Welcome to Jump In Real Estate's December 2018 rental income report! Wow. The end of 2018. In quite a year of growth for me and my portfolio, I'm just gonna say it: 2018 ended with a sputter on the cash flow side of things. My properties all got hit by expenses, dropping my portfolio into negative cash flow this month. But, as I always say, it's impossible to achieve positive cash flow EVERY MONTH. Repairs and expenses WILL pop up. Just remember, it's a LONG game. Check out the details 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 DECEMBER 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.
December in Indianapolis = RAIN and SNOW. Rain and snow = a great chance to really test a roof. And testing definitely happened. This property had a little leak in the roof that came down around the chimney. And that resulted in a $1,208 repair....fun times! I had to repair 12 linear feet of roof around the chimney, coat it with ice and water shield, and place new shingles. That all resulted in negative cash flow for My Second Property to close out 2018.
Gross Rents: $995
Property Taxes: $216.32
Property Management: $89.55
Income ($995) - Expenses ($1,904.62) =
Cash Flow from My Second Property: -$909.62
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 rented to a young professional.
And...we're definitely not ending 2018 on a high note. I ran into a few more expenses on this property. The good news is I got my tenant in the bottom unit to re-sign a new 12 month lease. The bad news is it cost me a $299 "lease up" fee charged by my property manager. Don't be alarmed though, most PMs tack on a fee once they get a new lease signed. On top of that, I had a contractor go out to inspect the crawl space due to moisture issues. That cost me a cool $147.50 to have my PM drive there and show the contractor around. Lastly, I spend another $59 to create a duplicate mail key for one of my tenants. I just barely squeaked by this month and had a little positive cash flow.
Gross Rents: $1,725
Property Taxes: $221
Property Management fee: $172.50
Income ($1,725) - Expenses ($1,613.36) =
Cash Flow from My Third Property: $111.64
My Fourth Property
This is an 80-unit apartment complex in Louisville that a group of partners and I purchased. It was acquired for $2.25 million and we're investing $1.05 million into it over the next 7-9 months. Cash flow isn't expected until July of 2019.
We were able to bump occupancy of this property up from 50% to 55% in the first couple months and we're seeing rental demand is pretty strong for these units. We're in the process of rehabbing 23 vacant units and expect to break ground on another 10 in January. Our biggest focus is to get these vacant units fixed up and rented to drive occupancy. Cash flow is still not expected until Q3 of 2019.
FULL PORTFOLIO CASH FLOW: -$787.98
The biggest lesson of December? ALWAY, ALWAYS, ALWAYS have reserves to pay for unexpected repairs, and always keep part of your cash flow for future expenses as well. Bottom line: have cash in your back pocket ready to be deployed for emergencies.
***VERY IMPORTANT NOTE: even if I brought in positive cash flow after all my expenses, I'M NOT TOUCHING any of it! This income goes toward my next investment and any future expenses. I have a day job and side-hustles to cover my lifestyle :)
If I ever get to the point where I actually want to take the cash flow, I would still only take about half of it 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!