Monthly Portfolio Report: August 2022
One of my goals with Rental Income Advisors is to be as transparent and data-driven as possible with my readers and my coaching clients. I think the best way to build confidence in a new investor is to actually show the numbers, to prove that rental property investing really does work as advertised.
For those reasons, I publish a monthly report on my portfolio’s performance. I hope that this chronological history paints a clear picture of what it’s like to be a remote landlord. It’s also a great exercise for me to be sure I’m staying plugged in to all my numbers.
Here is the update for August 2022. You can also check out all my previous monthly reports.
Property Overview
In June’s report, I discussed in detail the two simultaneous property turns I started in June. One of those new tenants moved in on August 1st, so I’m back go 95% occupancy this month. The other new tenant moved in just prior to September 1st, so by next month I should be back to 100% occupied!
Rents
Obviously, this was a very unusual month for collections! Let me explain what’s going on here.
First of all, I charged quite a bit more rent than the last two months because of the new tenants at the two properties I turned. Both paid their first month’s rent in August, which totaled nearly $3K. (Even the tenant who moved in at the end of August was charged and paid their first full month of rent; their second month will be pro-rated.)
But the huge surplus in collections (vs. the rent charged) was due to two factors. First, I had a tenant not pay any rent in July at Property #11, but they got fully caught up in August — so I collected double rent at that property this month, accounting for ~$,1500 of the surplus.
The bigger factor, though, was back-rent I received at Property #9. This tenant has not paid rent since last October. While their eviction was proceeding (excruciatingly slowly due to backups in the courts), my PM helped them get connected to local agencies who had rental assistance money available. Several months ago, I got 3 months of back-rent. But this month, I received EIGHT months of rent, covering them through the end of October. This tenant’s monthly rent is $827, but I booked over $6,400 in rent this month at that property!
This is obviously a big win-win situation. Whatever the cause of the tenant’s financial hardship, this assistance gives them an opportunity to avoid an eviction and get back on their feet. At the same time, it makes me whole on all the missing rent over the past year. And it’s another example of why I’m grateful to have a professional PM to handle my portfolio — I obviously would not have know what Memphis-area rental assistance agencies to connect the tenant with, but that’s something my PM was able to do for tenants across their 3,500+ property portfolio.
Expenses
Here are the highlights with my expenses this month:
Maintenance & Repairs: Pretty typical month of expenses, including an HVAC repair, a plumbing issue, a garage door repair, and an occupied home inspection. I also had some more leftover rent-ready expenses from my two recent turns (more lawn-cutting, professional photos for rental listings, etc.)
Property Management: This was way higher than usual, for two reasons. First, I had to pay the Leasing Fee for placing each of the new tenants at the properties I turned — this totaled just over $1,500. Second, I had to pay the normal 8% fee for all that additional back-rent I received, which accounted for another ~$600.
Mortgage: This is another ~$200 higher than last month. As discussed in my reports over the last few months, this is being driven by escrow adjustments from my lenders. I’m through all of the adjustments now, so it won’t be going up further, but overall my mortgage costs went up by about $500 since June. I discussed my property tax increases way back in July 2021, which account for about half that; the rest reflects the increasing cost of insurance, and the fact that the escrow amounts in some cases were too low from the outset. Note that these escrow adjustments do NOT affect my projected average monthly cash flow, because my pro forma model uses the actual tax and insurance costs, not the escrow payments — so the effects of those property tax and insurance increases were already baked in. (But now I actually have to pay for them every month!)
Utilities: Like last month, I was responsible for utilities charges on the vacant properties. However, some of these bills were HUGE…so I’m inquiring with my PM to understand why.
Legal Fees: The tenant at Property #11 got current on their rent this month, including paying this eviction filing fee. So I was reimbursed the fee by my PM, resulting in a negative expense.
The Bottom Line
My financial model currently projects my Memphis portfolio to generate $7,193 of positive cash flow in an average month. This month, my cash flow was $13,143, or nearly $6K in excess of my projected average. This is due to the surplus collections discussed above — without those, I would have been pretty much on-target.
Finally, here’s the running tally and graph I update each month. The dotted blue line indicates my projected average monthly cash flow for my portfolio in each given month. This very strong month helped erase some of the deficit I had accumulated for the year, but I’m still a long ways behind my projections despite having over $44K in cash flow.
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About the Author
Hi, I’m Eric! I used cash-flowing rental properties to leave my corporate career at age 39. I started Rental Income Advisors in 2020 to help other people achieve their own goals through real estate investing.
My blog focuses on learning & education for new investors, and I make numerous tools & resources available for free, including my industry-leading Rental Property Analyzer.
I also now serve as a coach to dozens of private clients starting their own journeys investing in rental properties, and have helped my clients buy millions of dollars (and counting) in real estate. To chat with me about coaching, schedule a free initial consultation.
