November 2013 Cash Flow Statement

by FI Fighter on December 3, 2013

in Cash Flow


The Cash Flow Statement is my favorite update of the month! This is the post I most look forward to writing each month, since the results validate all the hard work I’m putting in. You can’t fake it, twist it, or lie about it… the results are what they are…The plan is either working, or not!

This month, we introduce Rental Property #4 into the fold, as this marks the first month I started collecting income for it. Since closing finalized on November 12, the rent for this month was prorated. The other properties are all still occupied and renting out as normal.

Let’s get to the results:


Rental Property #1

Rental Property #1 is performing as expected. I was able to collect rent on time this month, with no additional issues or surprises. The first installment of property taxes were paid last month. The second installment isn’t due until the end of April, so I’ll probably get to that payment sometime after Rental Property #5 closes. I’m probably going to need the extra funds to get through underwriting, otherwise my preference would have been to pay off all the property taxes in one go.

Rental Property #2

I paid the first installment of property taxes for Rental Property #2 this month. This property is continuing to perform with no news to report this month. That’s always music to my ears! Similar to Rental Property #1, the second installment of property taxes will be paid after Rental Property #5 closes. I need to hold onto as much cash as possible until I get through closing again!

Rental Property #3

Just when I thought I had all the kinks resolved, we go through yet another month in which tenant #2 misses a payment! This is starting to become the norm, which is unfortunate, and something that the property manager and I will need to get resolved ASAP. As mentioned in last month’s report, tenant #2 recently lost her job and had to petition with Section 8 to get her monthly rent reduced. Section 8 approved the request, and has been covering 92% of the monthly rent (since September), or $1064. The tenant is only responsible for $94, but still missed this payment. The last I heard, my property manager has an upcoming phone call with the tenant to go over her situation. It would be a shame if she had to be evicted, because losing that wonderful Section 8 voucher would be a huge blow for her own personal situation.

Tenant #1 continues to pay on time, and I have not had a single issue with her. She’s been terrific, and I was able to collect her portion of the rent, $950.

Total rent collected was $2014. Even with the missed rent from tenant #2, the property still cash flowed $871.13. Looking at the big picture, it was still a very successful month, overall. This is why I’m willing to be a bit more patient with this situation, and why I’m not jumping the gun to start an eviction.

Rental Property #4

Rental Property #4 is now leased for 2 years at $1075/month. Since closing didn’t finalize until November 12, I was only able to pick up rent for 19 days this month (starting November 12). The prorated amount comes out to be $680.83. However, unlike my Chicago property, this property manager charges a lease up fee (for a new tenant) equal to the first month’s rent. So, I actually owe them the entirety of this month’s rent, $1075. After subtracting my prorated portion, I owe them $394.17.

The agreement I signed with the property manager does state that the standard 10% property management fee is waived on a month where there is a lease up fee. So, at least for this month, I didn’t have to pay the PM anything. Starting next month, I will get charged 10% of the gross rent, and pay them back the remaining $394.17 balance I owe.

Also, it’s worth noting that I haven’t had to make any mortgage payments yet. The first mortgage payment, including escrow funds for property taxes and insurance, will be due in December. Keeping these expenses in mind (previous balance, mortgage, escrow), I’m anticipating December’s cash flow to only be slightly cash flow positive. Starting in January, Rental Property #4 should finally be cash flowing to its true potential!


Total cash flow for November was $1317.70. This is a bit lower than usual, as a consequence of the lease up fee I had to pay for Rental Property #4. It’s still a decent amount, though, and the cash flow covers 87.8% of my original early FI passive income target of $1500. I definitely can’t complain, but will look forward to better numbers starting in January. I know it’s a bit premature to be thinking too far ahead, but I really can’t wait until I close Rental Property #5. I anticipate that property being a cash cow monster, and it should easily add another $600 to $700 each month to the cash flow. If that happens, I’ll be well over $2000/month (even after factoring in vacancy and maintenance reserves). Exciting times ahead, so let’s keep at it! Forward march!

{ 28 comments… read them below or add one }

1 JC @ Passive-Income-PursuitNo Gravatar December 3, 2013 at 4:25 am

That cash flow sure is amazing! The good thing about Rental #3 is that it looks like you wouldn’t be that cash flow negative should the tenant get evicted and it take a while to get a new tenant. I guess the best way to do Rental #4 is to make sure it’s a 2 year lease minimum because that lease up fee is quite hefty. You’re making awesome progress! Keep up the good work!


2 FI FighterNo Gravatar December 3, 2013 at 7:43 pm


Thanks! Yeah, one of the benefits of owning a 2-flat is the hedge two tenants provide. If one of the units is vacant, the other one should be about enough to cover the mortgage.

