Monthly Portfolio Report: May 2021
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 May 2021.
Property Overview
With the tenant moved in after the long turn at Property #7, I am back to full occupancy. Love when that happens!
However, there are some caveats to this — I have one non-paying tenant who is about to be evicted, and the saga of Property #7 didn’t end when the tenant moved in. More on both of these situations below.
Rents
In last month’s update, I talked about the tenant at Property #2, who received help from a rent assistance program in Memphis. I was to receive 80% of March and April rent, which the tenant had not paid, in exchange for forgiving the balance and giving the tenant a fresh start in May.
For some reason, though, that rental assistance fell through. I’m not exactly clear why, but it may be because the tenant failed to go in to sign all the paperwork that was required.
In any case, because the rent assistance never came, my Property Manager never stopped the eviction in progress, which was initiated in late March. They had a court date in May, and as of the time of writing (early July), I’m expecting to take possession of the house in a few days. (As you can see, evictions take a long time.)
I’ve gone back to adjust my rent collected in March and April (I had booked the 80% rent in each of those months, in anticipation of the rent assistance), so the new cash flow graph at the bottom of this post is accurate.
Expenses
A few things require explanation this month:
Mortgage: Banks are regularly re-evaluating escrow payments to be sure they are appropriate to cover insurance and property tax payments. That is why my total mortgage amount may fluctuate from month to month — this is a bit higher than last month, for example. But these escrow adjustments do not change the underlying financials of the properties, just how much the bank is “withholding” to cover those fixed costs.
Maintenance & Repairs: There were several typical repair visits, but also included in this amount is the $825 build-back of the section of wall that had to be removed at Property #7 in order to move the honeybee colony. However, it also includes a large HVAC issue at the same property after the tenant moved in, an issue that continued into June. So far, this issue has cost me over $1,200, but I hope to negotiate some of that back from my PM, who in my view did not handle the situation appropriately. In next month’s update, I’ll give a full chronological account of this issue, because it’s a good lesson in why it’s important to manage your PM.
Property Management: This is a bit higher this month because of the leasing fee I paid to my property manager for the new tenant placement at Property #7. (My PM charges 50% of one-month’s rent each time they place a new tenant; this kind of fee is quite standard among professional property managers.)
Tenant Chargeback: I’ve added a new category in my accounting for Tenant Chargeback. This represents amounts that my PM charges back to my tenant’s accounts, which can happen if the tenant is a no-show for a technician appointment, or if the issue was something the tenant is responsible for (i.e. keeping drains clear). I am charged for these upfront, but once the tenant pays the amount, I’m reimbursed. In the past, I categorized these as regular maintenance expenses, with a subsequent offsetting refund when I was reimbursed, but I think it is cleaner to have a separate category. (At the end of the year, the net amount in this category should be $0 assuming the tenants pay the amounts they owe.)
Utilities: My final utility bill during the vacancy/turn at Property #7. (I thought last month was the final bill, but it turns out there was one more.)
The Bottom Line
My financial model currently projects my Memphis portfolio to generate $6,329 of positive cash flow in an average month. In May, the positive cash flow was $9,204, nearly $3K better than that projected average.
This was entirely due to the ~$4K insurance payment I was able to negotiate for the water damage done at Property #7, which I mentioned in last month’s update. This helps to offset some of the downside I had in March, when I paid for that rehab work.
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. It’s been a bit of a wild ride so far this year! But despite that, I’m only about $1K short of my total projected cash flow year-to-date.
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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.
