diff --git a/instantout/reservation/manager.go b/instantout/reservation/manager.go
index 06dedee3..f2833c07 100644
--- a/instantout/reservation/manager.go
+++ b/instantout/reservation/manager.go
@@ -34,7 +34,9 @@ func NewManager(cfg *Config) *Manager {
 }
 
 // Run runs the reservation manager.
-func (m *Manager) Run(ctx context.Context, height int32) error {
+func (m *Manager) Run(ctx context.Context, height int32,
+	initChan chan struct{}) error {
+
 	log.Debugf("Starting reservation manager")
 
 	runCtx, cancel := context.WithCancel(ctx)
@@ -55,6 +57,9 @@ func (m *Manager) Run(ctx context.Context, height int32) error {
 
 	ntfnChan := m.cfg.NotificationManager.SubscribeReservations(runCtx)
 
+	// Signal that the manager has been initialized.
+	close(initChan)
+
 	for {
 		select {
 		case height := <-newBlockChan:
diff --git a/instantout/reservation/manager_test.go b/instantout/reservation/manager_test.go
index 1dbb5a34..226ffb17 100644
--- a/instantout/reservation/manager_test.go
+++ b/instantout/reservation/manager_test.go
@@ -25,12 +25,16 @@ func TestManager(t *testing.T) {
 
 	testContext := newManagerTestContext(t)
 
+	initChan := make(chan struct{})
 	// Start the manager.
 	go func() {
-		err := testContext.manager.Run(ctxb, testContext.mockLnd.Height)
+		err := testContext.manager.Run(ctxb, testContext.mockLnd.Height, initChan)
 		require.NoError(t, err)
 	}()
 
+	// We'll now wait for the manager to be initialized.
+	<-initChan
+
 	// Create a new reservation.
 	reservationFSM, err := testContext.manager.newReservation(
 		ctxb, uint32(testContext.mockLnd.Height),
diff --git a/loopd/daemon.go b/loopd/daemon.go
index 291c6e54..a7db601b 100644
--- a/loopd/daemon.go
+++ b/loopd/daemon.go
@@ -648,6 +648,7 @@ func (d *Daemon) initialize(withMacaroonService bool) error {
 	// Start the reservation manager.
 	if d.reservationManager != nil {
 		d.wg.Add(1)
+		initChan := make(chan struct{})
 		go func() {
 			defer d.wg.Done()
 
@@ -663,12 +664,25 @@ func (d *Daemon) initialize(withMacaroonService bool) error {
 			defer log.Info("Reservation manager stopped")
 
 			err = d.reservationManager.Run(
-				d.mainCtx, int32(getInfo.BlockHeight),
+				d.mainCtx, int32(getInfo.BlockHeight), initChan,
 			)
 			if err != nil && !errors.Is(err, context.Canceled) {
 				d.internalErrChan <- err
 			}
 		}()
+
+		// Wait for the reservation server to be ready before starting the
+		// grpc server.
+		timeOutCtx, cancel := context.WithTimeout(d.mainCtx, 10*time.Second)
+		select {
+		case <-timeOutCtx.Done():
+			cancel()
+			return fmt.Errorf("reservation server not ready: %v",
+				timeOutCtx.Err())
+
+		case <-initChan:
+			cancel()
+		}
 	}
 
 	// Start the instant out manager.
@@ -701,8 +715,9 @@ func (d *Daemon) initialize(withMacaroonService bool) error {
 		select {
 		case <-timeOutCtx.Done():
 			cancel()
-			return fmt.Errorf("reservation server not ready: %v",
+			return fmt.Errorf("instantout server not ready: %v",
 				timeOutCtx.Err())
+
 		case <-initChan:
 			cancel()
 		}