Quarter 1 - 2019 - Rental Property Report

Q1 2019 - Rental Property Report

If you need basic information regarding this report, make sure to check out my post on this property and everything associated with the raw data numbers. This report only covers the Q1 numbers in summary form. You can access that post by clicking here.

Welcome to my First Rental Property Report!

In these reports I am going to share with you some high level numbers as well as what my thoughts are for any given period of time. These are actual results, not theoretical. Each report will consists of TWO sets of numbers. The first set of numbers are the TAX numbers. The tax numbers consists of actual write offs and net income after considering the tax code. This is important because taxes will be based on this number. The second set of numbers are the CASH FLOW numbers. These numbers are what is left in my account after I’ve paid everything related to the rental property.

These two numbers are important because the tax numbers will tell you how much in income taxes you’ll have to pay and the cash flow numbers are what goes in your pocket at the end of the day. You want your tax number as low as it can, but the cash flow number as high as you can.

So let’s dive in:

Time Period: Quarter 1 - January 1, 2019 - March 31st, 2019

TAX NUMBERS

Total Revenue: $2,250.00
Interest Revenue: $7.15
Depreciation Expense: $(722.58)
Interest Expense (Mortgage): $(843.69)
Property Management Fee: $(225.00)
Net Income: $465.88

CASH FLOW NUMBERS

Total Revenue: $2,250.00
Interest Revenue: $7.15
Mortgage Payments: $(1,913.58)
Property Management Fee: $(225.00)
Cash Flow Positive: $118.57

Saving Account Balances

Repair Fund: $1,607.06 ($1,250 in CDs and $357.06 in Savings)
No Renter Fund: $890.90 ($750 in CDs and $140.90 in Savings)
Mortgage Excess Account: $88.10 (Excess just in case)

Personal Funds Invested

Funds added: $514.62 (Purpose - Repair Funds and No Renter Funds)

Commentary

This quarter is probably the best quarter to report numbers because I do not pay for lawn care during the winter months so I get to keep more of my cash. From a tax perspective, at this moment in time I would be showing a $465.88 profit on this property. However, it is important to understand that in Q1, I didn’t pay property taxes, property insurance, or my PMI (it was paid in escrow, but not actually paid to the entities that charge me for it). Property Taxes will show up in Q2 and Q4, Property Insurance will show up in Q2 or Q3 (whenever the bank wants to pay it), and PMI usually shows up in Q3. In those reports, I will include those numbers as that is when it is paid.

Overall I am showing a positive cash flow of $118.57 and that is good, I guess. However that wasn’t enough to cover the repair fund or no renter fund, so I had to kick in $514.62 to my rental property accounts.

What I am really excited about is the growing of the repair and no renter funds. I started the repair funds as soon as I had the property rented and the no renter fund started January of this year (I already had like $750 saved just in case, but I kept reading articles about rental property investors baking that number into their monthly rental expenses so that they are always ready and so that is what I did).

I also used some of my finance knowledge to open up CDs that paid .60% more than my regular savings accounts. Although there are penalties attached to early withdraw, I am assuming that I don’t have to withdraw these funds. I do have two different strategies I am working on here. The first one is on the no renter fund. I am trying to accumulate and purchase the CD in the month a renter renews their lease or a new renter moves in. The idea is that if they sign a 1-year lease, then I technically don’t need that money for 1 full year so at that point I should lock it in a CD and the CD will mature 1 year later when I may not have a tenant in place. So any funds I achieve in the no renter fund by July 1, 2019 will be rolled into a 12-month CD.

When it comes to the repairs and maintenance account, I started to build a monthly CD ladder where a portion of the repair and maintenance fund is open up. In my case, I have a CD ladder for 6 full months at about $200 a month. I’ll have to explain this more in another post, but basically, each month $200 would be released from a CD and I have two options: 1) use some of it to pay for repairs that occurred in a previous month or 2) add funds to it from that particular month’s repairs and maintenance savings then open a new 12 -month CD. So far I am half way to a year’s worth of CDs.

Summary

As you can see there are a lot of changes I have been making to make this rental property sustainable for the future. It is interesting how much I don’t make because of how much mortgage I have to cover and the property management costs I am deciding to incur.

Until Q2, see you later.

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