Reserves cover the gap between projected and actual performance
Short-term rental income is inherently more variable month to month than a long-term lease, which means a cash reserve isn't optional padding -- it's what covers a slow season, an unexpected vacancy stretch, or a major repair without forcing a fire sale or missed debt payment.
A reasonable starting point many investors use is several months of full operating expenses and debt service held in reserve, adjusted up for a more seasonal market and down slightly for a market with steadier, more predictable year-round demand.
Build the reserve requirement into your total entry cost, not after closing
Treating the reserve as part of total capital required for the investment, alongside the down payment and furnishing costs, prevents the common mistake of buying a property and only then realizing there's no cushion left for the inevitable slow month.
A done-for-you acquisition process discusses an appropriate reserve target as part of underwriting each property, sized to that specific market's seasonality and the buyer's overall financial picture.
BNB Accelerator's acquisitions team, led by Nick Korom, screens over 1,000 short-term rental listings a week and hand-delivers the roughly 2% that clear underwriting. Book a free consultation to see what a done-for-you short-term rental acquisition looks like for your situation.