Rental Properties: 2013 Recap

by FI Fighter on December 23, 2013

in Progress

Rehab-2

We are nearing the end of 2013! It’s crazy to think how fast time has flown by this year… At this time last year, I owned one property. Now, I have four locked down, and a fifth rental that is currently under contract. As the rentals accumulate, it’s getting more and more difficult to keep track of everything. Hopefully this update will help summarize all the important information.

Let’s get to it!

Rental Property #1

Scheduled Gross Income: $25,240
Less Vacancy and Lease Renewal: $0
Effective Gross Income: $25,240

13-Jan $2,090.00
13-Feb $2,090.00
13-Mar $2,090.00
13-Apr $2,090.00
13-May $2,090.00
13-Jun $2,090.00
13-Jul $2,090.00
13-Aug $2,090.00
13-Sep $2,130.00
13-Oct $2,130.00
13-Nov $2,130.00
13-Dec $2,130.00

 

Total Operating Expenses: $7,191.58

  • Utilities: $338.76
  • Garage Door Repair: $180.00
  • Property Taxes: $4,706.82
  • Insurance: $286.00
  • HOA: $1,680

Net Operating Income: $18,048.42
Less Debt Service: $13,129.32

Cash Flow: $4,919.10
Cash Flow (Monthly): $409.93/month

Principal Paydown: $4,450.69
Principal Paydown (Monthly): $370.89/month

Total Return: $9,369.79
Total Return (Monthly): $780.82/month

Principal Interest
Dec-13 $377.29 $716.82
Nov-13 $376.11 $718.00
Oct-13 $374.94 $719.17
Sep-13 $373.77 $720.34
Aug-13 $372.61 $721.50
Jul-13 $371.45 $722.66
Jun-13 $370.29 $723.82
May-13 $369.14 $724.97
Apr-13 $367.99 $726.12
Mar-13 $366.84 $727.27
Feb-13 $365.70 $728.41
Jan-13 $364.56 $729.55
2013 Total $4,450.69 $8,678.63

Rental Property #2

Numbers for Rental Property #2 are prorated for eight months. All numbers reflecting gross income, property taxes, HOA dues, insurance, debt service, etc. are for eight months since the property was not leased out until May 2013.

Scheduled Gross Income: $17,200.00
Less Vacancy and Lease Renewal: $0
Effective Gross Income: $17,200.00

13-May $2,150.00
13-Jun $2,150.00
13-Jul $2,150.00
13-Aug $2,150.00
13-Sep $2,150.00
13-Oct $2,150.00
13-Nov $2,150.00
13-Dec $2,150.00

 

Total Operating Expenses: $5,960.21

  • New Dishwasher: $314.29
  • Leak Repair: $600.00
  • Property Taxes: $2,424.56
  • Insurance: $173.36
  • HOA: $2,448.00

Net Operating Income: $11,239.79
Less Debt Service: $9,266.72

Cash Flow: $1,973.07
Cash Flow (Monthly): $246.63/month

Principal Paydown: $2,560.01
Principal Paydown (Monthly): $320.00/month

Total Return: $4,533.08
Total Return (Monthly): $566.64/month

Principal Interest
Dec-13 $324.09 $835.43
Nov-13 $322.91 $836.60
Oct-13 $321.74 $837.77
Sep-13 $320.57 $838.93
Aug-13 $319.41 $840.09
Jul-13 $318.25 $841.25
Jun-13 $317.09 $842.40
May-13 $315.95 $843.55
2013 Total $2,560.01 $6,716.02

Rental Property #3

Numbers for Rental Property #3 are prorated for five months. All numbers reflecting gross income, property taxes, HOA dues, insurance, debt service, etc. are for five months since the property was not leased out until August 2013. As mentioned in the Cash Flow reports, Rental Property #3 has had some issues collecting rent from the second floor tenant. Although there has been no vacancy, the tenant has missed portions of the rent, which lowers the effective gross income collected.

Scheduled Gross Income: $10,728.33
Less Vacancy and Lease Renewal: $270.00
Effective Gross Income: $10,458.33

13-Jul $188.33
13-Aug $2,026.00
13-Sep $2,108.00
13-Oct $2,108.00
13-Nov $2,014.00
13-Dec $2,014.00

 

Total Operating Expenses: $2,879.17

  • Property Management: $836.67
  • Property Taxes: $1,065.00
  • Landscaping: $400.00
  • Insurance: $577.50

Net Operating Income: $7,579.16
Less Debt Service: $2,992.60

Cash Flow: $4,586.56
Cash Flow (Monthly): $917.31/month

Principal Paydown: $783.62
Principal Paydown (Monthly): $156.72/month

Total Return: $5,370.18
Total Return (Monthly): $1,074.04/month

Principal Interest
Dec-13 $157.90 $440.62
Nov-13 $157.31 $441.21
Oct-13 $156.72 $441.80
Sep-13 $156.14 $442.39
Aug-13 $155.55 $442.97
2013 Total $783.62 $2,208.99

Numbers Recap

At this time, Rental Property #4 is just getting started (second month collecting rent), so I decided not to run the numbers yet. To summarize, the three other rental properties are generating the following:

Cash Flow:

Rental Property #1: $409.93/month
Rental Property #2: $246.63/month
Rental Property #3: $917.31/month

Total Cash flow: $1,573.87/month

In addition to the cash flow, the rentals have paid down principal in the following amount:

Principal Paydown:

Rental Property #1: $370.89/month
Rental Property #2: $320.00/month
Rental Property #3: $156.72/month

Total Principal Paydown: $847.62/month

Total Return:

Rental Property #1: $780.82/month
Rental Property #2: $566.64/month
Rental Property #3: $1,074.04/month

Total Return: $2,421.49/month

In terms of pure numbers (not prorated), we have the following:

Total Gross Rent Collected: $52,898.33
Total Cash Flow: $11,478.73
Total Principal Paydown: $7,794.32
Total Return: $19,273.05

Summary

The numbers shown above are the actual 2013 results for each rental property. When I run my own projected numbers, I tend to be more conservative. To give you an idea, my monthly net cash flow estimates (2014) for four rental properties is $1,300/month. In actuality, Rentals #1-3 generated $1,573.87/month for 2013. However, the sample size is just for one year, and I am a firm believer that rental expenses are unpredictable, so it’s better to err on the side of caution. All it takes is one big expense to wipe away the cash flow…

2013 was a successful year. The cash flow numbers were great, and the principal paydown is just icing on the cake. The rentals are returning $847.62/month in combined principal reduction, which is not trivial (this will really add up over the years). Total return (cash flow + principal paydown) is $2,421.49/month. Over time, the principal reduction will keep on increasing as more of the debt gets repaid. Another reason why I’m such a big fan of utilizing leverage on multiple properties… The principal paydown gets enhanced by the number of properties owned, and this reduction is what will ultimately increase your net worth over time. “What you owe today, you’ll be worth tomorrow.”

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{ 15 comments… read them below or add one }

Charles@gettingarichlifeNo Gravatar December 23, 2013 at 12:54 am

When everything is done are you going to move to Hawaii? This seems to be your ideal place for what I see. I’m done with properties until 2015 but you never know. Happy holidays.

Reply

FI FighterNo Gravatar December 24, 2013 at 7:44 pm

Charles,

Man, it would be awesome if Hawaii was possible! I haven’t thought too far ahead, but I would like to end up on a tropical paradise… well, at least for a few years. Hawaii might be out of my price range, but who knows… maybe I’ll get lucky ;)

Cheers!

Reply

Roger HNo Gravatar March 1, 2014 at 3:53 am

FIF,

I am just curious if you know how much longer you would need to work in order to afford Hawaii?

Thanks,
Roger H

Reply

Fast WeeklyNo Gravatar December 23, 2013 at 5:05 am

That’s awesome FI. Harnessing the power of leverage to produce, and greatly increase, really nice cash flow. Good work! Enjoy that trip of yours too. The high is nearly 80 here today, which drives my wife nuts. I however, love it.
-Bryan

Reply

FI FighterNo Gravatar December 24, 2013 at 7:45 pm

Bryan,

Thanks! Are you also located in Hawaii or just vacationing?

In any event, I hope you enjoy the gorgeous weather! It’s been in the 30′s here… and I thought CA was supposed to be warm.

Take care!

Reply

MoneyconeNo Gravatar December 23, 2013 at 6:32 am

What do you mean cashflow numbers are great? They are awesome! :)

Reply

FI FighterNo Gravatar December 24, 2013 at 7:46 pm

Moneycone,

Thanks! Appreciate the support!

Cheers!

Reply

Financial SamuraiNo Gravatar December 23, 2013 at 8:54 am

Love it man! Bit by bit it grows.

Let’s hope the bull market continues for years to come!

Reply

FI FighterNo Gravatar December 24, 2013 at 7:47 pm

Sam,

Thanks! I wouldn’t mind if the bull market keeps surging a few more years. Definitely beats the doom and gloom panic of a few years back… although the best deals are only made possible in times of fear… still, nice to see people employed, going out, eating out, and just living life again.

All the best!

Reply

theFIREstarterNo Gravatar December 23, 2013 at 1:42 pm

Let’s hope 2014 is just as good a year!

Reply

FI FighterNo Gravatar December 24, 2013 at 7:47 pm

theFIREstarter,

Cheers to that! Bring on 2014!

Reply

MartinNo Gravatar December 23, 2013 at 7:31 pm

These are excellent numbers. Considering (and correct me if I am wrong) those are generated with other people’s money right? You had some down-payment, but generally using leverage overall. I like it. The income is impressive.

Reply

FI FighterNo Gravatar December 24, 2013 at 7:48 pm

Martin,

You got it! Each property is leveraged, although I do have either 20% or 25% in each deal.

Take care!

Reply

Wendy mccleanNo Gravatar December 24, 2013 at 6:12 am

You are doing so well with rei . What type of insurance do you have on theses rental? Cash value or replacement cost? It is so low costs? Thanks , keep up the good work.

Reply

FI FighterNo Gravatar December 24, 2013 at 7:50 pm

Wendy,

I have HOA on a few of these properties, so only need HO-6 insurance, which is very cheap…For the out of state stuff, I have basic landlord insurance which I believe is just cash value… I could be mistaken, but I think the replacement cost premium was a bit higher.

Take care!

Reply

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