Cash reserve questions.

Friday, September 28

I am  a new member but am looking for advice on cash reserve questions.  I currently own 2 single family rentals with combined income of $1625 per month but mortgage payments of $1525 per month.  I pay insurance and yearly taxes out of pocket.  I can do most minor repairs myself and have access to good plumbers and electricians in the area.  Both houses are in average or better condition, except 1 has a roof excluded from insurance coverage which could last 10 years or 6 months.  How much should I have in cash reserves for each rental?  Is it 6 months mortage payments?  More?  Less?  I bought both houses with very little down, but if I buy more it will drain cash reserves for a down payment.  The local banks all insist on 20% down or more in order to finance.  Wyoming is a bust/boom state but our little town escapes the worst of that.  My fear is having 10 empty rental houses that I cannot pay the mortgage on, but having 10 rentals with a nice cash flow would be nice.  My day job pays well but I do not want to over extend and get myself in trouble in case of a downturn in the economy.

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