February 2015 Cash Flow Statement


When it comes to early FI, cash flow (passive income) is the name of the game! With that said, February marked a month where my rental income saw things moving in the wrong direction for one particular property! Thanks to my refi of Rental Property #2, my cash flow for that unit is now less than it was when we started the year. That’s usually not a good sign, but in this case, I really believe that the move was necessary and that it will benefit me greatly in the long-term.

With that said, let’s see how we did this month!

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 February:


Rental Property #1: Bay Area

Rental Property #1 has been a consistent performer for over 2 years now, and continues to do very well. There were no incidents to report this month, and cash flow was strong yet again. However, just like with Rental Property #2, starting next month, my refi for this property will begin to show up in the form of higher monthly mortgage payments. Until then, I’m going to enjoy the higher cash flow while I still can…

Total cash flow for the month was $447.15.

Rental Property #2: Bay Area

Well, negative cash flow is never something that I wish for, but because of my refi on this property, that’s where I find my current position with Rental Property #2. Altogether, it was another great month without any issues, but the bottom line still stands out like a sore thumb — it’s red!

I can’t say I’m surprised by the results; this is something I accepted when I asked for the refi. Actually, I feel very fortunate to have been able to pull out the cash when I did, because it allowed me a wonderful opportunity to tap into ~$100,000 of equity, tax free. I used about $60,000 of the proceeds to payoff Rental Property #4, and the other $40,000 as downpayment for Rental Property SH #3.

All in all, I’ll take that deal any day of the week. The interest rate on Rental Property #2 is still 4.375% (which was my original rate when I purchased the property in 2013), while the interest rate on Rental Property #4 was a higher 4.75%. Of course, that wasn’t the reason why I paid off Rental Property #4 (Fannie Mae won’t allow for a cash out refi if you have more than 4 loans), but it’s sort of a bonus, anyway. In the end, even though the cash flow for this property suffers (until I can raise rents upon lease expiration in May), the cash flow for Rental Property #4 increases to compensate since there is no longer a loan associated with it.

Bottom line, I did what I did to secure the funds needed to close Rental Property SH #3. In the long-run, I think this will prove to be a wise decision. We only closed Rental Property SH #3 in January, but because the Bay Area real estate market is even more INSANE now (it’s officially buying season!), prices have surged considerably since then. Based on what comps are going for, I’m guessing we are already up $30,000 since we closed! Also, the $15,000 we poured into renovations probably doesn’t hurt the property’s value either. 😉

Total cash flow for the month was -$130.64.

Rental Property #3: Chicago

The first floor tenant is wonderful and paid rent on time again this month without incident. The second floor tenant is Section 8, and missed her small portion this month. No surprises there, I’ve come to expect this type of behavior from Section 8 tenants. Her CHA portion is $771, so not all is lost.

There was a small maintenance bill this month, but other than that, Rental Property #3 had a solid month with good cash flow.

Total cash flow for the month was $560.06.

Rental Property #4: Indianapolis

Rental Property #4 is doing very well, and even better this month now that I no longer have a loan attached to it! 😉

I did have another $118.31 maintenance bill this month, due to some water heater issues. These monthly expenses are sure adding up, but the PM does seem very responsive and the tenant does pays on time every month, so I’ve been reluctant to raise too much of a stink over these issues. I’m still hopeful things will get better over time.

Total cash flow the month was $616.44.

Rental Property #5: Chicago

Rental Property #5 continues to do well, and my outstanding market tenant is to thank for that. She paid again, on time and without incident. This month, even the Section 8 tenant chipped in her share, paying $200.

However, there were two big blows that occurred this month. For starters, CHA reduced my Section 8 tenant’s subsidy from $1,098 to $798 each month. This is $300/month in lost cash flow, moving forward, assuming that the Section 8 tenant won’t be paying on time… From my own experience, these tenants will pitch in small sums every now and then, but they definitely won’t be making periodic payments on time like clockwork…

In addition, there was a large repair bill this month to fix a leaking roof. This maintenance item set me back $450. Cash flow for this property was definitely not optimized this month, but still pretty good, overall.

Total cash flow for the month was $563.27.


Tallied up, the total cash flow this month for all rental properties came in at $2,056.28. Yes, there were some increased maintenance expenses this month, but overall, the result of the cash out refi on Rental Property #2 is decreased net cash flow.

The mortgage payment on Rental Property #2 increased from $1,158.34 to $1,647.64. This is a difference of $489.30. However, the elimination of Rental Property #4’s mortgage also gives me a boost of $336.46 in the cash flow department. So, the overall delta is $152.84. Yes, that is a noticeable difference, but one that I don’t think will be too dramatic in the future. I’m investing with the big picture in mind, and taking one step back to move two steps forward. Locking down Rental Property SH #3 when we did was a no brainer, in my eyes.

Nevertheless, there’s definitely room for improvement. Hopefully, the negative cash flow being experienced by Rental Property #2 will be short-lived, as I’m anticipating raising rents in May.

Next month, the cash flow will be reduced even further as the refi on Rental Property #1 goes into effect! Oh, boy…

But there’s a method to this madness… I’ll explain in more details next month.


2015 Cash Flow Summary:

February 2015: $2,056.28

January 2015: $2,758.91


2014 Cash Flow Summary:

December 2014: $2,239.59

November 2014: $1,459.84

October 2014: $2,479.99

September 2014: $3,008.02

August 2014: $3,265.64

July 2014: $2,778.24

June 2014: $3,129.87

May 2014: $3,152.58

April 2014: $3,381.28

March 2014: $3,800.20

February 2014: $2,467.62

January 2014: $2,122.26


2013 Cash Flow Summary:

December 2013: $1,892.55

November 2013: $1,317.70

October 2013: $2,271.81

September 2013: $1,932.28

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5 years ago

Hey FIFighter,
I am surprised that there are any repairs required for the Chicago property. Is the roof not part of the gut job? Glad that having multiple properties helps offset each other. I need to get to that point as well since my months can be awesome or bad depending on the situation. Having multiple properties smooths things out.



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