How Much Money Do I Need In Reserve


#1

My wife and I are bored with our house and the city we live in. We want to move to an apartment in a city about 40 miles away so we can be around different culture, have access to a spa and swimming pool, shops, restaurants, people watching, etc.

We don’t want to lose the house we live in. We want to hold onto it and rent it out. I am worried about vacancies, evictions, maintenance, repairs, etc.

How much cash reserves should I have set aside to protect us in the event that something goes wrong. Our mortgage is $790 and the house can rent for about $1200-1250/mo. Any cash flow I plan on setting aside to cover emergencies.

Renting an apartment, my income will be tapped. I won’t have the money to make a payment on my house in case of an eviction or vacancy.

How much cash should I have in reserve to cover making payments on my house and maintaining the property?


#2

How Much Money Do I Need In Reserve

Generally speaking, the rule of thumb is you should have on hand at least six month expenses for reserves, which for you runs to about $5,000. Also, do you have a home equity line? If not, apply for one before you move.

Now, I done something similar, but I moved to another property I own. Having gone through that, there are certain things to watch out for.

First, how old is the house?? If the house is approaching 50 years old, I would sell it. A number of years after I moved, I constantly have plumbing problems, like leaks inside the walls. I’m told it’s time to upgrade the plumbing, else having walls broken open constantly, fix resultant holes etc.

Second, you’ll have to buy non homeowner insurance which runs a bit more. Not only that, make sure contractors are licensed and insured else the insurance company will not pay if something happens. Homeowner insurance is not as strict, and at least here, covers workman’s comp claims.

Third, a rental 40 miles away is a pain to go do repairs yourself. You can have tenants do some repairs, but in some cases, their definition of repairs is if there’s a leak under the sink, put a pail under it. And hiring handyman to do it is not cheap, and some charge a minimum of $300 per repair, and plumbers charge a minimum of $100.00 to do a small job like changing a washer. Remember, we’re talking about licensed and insured people here.

So you’ll have to decide if you rather enjoy people watching, or play plumber.


#3

[QUOTE=Frank Chin;894325]Generally speaking, the rule of thumb is you should have on hand at least six month expenses for reserves, which for you runs to about $5,000. Also, do you have a home equity line? If not, apply for one before you move.

Now, I done something similar, but I moved to another property I own. Having gone through that, there are certain things to watch out for.

First, how old is the house?? If the house is approaching 50 years old, I would sell it. A number of years after I moved, I constantly have plumbing problems, like leaks inside the walls. I’m told it’s time to upgrade the plumbing, else having walls broken open constantly, fix resultant holes etc.

Second, you’ll have to buy non homeowner insurance which runs a bit more. Not only that, make sure contractors are licensed and insured else the insurance company will not pay if something happens. Homeowner insurance is not as strict, and at least here, covers workman’s comp claims.

Third, a rental 40 miles away is a pain to go do repairs yourself. You can have tenants do some repairs, but in some cases, their definition of repairs is if there’s a leak under the sink, put a pail under it. And hiring handyman to do it is not cheap, and some charge a minimum of $300 per repair, and plumbers charge a minimum of $100.00 to do a small job like changing a washer. Remember, we’re talking about licensed and insured people here.

So you’ll have to decide if you rather enjoy people watching, or play plumber.[/QUOTE]

I agree…


#4

[QUOTE=Frank Chin;894325]Generally speaking, the rule of thumb is you should have on hand at least six month expenses for reserves, which for you runs to about $5,000. Also, do you have a home equity line? If not, apply for one before you move.

Now, I done something similar, but I moved to another property I own. Having gone through that, there are certain things to watch out for.

First, how old is the house?? If the house is approaching 50 years old, I would sell it. A number of years after I moved, I constantly have plumbing problems, like leaks inside the walls. I’m told it’s time to upgrade the plumbing, else having walls broken open constantly, fix resultant holes etc.

Second, you’ll have to buy non homeowner insurance which runs a bit more. Not only that, make sure contractors are licensed and insured else the insurance company will not pay if something happens. Homeowner insurance is not as strict, and at least here, covers workman’s comp claims.

Third, a rental 40 miles away is a pain to go do repairs yourself. You can have tenants do some repairs, but in some cases, their definition of repairs is if there’s a leak under the sink, put a pail under it. And hiring handyman to do it is not cheap, and some charge a minimum of $300 per repair, and plumbers charge a minimum of $100.00 to do a small job like changing a washer. Remember, we’re talking about licensed and insured people here.

So you’ll have to decide if you rather enjoy people watching, or play plumber.[/QUOTE]

I definitely agree, you should have atleast 6 months for reserves


#5

Learned something new and useful here. Would it make more sense to just travel rather make the move? From experience, traveling is a good opportunity to do people watching and observing other cultures. Moving to a new home / city is very stressful, in my opinion and I would avoid it as much as I can. Just my two cents on this :slight_smile: