How much is "enough" reserve for vacancies?

[Matt R.]

Hello all!

I have one rental so far, and each month, I set aside 1/12th of the gross rent for future vacancies.  Since my property has been rented for two years now, I have enough money in the vacancy fund to pay myself the full retail rent for two months.

It's not a problem for me to keep putting money in the vacancy fund at this rate, but I was just curious what other landlords do - how many months of vacancy reserve do you consider to be "enough"?

Thanks!

[Kwame Williams]

@Matt R.

Vacancy is not always because your having a tough time finding tenants willing to pay market rent. There are a variety of unforeseen reasons you could be forced to carry your property and not have tenants and cash flow.

As such, I dont think you can have enough reserves...

I would continue to accrue the vacancy reserves in a safe place until you execute your exit strategy. I personally wouldn't be comfortable with less than the equivalent of a full years net cash flow as a reserve before I changed my accruals. Natural disaster, property damage remediation are two that can leave you in a serious pinch.

Kwame