February 2014 Cash Flow Statement


Another month, another cash flow report! As always, I look forward to writing up this report since it’s the results here that ultimately determine whether or not early FI is possible for me. Also, I will of course do my best to keep things honest and true. I owe it to you readers to tell it like it is! If any of my properties aren’t performing (see below!), you’ll be the first to know.

Here’s the report for February:


Rental Property #1: Bay Area

Rental Property #1 continues to perform. I was able to collect rent on time this month (they even paid early!) and there were no maintenance costs. Bills this month were due to PITI, HOA, and utilities, which are owner paid bi-monthly. I was able to operate at maximum potential (sans utilities) for this month. Starting next month, I will partition out the utility payments into a recurring payment, just like PITI and HOA. So, no more bi-monthly distributions, which will make things even easier to track. This is something I should have done last month, in January. Total net cash flow collected was $423.36.

Rental Property #2: Bay Area

Similar to Rental Property #1, this property also continues to perform well. Rent was collected on time and there were no issues that popped up this month. For this month, I paid the insurance premium for 2014 in a lump sum payment of $257.00. This breaks down to $21.42/month. Just like last month, this rental operated at its maximum potential, cash flowing $349.17.

Rental Property #3: Chicago

Rental Property #3 has been pretty inconsistent so far. My first floor tenant has been outstanding, and this remains the case again this month. She is a market rate tenant and always pays her bills on time. I was able to collect her $950/month payment, no sweat.

The second floor tenant, on the other hand, has been wildly inconsistent. She has missed payment after payment, even though Section 8 has agreed to subsidize 92% of her rent. This month, I was ready to start the eviction process. Enough was enough, and I was tired of hearing her excuses. The PM and I agreed to start, when miraculously, they received a last minute online payment from her.

We were all surprised, but there it was, a payment of $421.50 for missed rent. The tenant still has an outstanding balance of less than $100, but confirmed on the phone that she would have the rest ready in March. At this point, I don’t expect much from her, but by coming through and making payment, I decided to not go through with the eviction process. If she slips again in March, we’ll probably be right back on it…

This is not an ideal situation by any means, but I do worry about going through an eviction which would put me at risk of missing out on even more rent. If the tenant is this difficult now, I can’t imagine she’ll be paying AT ALL once I start an eviction… which could very well drag out until August…

At this point, I’m thinking it might just be best to ride it out until August when her lease expires. Around June or July, I will coordinate with the PM to find me a new tenant. I definitely don’t want to keep this tenant around… Well, unless, somehow she actually does shape up and starts paying rent on time each and every month, moving forward.

Total cash flow this month for Chicago came out to be $1258.91.

Rental Property #4: Indianapolis

Rental Property #4 ran into some problems this month… I got note from my PM that my tenant missed rent and that they were starting the eviction process immediately.

Indianapolis is a very unique market… one that is very landlord friendly. And my PM does NOT joke around at all when it comes to missed rent payments. After the grace period (I think 5 days) expired, they immediately filed papers to setup a court date. The tenant missed her appearance, and the PM informed me that they were going to take back the property. Things were getting interesting…

Here is the message from my PM to me:

I was finally able to get a hold of the resident. She is going to try to see if she can borrow money from someone to pay the rent until her tax check comes and she can get caught up. She claims that she had her wallet stolen and they wiped out her bank account. I want to believe her story, but she seems to have a lot of stories over the last month and I always have to keep my guard up on these situations. So, we have scheduled a truck for tomorrow afternoon – if she does not have rent paid by that time, we will take possession of the home.

This all happened around the middle of February. I was in communication everyday with my PM who was excellent in keeping me apprised with the situation. On the day they were supposed to take back the property, the tenant showed up at the office and made her rent payment. The tenant assured the PM that this wouldn’t happen again…

As a result of all this, I was billed $186 this month for eviction related expenses. The PM was able to collect back $104 back from the tenant. The tenant is responsible for the remaining balance and from what I understand will make this payment in March.

So, there you have it… My first dramatic experience with a tenant in Indianapolis! You might be wondering if I’m I sweating or worried about this property moving forward? Actually, I must say I’m somewhat relieved. I feel like this experience was a good test for my PM… and they passed with flying colors. I was very impressed with how they handled the situation. The PM took immediate action and kept me in the loop throughout the process. Being a few thousands of miles away, I really couldn’t ask for more. I’m actually even more confident about purchasing another property in Indy, after this…

Total cash flow for this month was $436.18.

