I’ve heard numerous horror stories of people who try renting and end up with double mortgage and no rent. I know screening tenants is critical to success - especially when starting out. But I also expect there to be vacancies (hopefully few and brief), repairs and other expenses.
That said, is there a general rule of thumb as to how much money to have set aside to cover the costs of preparing the unit for new tenants, covering the mortgage when vacant, normal wear and tear repair etc?
I have no idea if there is a “general” rule of thumb. The amount that you will need depends upon the number of properties you have and your vacancy rate. If you are just starting out with only one property in your portfolio, I suggenst you build a reserve account equal to six months of operating expenses plus three months of debt service.
As you acquire more properties, you may not need to increase your reserves at all because you mitigate your vacancy risk as you add more properties to your rental portfolio.