All Forum Posts by: Robert Biggerstaff

 Excellent...thank you.  All I asked was the answer to a simple question.

Now here's my answer:

1 - I don't keep cash reserves to cover these things. Like I said above, I feel this defeats the purpose of a cash flow property...turns it into the REI version of a "free checking" account, and adds $1500 by default onto the cost each property.

2 - Now, I didn't say (#1) that I don't cover it, I just prefer to not use my income to do so.

3 - What I have, is a growing LOC that would be greater than the $16,500 (11 x $1500). If I need less, I'm not stealing from my income. If I need more than the $16,500, I have it.

4 - If/when I need it, I know I'm covered...no matter how hard the hit.

I keep 3 month's worth of gross scheduled rent for each property as a base, then trickle in 2.5% GSR each month.  This is apart from maintenance, which is 12%  (my buildings are old).

I agree with what @Dennis M. says about losing out to inflation and not having that money work for you (and I love the idea of having an open line of credit instead), but I am still in the acquisition phase so the lenders love to see those reserves on my balance sheet.  It also allows me to count most of the new rent rolls as income (prior to seasoning).

"I have 11 units so far . I have only 3 mortgages on them. I feel that any of the unforeseen GOTCHAS can be addressed with monthly incomes for the most part. I think that coupled with 1500 each unit and I should be in good position."

@Robert Biggerstaff

I can't answer your question until you tell us  your reasons to keep $1500/unit (as opposed to $5 or $5000/unit).  All you've said is you have 1 units, 3 mortgages, and plan on keeping $1500/unit set aside for the GOTCHAS.  You haven't given your reasons for concluding that $1500/unit was the correct number.  What was that number based on?

 Wait until you see my answer when provided with the missing info.

 Not enough info .