Reserves for buying rentals

[Shyam Sundar]

I see some landlords say they own 10 or 20 rentals. I am not sure how they are able to do that - not the loan part as I am aware there are funding structures etc. but the cash reserves part. Don't people hold some cash/reserves/savings whatever you want to call it handy, especially the smaller investors. Is there a rule of thumb in terms of reserves/savings you must hold before buying your next (beyond the down payment) - in effect planning for the worst. Example, if I have 100K liquid and readily accessible and I own 2 properties, I can obviously put 25% down for #3 and rent it out but that leaves with me very little wiggle room. I understand this is personal comfort/risk appetite levels, but I'd like to hear how other smaller investors getting into the REI landlord arena think about this aspect.

Would love to hear insights. 

Thanks!

[Jon Kelly]

@Shyam Sundar You'll get to a certain point where you don't need the same amount of reserves per unit as you did when you only own 1-5 units. 

For example, if you own 1-unit maybe you'll keep $10k in reserves. If you own 5 units maybe you'll keep $5k per unit ($25k total). If you own 20 units maybe you'll keep $2k per unit ($40k). The chances of something happening to all 20 units at the same time is extremely slim. 

I'm sure someone will challenge the amount of reserves per unit, but this is just for illustrative purposes and hopefully it gets the point across.