Author Topic: First property bought, rented - how do you think we did? One year update!  (Read 8452 times)

Megma

  • Pencil Stache
  • ****
  • Posts: 744
We recently bought rental property #1 after looking at listings and planning for about two years. It's now rented (yay!) and here is how the numbers shook out.

Per month:
Rent: 1225 (1195 base + 30 pet)

PITI: 570
Maint: 120 (~1.5% of purchase price)
Management: 123 (I'm self-managing currently)
Lawn: 80
Vacancy: 123

Monthly cash flow: 209; 2,508/year. We have around 19,000 cash invested, which makes the CoC 13.2%, if I calculated everything correctly.

Overall, I am happy with the results but they're not amazing. If I could go back, I think I should have been more concerned with the area (1 end of the street is nice, the other not so much), as multiple tenants expressed that as a concern and I ended up showing the house a lot. At the beginning we were also asking too high of rent (though we kind of knew that) for the area but low for a house in the city in general, also let to a lot of unproductive showings. Our tenants have good credit and backgrounds though so I hopefully it will have been worth it to find the right ones.

The house is in good shape and the city has been on a fast rise for the last 10 years, so we'll hopefully also benefit from some rising rents and/or appreciation in the coming years.

It has been a learning experience for sure!
« Last Edit: May 22, 2017, 12:59:12 PM by Megma »

Coop

  • 5 O'Clock Shadow
  • *
  • Posts: 16
Re: First property bought, rented - how do you think we did?
« Reply #1 on: July 28, 2016, 10:47:20 AM »
I'm an aspiring real estate investor myself, so it's encouraging to see others making the plunge and showing their numbers on their first deal. I think I'd be happy to end up in a situation like you've found yourself in. A couple of questions if you don't mind:

How did you estimate your maintenance value of 120/month? This presumably includes repairs + capital expenditures? When analyzing properties, I'm having trouble estimating what these costs should be as certain repairs are more-or-less independent of the purchase price of a property. Also, did the fact that you allow pets factor into how much you 'budgeted' in for maintenance? For example, you are charging $30/mo for pets. Would your estimated maintenance budget be $90/mo rather than $120 if you didn't have renters with pets? Finally, do you expect your lawn expense to be there year round, or will you have months with higher cash flow when the yard doesn't need as much maintenance?

Congratulations on your first deal. Best of luck to you!

Megma

  • Pencil Stache
  • ****
  • Posts: 744
Re: First property bought, rented - how do you think we did?
« Reply #2 on: July 28, 2016, 12:30:45 PM »
Hi Coop, I'm clearly no expert but I will try to answer you! Maybe the more experienced MMM RE gurus will chime in too.

I estimated my maintenance as 1.5% of the purchase price to get 120 (I rounded to 120/mo). This is a rule of thumb, if you read the sticky post from Iamlindoro on the RE forum he says he uses 1%, I was slightly more conservative because this house is a little older though mostly updated. If it's an old house it might need more, if it's new it might not need much for 5 years. If most of the purchase price in your area is land, that doesn't break :-)

Of course some months I will pay nothing in maintenance and other months I will spend 2,000. So I will save the maintenance budget up to meet those bills (really I already have a contingency fund but you get the idea). There is no way to know 100% what you will spend, this is an estimate. There could always be a month or year where EVERYTHING breaks. The point is to not think your maintenance is cash in your pocket.

I did not factor pets into the maintenance, you might want to if you have carpet. This house has all wood floors, I charged pet and security deposits and hopefully that will cover any pet related damage (I would say pet issues are damage and not maintenance).

I am hoping to get away with less lawn maintenance in the winter yes, but I am in a warmer climate so I will probably still need to have the lawn mowed 1x every 3 weeks in the off season but that will mean I save $40 every two months only!

