside to cover vacancies (I'm not sure what "stable" means in your market).  The best way to prevent unnecessary repairs is to check in on your tenants regularly.  We do a walk through of the inside and the outside of the home every 90 days to ensure preventative maintenance is handled and that the tenant is not abusing the home.  We let our tenants know that it's our policy to do so once their application is approved and before the lease is signed (it also helps weed out bad tenants up front).