I’m falling behind on the updates again, and for that I apologize (again!). Ever since I started the new job, I am finding that my free time is now more limited than ever before. And after staring at a computer screen for 10-12 hours each day, it’s been a challenge finding a way to fit in more computer time for blogging. Usually by the end of the work day, I just want to rest my eyes and/or exercise and sleep.
But I don’t think these tough times will last indefinitely. I’m still the “new guy” at work, so I’m putting in the extra effort needed to establish myself. When the time is right, I will taper back a bit and aim to find a better work/life balance ratio.
Let’s get to the September cash flow update!
The results are presented “as is” for each month. If something breaks and I need to spend money on repairs, those charges will show up as an expense for the corresponding property. If there are no issues, no expenses are reported. So, although I do set aside a portion of the net income for vacancy and maintenance reserves (which will inevitably happen), I don’t account for them in this report.
Here’s the report for September:
Rental Property #1: Bay Area
Rental Property #1 has now been occupied by the same tenant for over two years! Things are going excellent here, and we have a win-win situation. I have yet to raise the rent, and the tenant keeps on paying consistently on time each month. With the cash flow being what it is, I have no complaints at all. This arrangement is working out well for both parties. 🙂
Total cash flow for the month was $447.67.
Rental Property #2: Bay Area
Similar to Rental Property #1, this property also keeps on performing. The current tenant has occupied the property for about a year and a half now. The cash flow from this unit isn’t as strong as for Rental Property #1, but it’s decent for a Bay Area rental. So far, so good; I”ll gladly trade some cash flow to have a solid, low hassle tenant in place. Another win-win situation here.
Total cash flow for the month was $344.76.
Rental Property #3: Chicago
The first floor tenant (market rate) paid on time this month, per usual. She paid towards the end of the month, so she was courteous enough to chip in an extra $25 late fee.
The second floor tenant (Section 8) is being evicted, but even she managed to contribute $301 this month. This is in addition to the CHA payment, which came in slightly lower than normal at $657. The annual CHA inspection took place this month and the second floor unit failed inspection. This is why I was hit with a $75 inspection fee, and because the unit failed, it was under abatement for a few days. Instead of collecting the normal CHA subsidy of $857, I lost out on rent for a few days… The PM did their best to resolve this issue ASAP, but unfortunately, they can only do so much as CHA ultimately determines when the next inspection will take place… and when the issue has been fully resolved. Like most things government, things don’t get done quite as quickly as you would like…
Other expenses this month were for utilities ($78.70) and for inspection repairs ($45.84).
Total cash flow this month for Chicago came out to be $599.07.
Rental Property #4: Indianapolis
Rental Property #4 underwent some changes this month. At the beginning of the month, I received a notice informing me that the PM was being re-assigned to a different PM company. After digesting the e-mail, I realized that one of my worse fears was becoming reality — The tunkey company that I had been working with was bailing out!
Well, I can’t say I was too happy with this piece of news… But I guess that’s one of the risks you take when investing out-of-state, and especially when trusting a turnkey company! Regardless of what a turnkey company tells you (or anyone else), it’s NEVER certain that they will be around for the long haul. If you’re considering investing out-of-state, this is a reminder of the extreme importance of purchasing a quality property! In this case, I believe Rental Property #4 is located in a solid neighborhood and should have little trouble securing a good tenant, regardless of the PM company I have in place…
The new PM company scheduled to take over announced that they would reduce management fees from 10% to 8%. Still, I was left feeling apprehensive about the whole turnover. The new company coming in was also a huge operations, as they manage many properties in various states.
After much deliberation (and pondering back and forth), I ultimately decided to pull out of my agreement with this incoming new company, and I decided to find my own PM. I received a recommendation from a local investor, and effective October, I will be entrusting the PM services to a much smaller, local company. They will keep the PM fee the same as I was paying previously, 10%.
Total cash flow this month for Indianapolis came out to be $518.18.
Rental Property #5: Chicago
Both tenants paid on time this month and Rental Property #5 seems to be doing well, overall. It’s still early in the game, but I’m glad to see that this property is producing solid cash flow again this month. There were no maintenance or vacancy issues, as is to be expected for a turnkey property just getting started.
After all expenses, total cash flow this month was $1,098.34.
Total cash flow for September came out to be $3,008.02. I barely cleared $3,000 this month, in part due to Rental Property #3 Unit 2 being under abatement for a few days. Further, there were a few maintenance items and a CHA inspection bill to pay this month.
Starting November, Rental Property #3 Unit 2 will be vacant, as the eviction process comes to completion. I’m a bit anxious to get over this hurdle, as I am not yet certain how long it will take for me to secure a new tenant. In addition, I have to worry about some more attorney fees, rent-ready, and leasing agent fees. It’s not going to be a pretty sight, and all these fees are going to eat at the bottom line. But hopefully I can secure a quality tenant this time around!
Rental Property #4 will also be under new management starting next month… There’s a lot of change in the air as we enter the fall season. I can’t say it’s ideal, but it’s real estate, so it kind of comes with the territory. It’s always the dream to be firing on all cylinders, but I knew going into this that there would be some speed bumps along the way.
I’m still learning how to navigate through them, but the end goal of early FI remains the same.