Coop

  • 5 O'Clock Shadow
  • *
  • Posts: 16
Re: First property bought, rented - how do you think we did?
« Reply #3 on: July 28, 2016, 01:09:40 PM »
Thanks for the quick reply and explanation. When I'm analyzing a deal, I'm a bit paranoid about underestimating repairs and CapEx, so I think I tend to over-budget for them which makes the property look less attractive from a cash flow standpoint. Sorry to derail your thread and get away from your original focus, but I appreciate your feedback. It looks to me like you did well on the first one. Clearing $200/month (plus paying yourself for PM) with ~$20k invested is exactly the type of deal I'm aiming to find for my first property. Again, I wish you nothing but the best!

yddeyma

  • 5 O'Clock Shadow
  • *
  • Posts: 76
Re: First property bought, rented - how do you think we did?
« Reply #4 on: July 28, 2016, 06:27:49 PM »
Looks like good solid numbers to me!  Mind me asking what area of the country you're in?

adamcollin

  • Stubble
  • **
  • Posts: 153
  • Age: 33
  • Location: Texas
Re: First property bought, rented - how do you think we did?
« Reply #5 on: July 28, 2016, 11:56:28 PM »
The results are good. Keep up the good work!

Megma

  • Pencil Stache
  • ****
  • Posts: 744
Re: First property bought, rented - how do you think we did?
« Reply #6 on: July 29, 2016, 01:01:09 PM »
Thanks for the encouragement everyone! I know it's not the amazing numbers one sees on sites like bigger pockets but it seems solid enough for the first property. The house we're living in now is planned for rental number two, as we'd like to move into something with more outdoor space in a few years.

Ihatescreennames, we're in North Carolina.

Coop, you might have analysis paralysis!

Landlady

  • Stubble
  • **
  • Posts: 248
  • Location: WA
Re: First property bought, rented - how do you think we did?
« Reply #7 on: August 08, 2016, 06:16:58 PM »
The good news is that your numbers work! Many people buy investment properties only to be negative the first few years knowing that even if a portion of their mortgage is covered their tenants are helping them. The great news is that if you keep raising rents fairly your numbers will look much better in 5 years!

I think it's common to have unsuccessful showings unfortunately. Getting a renter is the most time consuming aspect of the landlording job. Once you find a good tenant you may want to keep them to avoid this process, but don't let that keep you from raising the rent fairly. Always check craigslist and zillow to see what the current market rate is before renewing a lease. If you want the current tenant to stay, make your increase slightly less than what is available in the market. No one likes to move so if it's comparable to the market availability they will likely stay unless they need to move to a cheaper neighborhood.

You could try making a simple video to show people around for future openings. I experimented with this in the spring and landed a signed lease after meeting the person over Facetime alone. I made it with my iphone and iMovie in about 20 minutes.

Congrats!

thedayisbrave

  • Pencil Stache
  • ****
  • Posts: 700
  • Location: Raleigh, NC
  • CFO @ My Life
Re: First property bought, rented - how do you think we did?
« Reply #8 on: August 09, 2016, 05:08:36 PM »
Yay! Glad you got renters in there.  The first is always a learning experience but you are cash flow positive every month which is great.  Congrats!!

Megma

  • Pencil Stache
  • ****
  • Posts: 744
Re: First property bought, rented - how do you think we did?
« Reply #9 on: August 12, 2016, 10:57:36 AM »
Thanks! I think I definitely learned to be more questioning of the neighborhood - lesson learned!

clarkfan1979

  • Magnum Stache
  • ******
  • Posts: 3352
  • Age: 44
  • Location: Pueblo West, CO
Re: First property bought, rented - how do you think we did?
« Reply #10 on: August 20, 2016, 01:14:08 PM »
What was the purchase price? How do the separate categories of mortgage, taxes and insurance break down? The numbers look ok for a first year. They typically get better over time. I have two rentals and they both took off around year 5. Here are some of my numbers below.

Rental #1: 4 bed/2 bath single family + bonus room (2200 sq. ft.). Purchase price of $182,101 in May 2007. I put 20% down (36K) + closing costs (4K) + 10K in improvements for a total of 50K invested.

Current Rent: $2,000

PI: $760
Taxes: $142
Repairs: $120
Capital Improvements: $120
Insurance: $60
Vacancy: 0% (neighborhood vacancy is 0.2%)
Management (7% of rent): $140 (I manage myself)

Total cost $1,342

*I'm getting new carpet installed this winter ($1,000). I will probably increase the rent to $2200 next year.