I’m not a fan of the lease up fee, which is why I pushed hard to get a 2 year lease agreement in place for #4. It’s the only way to help minimize this cost…

All the best!


3 Fast WeeklyNo Gravatar December 3, 2013 at 4:52 am

Good work FI,
You’re making great progress. Will you slow down a little after #5 closes, and let your cash build? Take advantage of that outstanding positive cash flow, as it were. I was wondering….do you own all the properties in the same corp? I was just curious because they are spread across the country. Have a great day


4 FI FighterNo Gravatar December 3, 2013 at 7:45 pm


Thanks! I actually do plan on slowing down a bit after #5 closes… I may proceed with #6 in the Summer, but it will probably be for another cheap property, like #4. It shouldn’t be too bad…

At some point, I will focus my efforts to rebuilding my cash position. If the markets are “cheap” I’ll get back into dividend stocks. For now, the focus will be to keep locking down rentals while the rates are still low.

Take care!


5 Retire Before DadNo Gravatar December 3, 2013 at 5:08 am

This is impressive and great to see the numbers. I’m having trouble finding good deals in my area. That said I haven’t spoken to an agent yet, so I’m not fully in the game yet. I’ve been thinking about how I want to approach it and what kind of property I want.


6 FI FighterNo Gravatar December 3, 2013 at 7:47 pm


Yeah, I ran into the same problem with Bay Area properties. Starting in 2013, the cash flow all but dried up in the residential market. It was only this year that I started looking out of state.

Best of luck!


7 FFdividendNo Gravatar December 3, 2013 at 5:44 am

Would you kick out the tenant on property #3? You do get 100% guaranteed of $1,064. For $94 I think that tenant is still worth to keep.


8 FI FighterNo Gravatar December 3, 2013 at 7:49 pm


Hmm, that’s kind of tough… On one hand, she doesn’t pay rent on time which leaves a bad impression (who knows how well she is taking care of the property?). On the other hand, since Section 8 covers 92% of her rent, it still allows the property to cash flow reasonably well…

It’s really not the worst problem in the world to have, so I’m in no rush to evict her… evicting might be even more of a hassle and end up costing me more… I guess at this point I don’t know for certain what the best move would be.

Take care!


9 FI PilgrimNo Gravatar December 3, 2013 at 6:30 am

The numbers don’t lie, and they’re looking pretty good! Even with the expenses on #4! Great job, and thanks for showing these reports, they are inspiring!


10 FI FighterNo Gravatar December 3, 2013 at 7:55 pm


Thanks! I do my best to be transparent with the reports… even if the numbers aren’t always pretty 😉



11 writing2realityNo Gravatar December 3, 2013 at 6:37 am

Been waiting for this post all month! So thrilled to see things are moving forward, but a couple of items of note:

1) That is a tough PM arrangement for Property #4: 10% a month PLUS a lease up fee? Yikes. That is crazy steep and will always take a big bite out of the cash flow. I guess that is the cost of geographical diversification.

2) Same as FFdividend above, but for a 92% guaranteed rent payment, would the expense of evicting the tenant be worth it? Obviously you want to set the precedent that late or non-payment of rent is unacceptable, but the cost of eviction might be a factor here. Obviously, if you could replace with a fully funded Section 8 tenant or another tenant without any vacancy loss than I’d say it makes sense, but that would be a tough turnaround.


12 FI FighterNo Gravatar December 3, 2013 at 7:58 pm


1) Yeah, that’s a pretty steep price I’m paying… it’s unfortunate, but that’s what can happen when you invest in cheap properties… the margins are really thin for the seller/PM. For most markets, standard PM fee is 8%, but they charge 10% here… I wasn’t able to get them to budge on the lease up either, except insist on a 2 year lease to help dampen the impact. Still, the cash flow (bottom line) numbers still work, which is why I went ahead with it.

2) Good point, it probably isn’t worth the hassle to evict the tenant over just 8% of the rent… Chicago isn’t exactly the easiest place to evict a tenant either… it can really drag out, which can really cause damage to the bottom line. I’ll have to think about it some more. Right now, I’m leaning towards not evicting.



13 moneyconeNo Gravatar December 3, 2013 at 7:28 am

Nice going there and I love the photo!


14 FI FighterNo Gravatar December 3, 2013 at 7:59 pm




15 Financial SamuraiNo Gravatar December 3, 2013 at 9:43 am

Things must be really bad to miss a $92 a month rent payment. Yikes………

From your perspective, losing $92 is not bad since you still get 92% of the entire payment guaranteed by the government right?

Is this a CA property? What are the basics of becoming Section 8 eligible?



