investment property reserves

Asked by Jhonny Polanco, Newark, NJ Mon Nov 19, 2012

Im planning on purchasing an investment property ..and im a little confused on the reserves needed ( 6 Month PITI) can i use my current homes equity already using equity (HELOC) for for the down payment

Help the community by answering this question:

+ web reference
Web reference:


Keith & Kins…, Agent, Verona, WI
Mon Nov 19, 2012
My understanding is that equity is not a reserve. Accessible cash is a reserve. So, your savings account or checking account is the most sensible place for reserves (since there's no chance of losing it). Although, you can pull cash out of a Roth IRA (excluding gains) that could be considered reserve funds too.

Below is a blog link that my lender wrote on income property financing. He said 2 months of PITI reserve per property is required. So, if this is your first property double check with your lender. As a rental owner myself, I strongly recommend having a full 6 months of PITI to cover all properties in reserves though. I've seen far to many over-leveraged investors get themselves in trouble.
0 votes
Search Advice
Ask our community a question

Email me when…

Learn more