How Much Savings Should a Newbie Investor Have For First Deal?

[Seth Murray]

What's the minimum amount of money a new real estate investor should have in savings before buying their first rental property? Specifically for the BRRRR strategy on a single family residence. Any rules of thumb for this?

Even though you can use other people's money to purchase and rehab, it seems like you'd need a certain level of cushion for unexpected repairs, vacancies, or emergencies that might come up before the property has had enough time to build up its own cash reserves for such things. 

[Joseph Cacciapaglia]

Because the BRRRR strategy hinges upon your ability to refinance at the end, you need to at least have enough for the closing costs and enough cash reserves to qualify for that financing. A lot of lenders won't let you borrow funds for those two things. You should check with your intended lender to see how much those will be. I've seen some people run into refinancing issues, because they didn't have the 6 months of payments in reserve after accounting for closing costs. Of course, I think that is the absolute minimum you should have. For any rehab, I think you should also have a significant contingency budget. Even the best rehabbers will occasionally come in way over budget. It's really about your level of risk tolerance, and your ability to raise capital from other sources.