So I’m a little behind this month in publishing my cash flow report. I know it’s nearly Thanksgiving, but hey, better late then never.
Truth is, I’ve been on international travel for about a month now, with another week to go. My day job sent me to the freezing cold of Russia for 3 weeks. A California boy like me had little chance at fighting off the sub-zero temps so I caught a cold pretty quickly. Weeks later, I’m still trying to shake this off.
After the business portion of my trip, I’m now in France visiting some family. Catching up with relatives, eating amazing food, and staying warm.
Next up, Tuscany. It’s been way too long since I’ve seen my wife. She gets Thanksgiving week off so we’ll be meeting up in Florence. Then heading to see my Italian relatives in a small Tuscan town where we got married almost 5 years ago now.
With all that being said, business continues as usual. Each month, my tenants have to pay rent. There’s no exception. Heck, even owners such as myself have to pay rent. My payments are on autopay to my landlord back home in Los Angeles so nothing is missed while I’m abroad.
That’s the great thing about passive income. Here I am thousands of miles away, but I’m still collecting rent.
Without further adieu, let’s jump into this month.
Here’s the roll up cash flow summary for rental property (RP) #1.
On the plus side, these tenants paid the rent in full. Even though they were late again, they still end up paying. The PM gets the late fee, which is why you don’t see it reflected in the table above.
There were a couple maintenance items this month where the PM sent out a plumber to fix. The plumber is not cheap. A few hours of work from a plumber can easily rack up a couple hundred dollars. Sucks.
This month there was a water heater problem and a water leak under the kitchen sink. $342 later, the problem was solved. Ouch!
October’s net cash flow came out to $179.
Here’s the roll-up cash flow for rental property (RP) #2.
As you can see, it’s been a pretty standard month on paper. Just the PITIM (principal, interest, taxes, insurance, and management) that lowered my income. Max cash flow achieved!
So I didn’t hear a peep out of this tenant until after my last month’s cash flow report…I may have jinxed it. This tenant lost her job and is relocating to a job that she found in another state. She’s planning to leave by the end of November.
Not another vacancy. Especially during the holiday season, which can be the toughest time to find qualified tenants. If you recall, this is the one that had 2 months of vacancy. This time will be different. On the bright side, the tenant gave us a heads up and did agree to cover the rent until it we found another tenant.
In Search of a New Tenant
We’re planning ahead and have been marketing this property for lease well before the tenant leaves. Also, I lowered the rent to $1200 instead of the $1250 it has been renting at. This lower rent was more in line with the current competition of rental properties on the market at this time. I didn’t want to be the highest rental because my goal was to get a great tenant signed as fast as possible.
We had several showings and even received multiple applications after 2 weeks of marketing. The first 2 applications received were both very good.
I ended up accepting a working couple in their mid-40s. Their incomes well exceed 3x the rent, they met the 600 credit score minimum, and have no criminal history. While they do have a small 15 pound dog, they agreed to pay a $20/month pet rent. I haven’t charged pet rent in the past, but I’m going to give it a try. In addition to the pet rent, they also have a non-refundable pet deposit of $250.
Lastly, they agreed to an 18 month lease term instead of the standard 12 months. This was critical because had they signed only a year-long lease, a year from now I would be in another tough position of having to find new tenants during the holiday season. Instead with the 18 month lease, the term would end during the beginning of the summer. Therefore, I can likely charge a higher rent and find qualified tenants quickly, thus reducing my vacancy.
If all goes as planned, we should have no days of vacancy.
Stay tuned next month and I’ll let you know how this all unfolds.
Net cash flow for RP#2 for the month of October came out to $421.
Cash Flow Summary
Net cash flow from both properties: $600
Time Spent on Rentals?
As I said earlier, I’m working remotely from abroad and adding a little vacation time while over in Europe. So I’ve only spent minimal time sending emails back and forth. In all, probably about an hour’s work. I could have spent more time, picked up a phone and talked to my PM, but the time difference just wasn’t convenient. So I sent emails instead.
At the end of the day, it worked out. My rents were collected, we marketed RP#2, and found a new tenant.
More importantly, I’m able to catch up with family and spend quality time with loved ones.
That sums up my month. How was yours? Leave a comment below.