Rental #2: I purchased a 3 bed/2 bath single family + bonus room (1750 sq. ft.) in January 2012 for $95,000. I put 5% down (5K) + 5K in closing costs and 16K in repairs for a total of 26K invested.

Current Rent = $1700/month

PI: $430
PMI: $42
Taxes: $88
Insurance: $78
Repairs: $100
Capital Improvements: $100
Vacancy: 0% (neighborhood is 1.86%)
Management (8.3% of rent): $142 (I manage myself and get minor help from a relative)

Total Costs = $980




NoNonsenseLandlord

  • Bristles
  • ***
  • Posts: 396
  • Age: 64
  • Location: Eagan, MN
    • No Nonsense Landlord
Re: First property bought, rented - how do you think we did?
« Reply #11 on: August 23, 2016, 02:54:00 PM »
The proof will be after you get the second renter in.  If your current renter is a low quality one, your numbers may be out of whack.

Assuming you did find a decent renter, Congrats!!

Megma

  • Pencil Stache
  • ****
  • Posts: 744
Re: First property bought, rented - how do you think we did?
« Reply #12 on: August 26, 2016, 09:10:30 AM »
Thank you NNL - also I love your blog!

Tester

  • Bristles
  • ***
  • Posts: 478
Re: First property bought, rented - how do you think we did?
« Reply #13 on: August 30, 2016, 04:48:12 PM »
Per month:
Rent: 1225 (1195 base + 30 pet)

PITI: 570
Maint: 120 (~1.5% of purchase price)
Management: 123 (I'm self-managing currently)
Lawn: 80
Vacancy: 123

Monthly cash flow: 209; 2,508/year. We have around 19,000 cash invested, which makes the CoC 13.2%, if I calculated everything correctly.

Overall, I am happy with the results but they're not amazing. If I could go back, I think I should have been more concerned with the area (1 end of the street is nice, the other not so much), as multiple tenants expressed that as a concern and I ended up showing the house a lot. At the beginning we were also asking too high of rent (though we kind of knew that) for the area but low for a house in the city in general, also let to a lot of unproductive showings. Our tenants have good credit and backgrounds though so I hopefully it will have been worth it to find the right ones.

The house is in good shape and the city has been on a fast rise for the last 10 years, so we'll hopefully also benefit from some rising rents and/or appreciation in the coming years.

It has been a learning experience for sure!

Something is not clear for me.
If 120 is 1.5% of the purchase price, the property costs 8,000 USD?
You say you have 19,000 cash invested - it this the property cost plus repairs?
PITI: 570 - this makes me think you bought the place for 8,000 USD.
And you rent it for 1,200???
I want in :D.

EDIT:
Now really, are there places where you can buy a property for 8000 and rent it for 1200???
And the people paying rent can't get those 8000 to buy instead of renting???
Really???
If yes, please tell me what do I have to learn to find something like this.
« Last Edit: August 30, 2016, 04:50:53 PM by Tester »

letired

  • Pencil Stache
  • ****
  • Posts: 824
  • Location: Texas
    • Needs More Glitter
Re: First property bought, rented - how do you think we did?
« Reply #14 on: August 30, 2016, 05:17:35 PM »
Per month:
Rent: 1225 (1195 base + 30 pet)

PITI: 570
Maint: 120 (~1.5% of purchase price)
Management: 123 (I'm self-managing currently)
Lawn: 80
Vacancy: 123

Monthly cash flow: 209; 2,508/year. We have around 19,000 cash invested, which makes the CoC 13.2%, if I calculated everything correctly.

Overall, I am happy with the results but they're not amazing. If I could go back, I think I should have been more concerned with the area (1 end of the street is nice, the other not so much), as multiple tenants expressed that as a concern and I ended up showing the house a lot. At the beginning we were also asking too high of rent (though we kind of knew that) for the area but low for a house in the city in general, also let to a lot of unproductive showings. Our tenants have good credit and backgrounds though so I hopefully it will have been worth it to find the right ones.

