How I’m Quietly Turning 4 Rental Properties into a Passive Income Goldmine While Crushing My 9-5 Grind
Ashley:
Mike, when you decided to invest, did you have a set amount of reserves set aside for a circumstance like this? What would be your advice to a rookie investor that’s got money saved for a down payment? How much should they have in cash reserves in case this same thing happened to them and they had to work over $4,900?
Mike:
My rule of thumb, whether it be via my HELOC currently or when I was just using my own savings account, I like to have between 10 and 15,000 per property set aside just because it’s the individual residential properties at this point. That said, I guess everything can vary depending on when I got started, even just two years ago to now, my income level’s different by a pretty significant amount. If somebody’s making $50,000 versus $500,000, it’s going to be a very different thing where I guess as long as you’re not living wildly outside your means, maybe you don’t need as many reserves because you got big paychecks. But my rule of thumb is at least 10,000 if not 15,000 just because anything that could go wrong that you didn’t see already in the inspection, odds are that’ll cover the bulk of it, at least within the year. The odds of your roof collapsing, your hot water tank going and your HVAC shooting craps all in the same year is, I don’t know. I think you got pretty bad luck there if that happens,
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