How Much Cash Do You Actually Need for Your First Rental Property?

Most first-time investors budget for the down payment and stop there. Then closing gets close and they realize there are three or four other costs they never planned for. Here's the full list.

The down payment

For a rental property (not a primary residence), most conventional lenders want 20-25% down. DSCR loans, which qualify you based on the property's rent instead of your personal income, usually land in the same range or slightly higher. On a $200,000 property, that's $40,000 to $50,000 before anything else.

Closing costs

Budget 2-5% of the purchase price. This covers the lender's fees, title insurance, appraisal, and a handful of smaller line items. On that same $200,000 property, plan on $4,000 to $10,000.

The inspection

A general home inspection typically runs $300-$600. If the inspector flags something specific, roof, foundation, sewer line, you'll often want a specialist to take a second look, which is another $200-$500 per specialist. Cheap relative to the purchase price. Skipping it to save a few hundred dollars is one of the more common regrets first-time buyers mention.

Immediate repairs

Almost no property is move-in ready for a tenant on day one. Paint, cleaning, small fixes the inspection turned up. Even a property in decent shape usually needs $1,000-$3,000 before it's ready to list. Older properties or ones that sat vacant a while can run well past that.

Reserves

This is the one first-time investors skip most often, and it's the one that matters most. Once you own the property, something will eventually break: a water heater, an AC unit, a roof leak. Lenders and experienced investors both recommend keeping 3-6 months of the property's operating expenses in reserve, separate from your down payment money. Not investing it, not tapping it for the next deal. Just sitting there for the month rent doesn't fully cover a repair.

This isn't only a personal-finance nice-to-have, either. Many DSCR lenders specifically require proof of reserves as a condition of approval, on top of the down payment itself, so it's worth confirming what your lender needs before you assume your down-payment savings are the whole number.

Adding it up

On a $200,000 property, a realistic total often lands somewhere between $55,000 and $75,000 once you count the down payment, closing costs, inspection, immediate repairs, and a reserve fund.

The same math scales with price. On a $350,000 property, using the same percentages, you're looking at roughly $78,000-$88,000 for the down payment alone, plus $7,000-$17,500 in closing costs, plus inspection, repairs, and reserves on top. The ratios stay the same; the dollar amount you need to actually have saved does not.

That's meaningfully more than the down payment alone, and it's the number that actually determines whether you're ready to buy, not the number on the listing.

Every deal we send you includes the full cash-needed breakdown, not just the down payment, so you know your real number before you're already under contract.