How much is enough for emergency fund/reserves per property?

[Timothy Lon]

Hello All,

Looking for some opinions from more experienced investors.

The basics:

I close on my first investment property this following Monday. It's a SFR, 3/1.5 in a C+ neighborhood. Cost is $39,900 and will most likely rent for $700/month.

I plan to have this house paid off in 18 months, at which point I will begin using the additional cash flow for future deals, savings, etc.

The question is at what point, numerically, can I stop putting the normal percentages (i.e. 7.5% for vacancies, 10% for maintenance) away from the rent monthly, or at least reduce the amount to use more of the income for future investments?

I've read on here a number of times about having enough reserves to cover six months of mortgage/taxes in case of vacancies.  However, with a cheaper property like this that would mean I only need approximately $1,500 in reserves.

Obviously, I want to keep adding to the reserves as quickly as possible, and not think about slowing down until I have much more in reserves.  $1,500 isn't going to repair a roof or even a number of major repairs that may happen within the next 5-15 years.

I was thinking once I reach $10,000 in reserves for this property I can begin to think about contributing less, and I can merely build up the reserves at a quicker rate if maintenance or cap-ex start to significantly deplete the reserves.

All opinions welcome.

Thanks.