[quote=carlsbadworker]That still leaves us one question, AN/flu. What do you guys think is a proper cash holding right now in this kind of environment? I would think there would be some of emergency fund plus enough down payment for the next rental property? I don’t know what’s the magic formula here? Since you are not finding a rental property with the limited inventory in MM and you don’t want to pre-pay the house, you just watch the cash reserve starts to grow? Or just gamble it with the stock market even at the current high valuation?[/quote]
I don’t think there’s a right answer for all or even for 2 people. I think everyone’s situation is very different and the cash holding is very different. I personally would try to hold about 6 months of expense. Beyond that, I don’t think you need to have the down payment of the rental sitting in cash. Assuming you have access to the cash quickly and you have more than you need for down payment, you can have that money in the market to continue working for you. You can also put it in something like AGNC, so even if you don’t have an investment property yet, you’re still participating in RE. It’s a REIT that has been paying ~16% in dividend over the last few years. But I’m a lot less risk averse than a lot of people. If you’re more risk averse, you can keep it it cash and put it in a online savings account and make <1%.
