My Monthly Cash Flow Report – June 2016

Welcome to my June 2016 cash flow report!

Each month I document how my rental properties (RP) are performing in order to track my monthly cash flow. I share both the good and the bad, as well as any lessons learned from investing in out-of-state rentals.

For these income reports, I’ll report everything as they occur. That means if no rent came in, there will be a big fat zero. The same goes if there were no maintenance issues for a given month. This is different from when I analyze a potential property that I’d like to invest in. Where in that case, you’d always see some estimated maintenance expense, as well as a vacancy loss, capex, and more in order to appropriately determine my projected cash flow and cash-on-cash return numbers.

Without further ado, let’s jump into this month.


Here’s the roll up cash flow summary for rental property (RP) #1.

Rental Property #1 Cash Flow

The full month’s rent of $1200 was collected. This tenant paid late and in chunks this month. First, they paid a few hundred dollars on time before the 5th of the month. Then a few more hundred dollars came in late with a $30 late fee. Lastly, they paid the remaining balance well into the end of the month with an additional $30 late fee.

Having a late paying tenant definitely is not fun, but hey it’s better than a payment that doesn’t pay. My property manager (PM) keeps the late fees since they do additional work to make contact with the tenant and hassle them to bring in the rest of the rent payment.

Additionally, there was one maintenance issue this month where a plumber was needed to clear out a backed up drain. Someone (by someone I mean the tenants) were throwing away baby wipes down into the toilet. Plumbers cost quite a bit more than regular handymen so $184 of labor down the drain.

June’s net cash flow came out to $336.


FINALLY, found a qualified tenant! I mean…FINALLY.

The new tenant met all of our qualifications and passed our credit, criminal, and rental background checks. The high points of what I’m looking for in a new tenant are the following:

  • Gross monthly income > 3x rent
  • Verifiable employment history and income
  • Credit score > 600
  • No evictions, foreclosures, or bankruptcies in last three years
  • No felonies in last 10 years

The new tenant doesn’t move in until the 1st week of July. So in total, I will have had just over 8 weeks of vacancy. I know, 8 weeks is a long time. Having a Class B property near great schools vacant during the months of May and June was completely unexpected. My previous tenants broke their lease early and moved out by the end of April. Since they broke out of their lease early, they did agree to pay an additional month of rent and we were keeping the security deposit (see May’s cash flow report). These funds definitely helped because despite having known in advance that they’d be moving out, it still took over 8 weeks to find new tenants that were qualified.

What Was Done During the Vacancy Period?

When your investment property is not getting rented out, there’s usually a reason for that. Maybe the rent is too high or there’s a strange smell in the house.

In my case, we started the rent at $1295 which was just at the market rent for that area during May. In hindsight, this rent was on the high side of the market. I ended up reducing it down to $1250 after 3 weeks of no applications.

We also had the exterior of the house freshly painted and the backyard deck re-stained.   The thinking here was that by painting the exterior we would really make the property shine and generate more potential applicants. Plus, there was some wood rot that needed to be taken care of and painting is a good preventative measure against further wood rot.

Here’s a before and after photo below.


For anyone interested, I used the following 3 colors from Sherwin Williams:

  • Summit Grey SW 7669 – exterior siding/walls
  • Extra White SW 7006 – all trim including around windows, front porch, and railing
  • Heartthrob SW 6866 – front door and window shutters

So here’s the roll-up  summary for June.

Rental Property #2 Cash Flow

As you can see, vacancies hurt. No income this month, but still had to pay the usual PITI (principal, interest, taxes, insurance) and then some. There was the electricity and water to be paid. As well as some maintenance in adding downspout extensions that were noticeably missing. Lastly, the biggest chunk of change was in painting the house and re-staining the deck. So I’m in the red this month by a lot.

Net cash flow for RP#2 for the month of June came out to $3,841


Net cash flow from both properties: $3,505

10 thoughts on “My Monthly Cash Flow Report – June 2016

  1. Wow, I love the new paint! What a difference that makes.

    The long vacancy is a huge bummer. It’s so hard to know where to set rents. You can run all the comps you want in the beginning, but theres no way to know for sure if it will rent up at a given price other than trial and error. Unless you price yourself too low, of course, which is just a different way of shooting yourself in the foot.

    • Thanks for the tips you gave before with the grey paint. I spoke to a few investors, including my wife when picking those colors and everyone seemed to prefer that grey, red, and white combination. I’m happy with how it turned out.

      It really did feel a bit like trial and error. Next time, we really needed to start marketing before the tenant had moved out as well as making the decision to paint sooner then later.

  2. The property looks great! Congrats on getting it rented.

    Vacancies are definitely the most important factor in cash flow. If you can keep a tenant in the property over two years, you’ll likely crush your cash flow estimates.

    Was the credit score an eliminating factor for some of the tenants? I guess it depends upon the class of property, but 600 seems high / less important than your other requirements.

    • That’s funny that you think a 600 credit score is high/unimportant. I tend to think credit scores are very important, and I set 660 as my benchmark. I might go lower in less heated rental markets, but I would still think scores are important because it shows that the tenant is paying obligations on time, and that they have something to lose (their good credit) in the event of an eviction or collection action. Have you had high credit score tenants default on you?

      • I guess it’s all relative to the market and price point. Some investors do really well with section 8 tenants. Steady income wins.

        In the lower price markets OB and I invest in, someone with a 660 or 700 credit score might just move out and buy their own place. In CA that is a whole lot harder …

        • That’s a good point. In California, we have the astronomically high prices which makes for a good-sized pool of people with reasonably good credit but not quite enough down payment to get their own place.

          I wish there was some scientific way of ranking these factors. For example, I’d love to see whether the higher-credit-score tenants in California end up doing less damage to rentals and/or pay rent more reliably that the lower credit score folks in the areas where you out of state investors buy property. It’s so hard to get an apples-to-apples comparison, though.

    • Thanks Brian! I had several applications that I rejected for a couple reasons, but the credit score was not the deciding factor in any of these cases.

      One case, the combined gross income was hovering just slightly under 3x the monthly rent, their credit scores were in the mid 500s, and they owned 2 pit bulls (no bueno). As if the income and low credit wasn’t enough to make me nervous, the pit bulls made it a clear hell no. In another case, one of the 2 potential tenants seemed great (great income, stable job, good credit), but the other didn’t pass our criminal background check (string of robberies and drug related crimes), had terrible credit, and no employment history. My hunch was that the good tenant was filling out the application to qualify the guy with the prior history as a favor.

      I did have one great couple apply who met all of my requirements with flying colors, but the couldn’t move in until August 1. This was back in the beginning of June and I couldn’t stomach a vacancy till August! So regretfully, I had to pass on them.

  3. Thanks for opening up your numbers for new investors like me to follow. It helps to understand the ups and downs of rentals.

    Glad you finally found qualified tenants! However, 8 weeks does seem long for your property in a good neighborhood. Looking back now, do you think your PM could’ve done things differently to find a tenant sooner? How was the communication?

    • Thanks for stopping by Mas! I’m glad these posts help give a real perspective of a rental owner. I don’t hold anything back so you are really getting the good and the bad.

      Honestly, I think the PM could have done more to get this place rented faster. In an nutshell, being more proactive up front would have gone a long way. Rather than reacting to the market, pricing it accordingly from the get-go as well as suggesting to paint the exterior sooner than after over a month into the vacancy. I’m thinking of putting together a post of what I learned from this last experience so stay tuned.

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