16 FI FighterNo Gravatar December 3, 2013 at 8:03 pm


Not sure if you’re just joking, but don’t we always strive for 100%??? 😉

Yeah, I’m still guaranteed 92% from Section 8 so it’s not a big deal. The property is located in Chicago. In regards to getting a property qualified for Section 8… it’s pretty involved and stringent. There’s a lot of code/compliance that needs to be met, and Section 8 will even send in an inspector periodically (ever year) to make sure the property complies. It’s a lot of work/hassle, but luckily I outsourced all this work to the local experts who are used to dealing with these issues.

Thanks for stopping by!


17 LeighNo Gravatar December 3, 2013 at 10:08 am

Hmmm looks like you are doing pretty well. If you had invested your down payments in the stock market instead, you could only take out $587.08/month at a 4% SWR. But you’re seeing more like $1,300/month in cash flow.

That’s crazy that the tenant couldn’t come up with $94 to pay their part of the rent. But at least you have a good amount of it guaranteed 🙂


18 FI FighterNo Gravatar December 3, 2013 at 8:06 pm


Right, and that also doesn’t account for appreciation, principal pay down, tax breaks (depreciation), etc. I’ve done the math, and don’t really know of any other investments (that are accessible to me) that can generate these type of returns… The reason my returns are so low is b/c I own 2 properties in the Bay Area which do not cash flow well at all… The “real” results won’t be evident until I sell them and tap into the equity (appreciation).

The out of state properties should all cash flow 15% or so, which is very high compared to most other investments. Again, this is not factoring in principal pay down, tax breaks, etc.



19 Life In CenterNo Gravatar December 3, 2013 at 4:04 pm

Wow, I love reading real life real estate things. I’m so hoping to get things going in that department also in 2-3yrs. Too bad on the missed rent, hope you get the situation resolved peacefully.



20 FI FighterNo Gravatar December 3, 2013 at 8:08 pm

Life In Center,

Thanks! Best of luck to you as you get started on the real estate journey… I would recommend you check out Bigger Pockets forum if you haven’t already. It’s a great way to get started/educated. You’ll also come across a lot of other like minded individuals.

All the best!


21 KK @ Student Debt SurvivorNo Gravatar December 4, 2013 at 6:15 pm

Very impressive. This is exactly the type of real estate plan I’d like to enact if we ever move somewhere with lower housing price Right now we’re in the metro NYC area and the cheapest places in our area are $400k or so for a 1 (maybe 2-bedroom) condo . Add in the condo fees and ridiculous taxes and we would barely be making a profit, if any.


22 FI FighterNo Gravatar December 5, 2013 at 12:13 am


Thanks! Yeah, for a $400k condo at only 1/2 bedrooms, I’m doubtful you’ll be able to get any cash flow on it, especially after PITI + maintenance + vacancy reserves. Most likely, you’ll have to look further out the area, where prices are cheaper. Or you can hop on over to the Midwest where prices are super affordable (what I’m doing).



23 ddNo Gravatar December 6, 2013 at 12:21 pm

how are coming with 1500$ as your early FI passive income number? that seems very low to me and with all expenses down to a minimum…


24 FI FighterNo Gravatar December 9, 2013 at 11:47 pm


$1500 was a crude target I threw out there when I first started this blog… It doesn’t allow much cushion, and is kind of a bare minimum I feel I need to reach early FI. If I can get to $2000 or more, that would give me some more breathing room.



25 KatherineNo Gravatar December 7, 2013 at 10:38 am

I think it would be fantastic if you did a semi-annual recap of how the rental properties have given you in total and the total problems you have had, etc.


26 FI FighterNo Gravatar December 9, 2013 at 11:47 pm


You got it! I’ll have a report up later this month with a more complete breakdown of cash flow/expenses for each property throughout this year.

Take care!


27 Woman with a PlanNo Gravatar December 7, 2013 at 8:54 pm

What percent of your rents received are you allocating toward maintenance expenses?

I am trying to buy my next rental property and that is always the unknown and highly variable from property to property. My first rental needed a lot of repairs in the first 18 months, but those have slowed down substantially over the last two years. Our next property (we have an offer submitted- fingers crossed!) will have its own personality and won’t be something we have a good handle on in terms of maintenance until probably year 2.


28 FI FighterNo Gravatar December 9, 2013 at 11:50 pm

Woman with a Plan,

I typically budget 5% or so for vacancy and another 5% for maintenance.

Yeah, it’s always going to be a variable and a hard to predict expense. I guess you could always just use the 50% rule as a rule of thumb… That is, take the gross rents and divide that by 2. Take that number and subtract the mortgage payment. The remainder is your net cash flow… When running numbers, if the property still cash flows reasonably well after applying the 50% rule, it’s probably got good cash flow potential.

Good luck with the next property! I hope you land it. I agree, it probably takes a year or two to get a good feel on how things are going.

All the best!


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