How much do you keep in reserves for each house hack- turned rental property?

[Ben Einspahr]

I was at a meetup the other day, and we were discussing the question, "How much should I keep in reserves for each rental property?". So I figured I would post it to hear everyones feedback

My quick and simple answer is 6 months of PITI (Principal, Interest, Taxes, and Insurance) or $10,000 in reserves for each rental property. Which ever is greater. K.I.S.S.

To date, I still still use this metric. For context I have 3 rentals. Are there times when I dip under that thresh-hold? Yes!

However, there is a tipping point at which this rule of thumb no longer applies. For instance, if you have ten rental properties and $10,000 in reserves for each property, that amounts to $100,000 sitting idle in a checking or savings account. For me personally, that is too much and I would rather redeploy some of that money into other investments. How much money is too much depends on the individual.

Question for the BP community? How much do you keep in reserves for each rental property?

[Andrew West]

I keep 6 months PITI for each property. I also try to knock out any upcoming maintinece issues and budget for looming capex when I purchase a property. I have access to several lines of credit.

I keep all of my reserves in a savings account earning 5.25%.

Another consideration is how much steady W2 income that you have to supplement repairs and maintinence as issues arise.