All Forum Posts by: Tony Matthews

My initial plan is to have at least 6 months of PITI in reserves as part of my initial expense for a newly acquired property. On top of that, my monthly capex expense and vacancy expense will be added to these reserves.

So my reserves would = 6 months PITI for all properties + all capex and vacancy monthly accruals from all properties from all time - all capex and vacancy spend.

If I had an expenditure that dropped me below 6 months of reserves, I would take money from my savings for my next investment to put me back at that level.

Thirty-seven (two) part question, to which I understand has no right answer. Wondering what you do:

Do you keep your reserves for each property separate, or have one big pot of reserves for all properties?

Do you just keep adding capex and vacancy expenses to my reserves in perpetuity, or stop if you get to 12+ months of PITI of $10k over 6 months PITI?

Thanks everyone!

Basically, if it is capex that has to be done before I sell, I will go ahead and do it, like the HVAC and windows. 

What about counters and doors? I would want to replace these before I sell, but they are in line with the neighborhood currently. How often do tenants tear up doors and laminate counters to the point where they need to be replaced?  

(Is there maybe a thread somewhere I couldn't find that has some rules of thumb on what gets replaced between tenants that is not CapEx, like how often one might replacecounters, carpet, doors, and other things?)

Hi everybody!

(Question is at the bottom.. feel free to skip ahead.) :-)

I'm a first-time investor, and have tried to learn as much as I can before moving forward. It's amazing how many questions come up when you actually start to DO what you've been learning.

The neighborhood:

The neighborhood has 80%+ renters, but low crime. The best houses are "B", with the vast majority being in the C to C- range on the inside, and C+ to C on the outside. 

The property:

I've found a C- property (with new, bad paint job, new cheap carpet and flooring) in a C neighborhood in a college town. It's a 4 bedroom, with the secondary bedrooms all really small. (9x9)

The house needs some obvious work to make it a C+ home... some plumbing issues, getting the dryer hookup out of the middle of the living room, adding a dishwasher, etc. Do I stop there? The house has old windows, not all of which will stay open. The counters are dated. The walls have horrible Artex texture. The HVAC is ancient, but works well right now. 

I'm considering adding a closet in the second living area (9x11) to make a 4th small secondary bedroom, as our target market will probably be students on a budget. (I was there once... 5 BR means more people to split rent/utilities.)

The question: How much should I rehab?

Being in a C neighborhood, especially in a college town, I'm not sure how much value there is in bringing the house to a B. What do you think?

Thanks!