The house is in good shape and the city has been on a fast rise for the last 10 years, so we'll hopefully also benefit from some rising rents and/or appreciation in the coming years.

It has been a learning experience for sure!

Something is not clear for me.
If 120 is 1.5% of the purchase price, the property costs 8,000 USD?
You say you have 19,000 cash invested - it this the property cost plus repairs?
PITI: 570 - this makes me think you bought the place for 8,000 USD.
And you rent it for 1,200???
I want in :D.

EDIT:
Now really, are there places where you can buy a property for 8000 and rent it for 1200???
And the people paying rent can't get those 8000 to buy instead of renting???
Really???
If yes, please tell me what do I have to learn to find something like this.

It's probably divided out over 12 months, so if you multiply that 8k * 12 months, that's probably closer to the purchase price.

Tester

  • Bristles
  • ***
  • Posts: 478
Re: First property bought, rented - how do you think we did?
« Reply #15 on: August 31, 2016, 11:42:01 AM »
Per month:
Rent: 1225 (1195 base + 30 pet)

PITI: 570
Maint: 120 (~1.5% of purchase price)
Management: 123 (I'm self-managing currently)
Lawn: 80
Vacancy: 123

Monthly cash flow: 209; 2,508/year. We have around 19,000 cash invested, which makes the CoC 13.2%, if I calculated everything correctly.

Overall, I am happy with the results but they're not amazing. If I could go back, I think I should have been more concerned with the area (1 end of the street is nice, the other not so much), as multiple tenants expressed that as a concern and I ended up showing the house a lot. At the beginning we were also asking too high of rent (though we kind of knew that) for the area but low for a house in the city in general, also let to a lot of unproductive showings. Our tenants have good credit and backgrounds though so I hopefully it will have been worth it to find the right ones.

The house is in good shape and the city has been on a fast rise for the last 10 years, so we'll hopefully also benefit from some rising rents and/or appreciation in the coming years.

It has been a learning experience for sure!

Something is not clear for me.
If 120 is 1.5% of the purchase price, the property costs 8,000 USD?
You say you have 19,000 cash invested - it this the property cost plus repairs?
PITI: 570 - this makes me think you bought the place for 8,000 USD.
And you rent it for 1,200???
I want in :D.

EDIT:
Now really, are there places where you can buy a property for 8000 and rent it for 1200???
And the people paying rent can't get those 8000 to buy instead of renting???
Really???
If yes, please tell me what do I have to learn to find something like this.

It's probably divided out over 12 months, so if you multiply that 8k * 12 months, that's probably closer to the purchase price.

I don't know, this is why I am asking:

Mortgage Summary
Loan amount   $8,000.00
Term   15 years
Interest rate   4.5%
Annual home insurance   $1,000.00
Annual property taxes   $5,000.00
Monthly payment (PI)   $61.20
Monthly payment (PITI)*   $561.20
Total principal and interest payments   $11,015.84
Total interest   $3,015.84


Read more: http://www.bankrate.com/calculators/mortgages/mortgage-payment-calculator.aspx#ixzz4IvtJiHUP
Follow us: @Bankrate on Twitter | Bankrate on Facebook

the above makes me think that the property really cost 8,000???
I mean, the PITI almost matches what the topic says:
PITI: 570

So really really curious to find out the price.

Megma

  • Pencil Stache
  • ****
  • Posts: 744
Re: First property bought, rented - how do you think we did?
« Reply #16 on: October 24, 2016, 08:30:34 PM »
Tester, I just saw this. First if i had paid 8k for the house and rented it for 1200, I'd be way more enthusiastic about the results 😀
 Im not sure why you think it was 8k unless it's the maintenance figure? 120 is 1/12 of 1.5%, as in, it's 1.5% for the year and I divided it into a monthly figure and rounded it up. The house price was in the mid 90s, I can't remember exactly now. Does this make sense now? Sorry I did not explain that well.
« Last Edit: October 27, 2016, 02:18:36 PM by Megma »

Drifterrider

  • Handlebar Stache
  • *****
  • Posts: 1118
Re: First property bought, rented - how do you think we did?
« Reply #17 on: October 27, 2016, 12:31:35 PM »

Ihatescreennames, we're in North Carolina.

