Passive Real Estate Investing TBT: Ask Marco - How Much Cash Should I Keep In Reserve For My Rental Properties?
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Jan 15, 2026 Discover how much cash to keep in reserve for rental properties and how this changes as your portfolio expands. Marco discusses key factors like local market strength, tenant quality, and property age that influence reserve needs. He emphasizes the importance of thorough tenant screening and budgeting for repairs. A practical rule of thumb suggests holding two to three months' rent per unit. As your portfolio grows, you can effectively reduce reserves while using cash flow to replenish them, balancing safety and financial growth.
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Reserves Depend On Four Key Factors
- Reserve needs depend on market strength, eviction costs, property age, and neighborhood class.
- These factors change how much idle cash you should hold for vacancies and repairs.
Model Vacancy Conservatively In Proformas
- Budget at least one month's vacancy per year as a minimum and use 5% vacancy in pro formas.
- Increase to ~8% to assume one vacant month per year if you want more conservative planning.
Start With 2–4 Months Rent As Reserves
- Keep at least two to three months of gross rent per unit as your general reserve rule of thumb.
- For early properties, consider four months and then scale down as your portfolio grows.