Rental Property #5: Chicago

Rental Property #5 closed this month! I haven’t collected rent yet, but I will be prorated for February. To keep things simple, I will simply tack this on to the results in March. Stay tuned for next month! I’m eagerly awaiting for that first month with five cash flowing properties!


Total cash flow this month for all properties came out to be $2,467.62. Just like last month, it feels nice to be over the $2000/month mark. Although I should emphasize the importance of allocating a large portion of this cash flow towards reserves for maintenance and vacancy (15% to 20% or so of gross rents). Yes, the cash flow numbers look good now, but it only takes one bad month to wipe away the gains! With real estate investing, it’s much better to be safe than sorry.

The extra gains this month were due to the $421.50 repayment I received from tenant #2 in Chicago for missed rent.

The second floor tenant in Chicago is starting to come around. Hopefully she stays current and the tenant from Indianapolis doesn’t have any more problems moving forward. I’m looking forward to next month… Here’s hoping we see our first month clearing $3000/month! 🙂

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14 Comment authors
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Income Surfer

Ah the joys of being a landlord. I’m glad your property manager took care of business. It’s important to hire good people that you trust, and it appears that you have. Here’s to your first 3k (net) dollar month!



hey, cant remember if i ever read what you do with the monthly cash flow. I know you’ve been stressing building up reserve funds this year but have you ever considered using the cash flow to pay down existing mortgages? $2000+ in extra principal payments seems like a sure way to freeing up even more cash flow , what are your thoughts?

Liam G

The only thing that I see in your property analysis is some reserves for vacancy and repair reserves. Your personal cash flow is more than enough to cover it (from the sounds of your posts), but for me, my personal cash flow is tight, but I generally set aside 10% gross for vacancy (evictions, etc) and 10% gross for repair reserves.


Good to get started on that eviction notice immediately for missed payments. Glad that your PM is serious about this and takes action immediately.
Good luck with that tenant.



Congrats on another strong month FI! Certainly provides some reassurance that the PM was so aggressive in starting the eviction process. It is a tough thing to balance, especially if you have a chronically late tenant all the time (costly fees each time you start the eviction process). But, like yourself, I’d rather err on the side of caution and get the ball rolling as soon as possible.

No Nonsense Landlord

I am glad your Section 8 renter started paying, at least some of what she owes. Next time, send a letter on the 5th of the month, and cc the Section 8 office. You will get paid faster. No one pays once they get a eviction notice, very few anyway. A Section 8 tenant will immediately get a free lawyer, and attempt to stall. Or they can get emergency assistance. Without an eviction letter, they do not have an emergency.

I have 25 renters. All 25 rents are in the bank for March 2014. No one owes any money. Of course I have one Section 8 tenant that didn’t pay her share this month yet, a letter goes out tomorrow. A late fee will be added to her $125 portion of the rent of $10. She is working with her Social Worker to get things squared away; in the meantime I start the process.

I have gotten rid of all my Section 8 renters except this one. She will not have her lease renewed after 5+ years. I will take the $10K hit, and lots of labor, to remodel and get it ready for a private market tenant even if the rent amount might be slightly lower.

Section 8 tenants are just not worth it in the long run. I had one cost over $7K in legal fees alone.

Remember, your profitability is number 1. The Bank doesn’t give a damn about your ability or inability to collect rent. With a Section 8 tenant, you need to be tough. With a 700+ credit score person, they will pay, they just probably forgot.

Done by Forty

I’m so glad that your tenants are coming up in the clutch, as is your PM in Indi. I think they sound like a great company to work with. Congrats on another great month!

Dave @ The New York Budget

Looking good! And I agree – it’s great that the PM in Indy handled that situation so well.

The First Million is the Hardest

Congrats on another good month. Glad your tenants finally came around and paid. Hopefully you won’t have problems with them going forward.

Leonard @ The Wallet Doctor

Interesting post! It can be pretty complicated to manage properties like you are, and I’m sure the drama of having people pay inconsistently must get tiring. I don’t blame you for getting ready to evict that Chicago Tenant! Thanks for sharing


How did you find your PM and the properties? Have you done a post on that? You never traveled to Chicago or did you to buy the property? Who closed for you? I’d love some of the nitty gritty details


wow i am so glad i came across your blog. its refreshing to see actual numbers rather than just generalizations. i am a investor who just started looking at turnkey properties, do you mind if i contact you and ask a few general questions?


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