Where in NC?

zephyr911

  • Magnum Stache
  • ******
  • Posts: 3619
  • Age: 45
  • Location: Northern Alabama
  • I'm just happy to be here. \m/ ^_^ \m/
    • Pinhook Development LLC
Re: First property bought, rented - how do you think we did?
« Reply #18 on: October 27, 2016, 01:02:06 PM »
Not a bad CoC, though I try to get nominally 20% or more. It's still market-beating, IF your expenses work out per estimate. I'd be concerned about maintenance periodically exceeding estimate, maybe by a lot.

Megma

  • Pencil Stache
  • ****
  • Posts: 744
Thedayisbrave has recently helpfully reminded me that we bought our first rental a year ago (she was our agent), the time really flies! Since it’s been a year I wanted to share an update of how it’s going.

First, the bad news is in 2016, we were cash flow negative $321.78 overall (did not include any tax benefits or principal pay-down in this calculation). This is mostly because I included the cost of the appraisal and home inspection in the first year numbers (~1,000), if I had amortized them over the first few years of ownership, we’d have been positive a little bit. We also had 9 weeks of vacancy. First because we bought the property right before I had a work trip and then two of us were on vacation so we couldn’t effectively market it right away. We lost almost 4 weeks because of this. Second, we were asking too high of rent for the area at first. It took us a little while to find the right price where it was snapped up.

The first lease is up at the end of July and hopefully our tenants will stay. We like them, they’re low maintenance and have paid on time every month. We just approached them to see if they want to stay are waiting for their reply. We’re not raising the rent this year (I’m sure there will be comments about this choice!) because rent really hasn’t gone up in the area and it would be a big PITA if they decide to move out since our wedding is at the beginning of September, so we’ve got a lot going on in August. Next year we’ll do an increase.

We’ve had a few maintenance items, the first was the washing machine drain was thoroughly blocked. We tried to clean it ourselves, had a local handyman come snake it and then finally had roto-rooter come out. After the handyman came it seemed ok until our tenants moved in and tried to do more than one load of laundry in a row. Now we have a roof leak that we just got estimates to repair but it will probably suck up our maintenance budget for the year. Zephyr911, you are probably right that the budgeted amount is/was too low, though in 2016 it was enough for our washer drain issues.

We both feel really good about the purchase and are so happy we made it! It is amazing how quickly money accumulates in the rental’s account even with the PITI and other expenses coming out and us not really cash-flowing much. Seriously, I’m amazed by it. The maintenance funds are accruing there of course for later use and our management fees paid to ourselves and the budgeted cash flow.

At the present time we’re not planning to buy another rental because we’re paying for most our own wedding in September ($$$ - we should’ve eloped!). Our original plan was to buy a new house for us to live in, and turn out current two bedroom townhouse into rental #2 but since I didn’t have a clue what made a good rental when I bought it, only a vague idea that I’d do that with it in the future, at the current rents it would only break-even. So we’ve agreed to stay put for 2-3 more years and get another planned rental first than either rent or sell this one depending on the markets at that time. I am also toying with the idea of getting my own RE license starting next spring, so maybe by the time I’ve finished that we’ll have rebuilt our war chest sufficiently to start looking for #2.
« Last Edit: May 22, 2017, 12:58:43 PM by Megma »

jeromedawg

  • Walrus Stache
  • *******
  • Posts: 5174
  • Age: 2019
  • Location: Orange County, CA
Nice thread - I'm going to follow this.

