On WMH's post "Debt" you had mentioned about keeping a reserve of cash for a "what if" situation and I agree. I think that everyone should always consider and be prepared for that. I am in the process of learning more about money and finances and how it works and how things should be done. I think that my saving strategy was a good plan and idea at the time that I implemented it and especially considering my lack of knowledge and education about many things. However, I am starting to realize that purely saving and not spending at all, so to speak, has been a mistake.

I was wondering what you think is the proper amount to keep in reserve and how do you calculate the appropriate numbers?

What all do you consider in your calculations?

6x6,

My strategy for my personal finances is to keep 6 months of living expenses in cash/money market. Easily accessible. Doesn't make anything and in fact loses a little, but when you need emergency funds the last place it needs to be is in something volatile that is down.

For residential rentals, my goal is to keep about $40,000 in cash. Remember, these are "Class C" units, so the most expensive fix is usually a roof or an HVAC system, both of which run around $5000-$7000 at worst. In 16 years, I've never had a month with emergencies go over $10,000, so that seems to be accurate enough for the time-being.

Too, we bring home a certain amount of cash each month as our Owner's Draw (which includes my 10% "Manager's Pay"). That could be reduced if we have a particularly bad several months of expenses, but so far it has stayed steady for the past 5 years and/or increased as we brought more units online and increased rents. These reserve funds are continually replenished by setting aside 5% of gross potential rents (i.e. doesn't matter if vacant or occupied) into savings. Once we hit the amount, then the excess funds go into accelerating debt paydown, improvements, or future acquisitions.

For commercial units, I also set aside 5% of gross potential rents. I like to keep around $3,000 per unit for those. We're still building that fund up and are already around 75% of fully funded about 15 months into becoming commercial investors.

Each person has to weigh their own situation. If your rentals are in poor condition and/or your day job is precarious, then you want higher reserves. On the flip side, if your properties are in good condition (for what they are) and your market/industry is expanding, then you should be fine with less.

myob, yes,I would welcome any and all inputs.

I don't like cash. I use gold and some silver. I don't see inflation eating away at it like cash. It's easy to keep and accepted everywhere. (You'll think this crazy) my fear with cash-- that you have a fire and it's gone-- yes even in a fire safe. Gold-- so what if it melts. Crazy I know.

6Bye-- yea you can bury it also and don't need to worry that it gets wet.

Thank you myob, I appreciate the input.

6x6, that's one of the big problems with gold: it must be assayed (i.e. tested) for purity. Gold is valuable in small quantities, thus making fakes tempting for con artists.

John T. Reed has a detailed, descriptive list of many other major disadvantages of gold. See link below. He favors other "hard assets" like real estate, junk silver, nickels, etc. for wealth preservation against inflation. The good thing about lower denomination coins too is they can never fall below their face value, in case we get deflation. A nickel will never be worth less than a nickel, but it can be worth more if the component materials (melt value) goes up. It's sort of a win-win.

johntreed.com/blogs/john-t-reed-s-hyperinflation-deflation-blog/60940227-disadvantages-of-gold-as-an-inflation-hedge

I don't want to buy gold. What I want is a gold MINE! LOL

Thank you everyone again for the replies.

Sid, that was interesting to read and many good points.

LTD, that's not a bad idea if you can find one. You have the shovel.

Shelby, I am considering things along those lines everyday. I have to change my mindset to get there.