How do I go about figuring Funded Reserves for my property? A percentage of gross?

In Property Management - Asked by Jimmy S. - Oct 1, 2008
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Answer(s)

Jeng L.
Broker/Agent
Houston, TX

Use 2% of gross is reasonable if the occupancy is fairly new and stabilized at 85% or higher occupancy. Use higher percentage for older properties without recent renovations or low occupancy.

Nov 21, 2008
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Randy H.
Property/Asset Manager
San Diego, CA

Generally, reserve funds run 2% and up depending on the age of the property. You might also consider a sinking fund. As an example, if you have five years left on your roof and you estimate the replacement cost at $25,000 and you can get 3% at your bank your monthly deposit would be about $400. At the end of five years you would have the $25,000 to replace the roof.

Aug 27, 2009
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