BTW: I must have missed this but is your property out of state or local?

thedayisbrave

  • Pencil Stache
  • ****
  • Posts: 700
  • Location: Raleigh, NC
  • CFO @ My Life
Thanks for the one year update! Glad to hear you are still happy with your purchase.  Hopefully the tenants will want to stay, it is always a huge sigh of relief when all the renewal paperwork is taken care of - you can breathe easy for another year!

theoverlook

  • Pencil Stache
  • ****
  • Posts: 505
Do yourself a favor and find a good drain cleaning service before you need them again. Roto-rooter seems to be the highest cost option in my experience. I have a local company I use and they charge less than $100 to cable a branch line like a washing machine drain. Main sewer lines are more but still much less than Roto-rooter.

Also find a good general service plumber that will work on a time and materials basis; many of the big names charge "book rate," meaning they have a number of hours they charge for a job regardless of how long it actually takes to complete. I got a price from Roto-rooter on some work and it was $750. The time and materials plumber was $135, and the completed work was good.

SwordGuy

  • Walrus Stache
  • *******
  • Posts: 8955
  • Location: Fayetteville, NC
Looks like it might be a winner over time!

I have a question for you, why are you mowing the lawn of a rented house?  Why not make that the tenant's responsibility?

That will save you $80 a month!

You could even offer to cut the rent by $40 a month to your current tenants if they take over the mowing and you would make more money...

I haven't gone the leveraged real estate route, we've been cash-buying distressed properties in the $33k to $38k range and spending between $7k and $13k to fix them up for rental.    The properties are worth about $80k when we fix them up.

From the real estate folks I've talked to who do go the leveraged route, they want about $100 a month in cash flow per $10k invested.

Which, oddly, now that I think about it, is about what we're getting.

Megma

  • Pencil Stache
  • ****
  • Posts: 744
Looks like it might be a winner over time!

I have a question for you, why are you mowing the lawn of a rented house?  Why not make that the tenant's responsibility?

That will save you $80 a month!

You could even offer to cut the rent by $40 a month to your current tenants if they take over the mowing and you would make more money...

I haven't gone the leveraged real estate route, we've been cash-buying distressed properties in the $33k to $38k range and spending between $7k and $13k to fix them up for rental.    The properties are worth about $80k when we fix them up.

From the real estate folks I've talked to who do go the leveraged route, they want about $100 a month in cash flow per $10k invested.

Which, oddly, now that I think about it, is about what we're getting.

Yes SwordGuy you have a good thing going!

To answer your question, we tried to get tenants that would mow the lawn, trust me. This is not something I want to be doing. It even seems "normal" in the area for tenants to mow the lawn of a house based on other listings I looked at. However, after the 5th potential tenant balked at mowing the lawn, and we weren't getting the place rented, we adjusted. This was another thing we changed in the course of our 9-week vacancy. Viewers were turned off by having to mow the lawn so we eventually added that to "sweeten" the prospect.

I'd rather pay a guy to mow the lawn for them, keeping the rent up where it is and making it easier to find a tenant, than insist on it and have an empty house.

We also looked at adding an alarm system since we got some negative comments on the perceived safety of the neighborhood (and it was already wired for it) but the house rented so we didn't go through with that.

Megma

  • Pencil Stache
  • ****
  • Posts: 744
Re: First property bought, rented - Two year update!
« Reply #25 on: January 03, 2018, 10:26:55 AM »
I have just updated my rental spreadsheet with the 2017 results and I have to say that I am very pleased with how this is going.

First the numbers:
                                                2016*                       2017
Maintenance & Expenses            $3,207.21                 $2,474.89
PITI                                         $3,239.57                 $6,825.03
Total expenses                          $6,446.78                $9,299.92
      
Rental Income                           $6,125.00                 $14,700.00
      
Cash Flow**                              -$321.78                   $5,400.08
      
Vacancy                                  9 weeks                    0 (tenants renewed)
      
Principal pay down                 633.46                        $1,128.61

*Expenses include home inspection and appraisal costs of ~1,000 but not down payments & loan origination costs. 2016 was only 9 a partial year of ownership.
**cash flow doesn't include the principal pay down, only cash. It also includes management, as we self-manage, so this inflates the CF numbers a bit.

We have around 19,000 cash invested, that is a cash on cash return of 28.4% (assuming my math is right).

Our existing tenants renewed for another year at the beginning of August so we had no vacancy (yeah!) but we did have a roof repair that was around $1,300.

