The Cash Flow Analysis for Our Rental Property at Year End 2013

Rental Property Cash Flow Report

Another year has passed and it’s time once again to report on the progress of our rental property. To see 2012, visit the link at the bottom of the post.

Generally speaking, it’s been a very positive year. No issues with the tenant other than the threat of a job loss, which would have forced him to move. Luckily, that didn’t happen and I’m thankful I have a tenant that over-communicates in this area.

Given that there were 12 solid months of on-time payments and no major repairs or unexpected expenses, I expect the year-ending cash flow report to be very strong. Let’s dig into the numbers.

Cash Flow Analysis

Rent Collected

$1,775.00 January Rent
1,775.00 February Rent
1,775.00 March Rent
1,775.00 April Rent
1,775.00 May Rent
1,775.00 June Rent
1,775.00 July Rent
1,726.31 August Rent (less tenant repair)
1,775.00 September Rent
1,775.00 October Rent
1,775.00 November Rent
1,775.00 December Rent

Total Rents Collected $21,251.31

We collect rent using Chase Quickpay, which makes it super easy and free.

Expenses Paid

$10,104.44 Mortgage Payments for 12 Months (Details of the loan)
4,298.90 Property Taxes (I told you they were high in Texas)
2,100.00 HOA Dues for 12 Months (It’s a townhome, so this pays for lawncare, outside insurance, and the pool)
491.56 Insurance (Condo policy through Allstate)

Total Expenses Paid $16,994.90

Total Cash Flow $4,256.41

Nice! This easily beat my expectations and it’s more than made up for the slow start in 2012. Given our initial investment of $41,796, this cash flow produced an annual return rate of roughly 10.2%.

Being a landlord definitely comes with its risks, but this is certainly one of those times when I’m going to celebrate and feel good about our investment.

I have this tenant till August 2014, and would love to keep him on, so the next thing I’ll cover is signing a follow-up rental agreement.

You can read the entirety of my rental property experience by sifting through the real estate category.

What are your thoughts on our year two cash flow report? Leave your comment or question below.

So see last year’s cash flow report, click the next page below…

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Last Edited: December 27, 2013 @ 4:01 pm
About Philip Taylor

Philip Taylor, aka "PT", is a husband and father of two. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.

Comments

  1. HullFinancial says:

    Personally, I aim to have a little more cash flow in my properties, as the insurance will drag you down a little further and you’ll probably continue to have some maintenance costs. Still, if you can be pretty close to CF breakeven pre-tax, then you’ll wind up in the good when it’s all said and done, since you’re not having to bump into the standard deduction for mortgage interest given that it’s a rental. It’s a heck of a lot better than selling for a loss. If you can hold onto it (and keep it rented out) long enough, then you’ll either a) pay off the mortgage and have nice positive CF, or get back to at least breakeven on the capital gain of the sale.
     
    A potential topic to cover, if you haven’t already, would be the depreciation recapture rules on the sale of a rental property. A lot of people aren’t aware of it and certainly don’t understand it.

    • @HullFinancial What have you found is your vacancy rate across your properties? Obviously I was affected by the 1.5 months (effectively 3 months if you extrapolate) vacancy. I’m hoping to improve upon that in 2013 and see a nice positive cash flow.
       
      Now don’t go giving me work to do. I studied those rules once, but you know I’ve since forgotten them. Seriously, thanks for the push.

      • HullFinancial says:

        @Philip Taylor On the Virginia property, our vacancy is 14%. We refused to let pets and opened it up in the late fall, when few people were looking to rent – or, at least, few people without pets. In our Texas properties, the rate is a touch below 8%. We have a great property manager who keeps them filled, and a great working relationship with her where she birddogs properties for us and has renters lined up as soon as we can close on the property and get it into move-in condition.

  2. This is great Phil:-)  I will pass it onto my son who has a basement suite rented out…..
    I’m sure he will find it interesting

  3. BillyMurph says:

    @ptmoney Is that your first one? How have you enjoyed it so far? Does it make you more/less interested in doing more?

  4. I think investing in rental property is a wise decision.  And it looks like it won’t take long until it is profitable for you. My husband and I would love to rent out property in the future as well as we think it’s a good way to diversify our investments, instead of having everything in mutual funds, etc.  Glad things are working out for you so far.

  5. Does your mortgage include principal payments? or is it an interest only?
     
    If it is a fully amortized loan then you are probably asset positive

  6. moneystepper says:

    Pretty good looking figures there – 10.2% return is certainly impressive

  7. I am about to rent out my Denver condo for the first time. I hope I end up with the same positive cash flow at the end of 2014 that you did for 2013!

  8. DenverEric I hope so too, Eric. My first year wasn’t as good because I took a while to onboard the tenant. But I’m glad I took my time with that because it made year 2 (and beyond hopefully) really solid.

  9. Very good analysis of the income properties – you are right, it takes a lot of time and money to run a real estate portfolio.

  10. JD in Boerne says:

    How does the rent you receive impact your taxable income? I understand that your expenses can be deducted, such as repairs and taxes on the property, but doesn’t the rent collected increase your income and essentially cost you money as you pay taxes on that income?

  11. JD in Boerne Your taxes are never more than what you earn. Assuming you have a 25% tax rate, if your net income on the rental property is $5,000 for the year, you would pay $1,250 in taxes and keep $3,750 in after-tax profit.

  12. JD in Boerne This is a great question and one I intend to answer in detail when I file my taxes this year. Rental property gives you the added benefit of being able to subtract depreciation from the income. So my $4k profit will be more like a $2k loss for tax purposes once I subtract $6k in annual depreciation expense. The loss will help reduce my overall tax burden. It’s a huge win.

  13. Philip — Those are good numbers!
    I have learned maybe the best investment is by getting a quality tenant, and it sounds like you did!
    – Phillip H.

  14. Man congrats! Just started year one of a real estate business myself and it is so cool to see you cash flowing! Don’t forget to factor in home office deductions, mileage on your car, half of on your meals, and depreciation and you return is much higher than 10%!!