How much $$$ do you keep as an 'emergency buffer'?

I know that a lot of investors negatively gear their property(ies), or are slightly cash flow positive. So, that's got me thinking, how many people have a serious amount of $$$ as a buffer for emergencies - like big, unexpected repairs (that aren't covered by an insurance incident), or having an empty property that they need to keep paying the mortgage on?

I'd love to know if, and how much, people have put aside, just in case they need it. Or, if you've been hit with a unexpected, expensive incident that you didn't have the funds available for - what did you do?

 

Everyone gonna be different here due to circumstances.
Here's a thread from Somersoft on this very topic - http://somersoft.com/forums/showthread.php?t=108027&highlight=buffer

 

Need at least $200,000 sitting in the PPOR offset account - need that buffer these days!!!

Not only for interest rate hikes. What if you can't work, made redundant, become sick etc.

 

Show off lol when I first started I was very wary I used to have at least 4 months in repayments for each loan available in case of a emergency. At the moment the cash flow helps me sleep better at night.

 

The answer for us is - more than enough.

 

Why not have appropriate insurances to cover those events, and then invest using most of that buffer which will cover the cost of said insurances and then some?

 

Thankfully, I have a number of different insurance policies to help cover some of those little 'incidents', but WOW - $200,000…..

How, as a newbie investor, do I manage to get (and keep) that amount of $$$ to be used only for emergencies? That's over 3 years net income……. (maybe I really don't need to eat……..)

 

Corey,
I like your suggestion about having insurance, however sometimes they take a while to pay,
years ago, my solicitor said to me 'luvvy, a girl needs $40k in the bank'
I nearly fell off my chair, however It has certainly proved excellent advice,
eg. if a person were to be unemployed, it could take 6 months to find a new, suitable job....
you certainly need a buffer, related to your SANF!

 

I hold $10K cash buffer per property, to allow for up to 12 months worth of backside protection per property in the event of a dramatic change of circumstances, or loss of income

 

to answer your question im sure everyone keeps as much as they can.

similar to waterboy (except not quite the $$ amount) all the extra funds to offset the PPOR are my buffer.

 

Like you, @Waterboy and @B-Man, I am saving funds in an offset to my PPOR, for 'just in case'. I just don't know if I'll ever have enough - so I was wondering how much. $200K is never going to happen, so I'll just save what I can…….

 

I do this too - $10k/property

 

If properties are c.f. + then the dynamics / requirements of a buffer changes imo

 

I have everything covered.

 

Ok - so I'll aim for $10K, for 'just in case' funds. Pity - I was hoping to put that towards the next IP deposit……

 

That's why you have a LOC.

 

I actually have these insurance policies. I can't invest anymore without overstretching myself and increasing my risk appetite. At least it's offsetting my PPOR loan which gives me some 'return' (yield of 4%+, tax free), so it's not useless at all.

These are very scary times to invest in additional property and shares.

 

I'm thinking of putting 'spare cash' into shares, rather than into another property. Like you've said, it is very scary times to invest, and I don't like the idea of being that vulnerable with another non-liquid asset in the near future.

 

With a LOC do you pay down and use ONLY if needed for investment purpose?

 

That's fine, as long as you blame the driver and not the vehicle for the investment returns.