As of now we don't have plans to buy another rental, even though we are happy with this performance. We had high expenses in 2017 as DH and I got married and cash flowed our wedding and we'd like to buy a larger house for us to live in and change our current house in rental #2. That's the plan at the moment anyway.

sammybiker

  • Pencil Stache
  • ****
  • Posts: 511
Re: First property bought, rented - how do you think we did? One year update!
« Reply #26 on: January 03, 2018, 02:14:56 PM »
Great update and you obviously knocked it out of the ballpark with screening the tenants - good job.

supomglol

  • 5 O'Clock Shadow
  • *
  • Posts: 79
Re: First property bought, rented - how do you think we did? One year update!
« Reply #27 on: January 12, 2018, 12:04:26 PM »
Make sure you are keeping track of the amount of your own time spent on this.  You mentioned in your initial post that you showed the house a lot.  How much are those hours worth? 
It's always a struggle for me to keep track of all the non-hands-on time for our rentals. 

thedayisbrave

  • Pencil Stache
  • ****
  • Posts: 700
  • Location: Raleigh, NC
  • CFO @ My Life
Re: First property bought, rented - Two year update!
« Reply #28 on: January 14, 2018, 10:44:17 AM »
I have just updated my rental spreadsheet with the 2017 results and I have to say that I am very pleased with how this is going.

First the numbers:
                                                2016*                       2017
Maintenance & Expenses            $3,207.21                 $2,474.89
PITI                                         $3,239.57                 $6,825.03
Total expenses                          $6,446.78                $9,299.92
      
Rental Income                           $6,125.00                 $14,700.00
      
Cash Flow**                              -$321.78                   $5,400.08
      
Vacancy                                  9 weeks                    0 (tenants renewed)
      
Principal pay down                 633.46                        $1,128.61

*Expenses include home inspection and appraisal costs of ~1,000 but not down payments & loan origination costs. 2016 was only 9 a partial year of ownership.
**cash flow doesn't include the principal pay down, only cash. It also includes management, as we self-manage, so this inflates the CF numbers a bit.

We have around 19,000 cash invested, that is a cash on cash return of 28.4% (assuming my math is right).

Our existing tenants renewed for another year at the beginning of August so we had no vacancy (yeah!) but we did have a roof repair that was around $1,300.

As of now we don't have plans to buy another rental, even though we are happy with this performance. We had high expenses in 2017 as DH and I got married and cash flowed our wedding and we'd like to buy a larger house for us to live in and change our current house in rental #2. That's the plan at the moment anyway.

That's awesome!!! Glad to see things working out for the rental.

Megma

  • Pencil Stache
  • ****
  • Posts: 744
Re: First property bought, rented - how do you think we did? One year update!
« Reply #29 on: January 31, 2018, 11:25:57 AM »
Make sure you are keeping track of the amount of your own time spent on this.  You mentioned in your initial post that you showed the house a lot.  How much are those hours worth? 
It's always a struggle for me to keep track of all the non-hands-on time for our rentals.

I understand why I should keep track of the hours but honestly I also don't think it's worth the hassle to do so. I understand it's not a totally passive investment and that I have to do some work for the returns I’m getting. Last year I would estimate I spent fewer than 10 hours, probably around 5 working on things for the property because my tenants renewed. The first year it was more like 30 hours because I showed it a bunch. This year I have probably spent 3 hours already and it’s only January! 

I did include management as a cost in my initial budget, if I’d paid management fees of 10% of rents last year my net profit would’ve been 3,930.08. Still pretty good :)

Blindsquirrel

  • Pencil Stache
  • ****
  • Posts: 690
  • Age: 6
  • Location: Flyover country
Re: First property bought, rented - how do you think we did? One year update!
« Reply #30 on: February 04, 2018, 09:11:52 AM »
    Good job on the rental for your first deal I think. If you have good tenants, would only raise the rent either a little or only a bit every other year. Have to raise them every now and then to keep inflation at bay but if they are getting a good deal and you have no turnover, everybody wins.