September 2018 - Income Report
Welcome to the September 2018 rental income report! Gross rents were the same as last month, as I STILL had one vacancy in my duplex. Oh yeah, I guess I should address the elephant in the room....
This month, I was at NEGATIVE cash flow.
Yup, fun times. See WHY below!
My First Property
I bought this single family house in December of 2016 and SOLD it in May of 2018. 2 Bed/1 Bath in a "C" Class neighborhood. NO SEPTEMBER INCOME. See how it performed HERE.
My Second Property
I bought this single family house in March of 2018. 2 Bed/1 Bath in a "B" Class neighborhood. It's currently rented to two medical students on a 12-month lease.
Another pretty smooth month as I had no repairs or maintenance expenses. BUT, my property manager conducted their 6 month interior/exterior inspection (LOVE that they do these), and there's a little water damage in my living room ceiling. So, I'm expecting a repair expense next month. Other than that not-so-great-news, it was a straight month where I took full rent and paid my mortgage, property taxes, and insurance:
Gross Rents: $995
Property Taxes: $216.32
Property Management: $89.55
Income ($995) - Expenses ($696.62) =
Cash Flow from My Second Property: $298.38
My Third Property
I bought this duplex in July of 2018. Both units are 2 Bed/1 Bath in a "B" Class neighborhood. The lower unit is currently rented to a young married couple and the upper unit is vacant and on the market for rent.
Here's where things get interesting. I paid my first mortgage AND I paid off my renovation.
This property was in pretty good shape overall when I closed on it, but still needed a little work to get the vacant upstairs unit up to speed and on the market for rent. A lot of basic work was taken care of (general painting, landscaping, new outlet covers, fixed flooring, new bathroom fan, two new garage door motors). It wasn't too bad AND luckily I asked for $4,500 back in credit at closing to pay for these repairs. Here's how it breaks down:
Gross Rents: $850 (only 1 of 2 units rented)
Property Taxes: $221
Property Management fee: $85
Credit at closing for repairs: $4,500
Income ($850) - Expenses ($7,938.04) + Credit ($4,500) =
Cash Flow from My Third Property: -$2,588.04
FULL PORTFOLIO CASH FLOW: -$2,289.66
So, you can see, my portfolio is VERY MUCH in stabilization mode. But, repairs are taken care of now and getting a new tenant to fill my vacancy will be amazing and should get me back on the positive side of things next month. Remember, real estate is a LOOONNNNGGGGG GAME. We're all going to have multiple negative cash flow months over the years. It's just part of owning real estate.
***VERY IMPORTANT NOTE: even if I brought in positive cash flow after all my fixed expenses, I WOULDN'T TOUCH any of it! This income would all be going toward my next investment and any future expenses. I have a day job and side-hustles to cover my lifestyle expenses :)
If I ever get to the point where I actually want to take the cash flow (like when I head out and live #VanLife), I would still only take about half of the cash flow and save the remainder for future expenses. This is SUPER IMPORTANT! ALWAYS factor in future vacancy/repair/maintenance expenses. Make sure you know how to properly calculate cash flow HERE.
Let me know if you have any questions!