Part 5 - How Much Cash Should Every Landlord Keep?

Every landlord eventually learns the same lesson.

• Repairs don't schedule appointments.
• Neither do hurricanes.
• One month everything runs perfectly.
• The next month two air conditioners fail, a tenant moves out, and your insurance company sends a renewal that's thousands of dollars higher.
• That's why cash reserves matter.

The Biggest Mistake

Many landlords invest every available dollar into another property. Growth feels exciting. Liquidity doesn't. Until you need it.

What Should Your Reserve Cover?

At a minimum, your reserve planning should consider:

• Major repairs
• Vacancy
• Insurance deductibles
• Property taxes
• Legal expenses
• Unexpected maintenance

Florida landlords should also account for hurricane-related risks that investors in many other states never face.

Where Should Reserve Funds Stay?

Reserve money shouldn't be invested aggressively. Its purpose isn't maximizing returns. Its purpose is being available immediately. The best reserve account is the one you never have to think about until you need it.

Paul's Take

I've never heard a landlord complain about having too much cash during an emergency. I have heard plenty wish they had saved more. Cash reserves don't make you rich.

They keep you from becoming poor.