Author Topic: Can I make extra money off of this?  (Read 1776 times)

rothwem

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Can I make extra money off of this?
« on: November 18, 2019, 07:15:37 AM »
My tenant's rent ($2300) is due by the 5th of the month, but my mortgage is due by the end of the month.  I have been just transferring the "cash flow" portion of the rent (rent roll minus expenses, including PITI) to a separate account after I get the rent, and then pay the mortgage at the end of the month.  It just sits there though, all month, in a business checking account making 0.01%.   Cash flow is right at $700/month, so I really only get to invest $700, and that's if I don't have any repairs or anything that month.  I'd like to figure out how to get the full $2300 invested instead of just $700. 

Is there a way that I can make money off of this?  I was thinking about maybe trying to invest the $2300 as soon as I get it, let it grow a bit, then pull it out at the end of the month to pay the mortgage and management fees, then drop $2300 back in when get the next month's rent.  I can cover a few months if I take a huge investment loss, though I was thinking I'd stick it in something like an S&P 500 etf. 

So...bad plan? Good plan?  Would this make taxes a nightmare?

terran

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Re: Can I make extra money off of this?
« Reply #1 on: November 18, 2019, 07:30:36 AM »
You shouldn't invest money you need within the next 5 years, let alone the next month. You could open a high yield savings account for this money. It wouldn't add up to that much since it mean having something less than a $1600 daily average balance ($1600 for the 5th through the day you pay your rent).

Morning Glory

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Re: Can I make extra money off of this?
« Reply #2 on: November 18, 2019, 07:49:00 AM »
Can you just pay your mortgage early? You will be saving a few days of interest on the amount that goes to principal. Otherwise there are online savings accounts that pay around 2%

rothwem

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Re: Can I make extra money off of this?
« Reply #3 on: November 18, 2019, 09:29:39 AM »
Can you just pay your mortgage early? You will be saving a few days of interest on the amount that goes to principal. Otherwise there are online savings accounts that pay around 2%

I'm fairly certain that my mortgage is compounded monthly, so paying 20 days early would probably not get me anything I wouldn't think. 

Right?

PoutineLover

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Re: Can I make extra money off of this?
« Reply #4 on: November 18, 2019, 10:14:04 AM »
I think you can choose the payment schedule for your mortgage so you can probably switch to bi-weekly or change the payment due date if you wanted to. Worth asking your bank for options. Or sign up for a higher interest chequing account so you're not making nothing (although it still won't be all that much). Don't risk it in the stock market.

robartsd

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Re: Can I make extra money off of this?
« Reply #5 on: November 18, 2019, 11:57:57 AM »
You shouldn't invest money you need within the next 5 years, let alone the next month. You could open a high yield savings account for this money. It wouldn't add up to that much since it mean having something less than a $1600 daily average balance ($1600 for the 5th through the day you pay your rent).
I think you'd be very lucky to make $1/month on this money.

If I were operating a rental property business, I'd want to have a pretty substantial emergency fund. I'd hold the emergency fund in a high yield savings account. If possible, I'd automate having rental income deposited into this account and set up automatic transfers to the checking account for covering recurring expenses. I'd do for the convenience insulating expected outlays from any potential income shock; any additional interest earned based on when in the month the money comes in and goes out would just be a bonus. Of course, shocks on the expense side would require additional one-time transfers. Rental profits would only be taken out of the savings account when it is above the target for the emergency fund.

rothwem

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Re: Can I make extra money off of this?
« Reply #6 on: November 18, 2019, 12:21:30 PM »
Maybe I should have phrased this post differently, since I didn't put it in the real estate section for a reason. 

If someone gave you $2300 to hold onto every month between the dates of the 5th and the 31st, how would you try to make money off of it? 

And just FYI, I've got a nice fat emergency fund in another stupid savings account.  So if there's investment losses, its not that big of a deal, I just want it to trend in a positive direction. 

mistymoney

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Re: Can I make extra money off of this?
« Reply #7 on: November 18, 2019, 01:10:18 PM »
I get a lot better in the money market than just checking - that might be the best you can do without being risky.

robartsd

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Re: Can I make extra money off of this?
« Reply #8 on: November 18, 2019, 04:28:44 PM »
There's no real investment possible with ~$2k available for about 20 days each month. You park it in the best interest bearing account that meets your needs and collect your extra pennies.