Getting your rental cash flow on time is the name of the game. Mine is almost like a broken record. Rent is due, rent gets collected. If you are a landlord, collecting rents on time is what you want. For a landlord with only one or two properties, getting rents on time should be routine. Keeping track of 24 properties is a bit more of a challenge. I have done this for quite some time, and it all has to do with getting great tenants.
The rents were all collected by the second of the month; except for a $500 partial rent payment that was paid of the 5th. My usual late tenant was on-time, and also paid her $250 for the broken window.
The ‘late’ rent was a husband and wife who pay separately. I am unsure of the relationship there, but I am OK with a check on the 5th from one side, once in a while. Both have decent credit, so I am not worried about non-payment.
One less Property to Manage
The property I was managing was sold. I could have purchased it myself, and it may have been a great bargain, but I passed it off to a friend. At a price of $89K, it currently brings in $1,020 in rent. It was appraised for $97K, and there were no realtor fees and a fast cash closing. Rents could have been increased to $1,100 or higher if I wanted to push the rent. Not a bad return, but I have enough to keep me busy. I also do not like to have only one unit in a 4-plex.
So now, I only have 24 properties, all of my own, to manage.
Rental Cash Flow – Expenses
I have updated the maintenance log. There were not many major unplanned expenses.
Replaced Deck Railings
I did change the wood railings on a deck to a maintenance free composite. This will save future maintenance expenses. The cost was ~$550 and some labor, ~12 hours. I had to install the corner posts, as the previous deck did a different method for the corners. Then install the post sleeves, rails and spindles.
This is a pretty high deck (for me), as it is ~20’ off the ground, which would be a third story deck. I hate to work that high up, but I am more cheap than scared, so I do it. I saved at least $500 in labor and disposal of the old deck. Make no mistake, if you slip off the edge and hit the ground, it would definitely sting a bit.
Durozone Damper Zone Control Motor
Another maintenance item I have to do is change out a damper zone control motor for an A/C unit that I have. I was able to troubleshoot the issue and take the motor off. That allowed the vent to open 100% all the time, and the tenant could at least get A/C in their apartment. The motor costs ~$75 and l will finish installing it this weekend.
I fixed my dryer and it is now ready to go. I have it as a backup, as the smaller appliances seem to go out faster than the full-size ones.
Increased Association Dues
The Association has increased the dues. At $250 for a 4-plex, the same price it has been since 2008, it was a bit light. We needed to build some additional reserves, so the dues were bumped up $110 to $360. For me, that is an extra $550 per month, or $6,600 per year. Next year, we are planning on $400 per month.
While it is not a small chunk of change, it will accomplish several things. The Association will be able to provide better maintenance for the streets. The asphalt is 30+ years old, and will need to be replaced within 5 years.
The increased dues will force any marginal tenants into paying more, or marginal landlords will make less. Most landlords have already bumped rent by at least $25 per unit over the past few years, so the landlords should be making the same money, or more, than they started with.
My rents are up significantly since 2008. I bumped up some existing tenants rents, so I will have about the same cash flow as last year. I still have a bit more room to bump rents, but for now, all should be good.
I am the president of the Association, so I could have tabled the dues increase, or even voted against it, but we need to have a solid association in order to get the highest rents. If you are an investor that buys in an Association, you must always be aware of the Association’s financial strength. A good deal on a property is not as good if the Association needs to assess a lot of money for streets or other maintenance.
New Parking Lot
My West St Paul property needs paving in the parking lot. It is a half commercial, half residential building. The asphalt is all crumbling and there are a lot of potholes. A new overlay would be ~$7,000, so I hate to spend that money now, but it will be necessary to do it this year. A capital expense is never fun, but the lack of maintenance will lead to a different investor getting a deal. Never mistake deferred maintenance for profit. Far too many investors skip maintenance and then have trouble renting. So, they have to settle for a lower quality tenant, and then suffer an eviction and a larger expense. Sooner or later, it bankrupts them.
Long Term Vacancy Update
My West St Paul property is still vacant. I am almost done painting it, and most of the garbage has been removed. I anticipate installing an electric stove, rather than a gas stove, and finish painting. My other properties are a higher priority, so this one waits. I may take a few days of vacation to polish it off, if I have to.
I have to paint the bathroom and a hallway, all the rest has been painted. I need to replace virtually all the screens, and patch a large hole where the lath and plaster has given way. Then a major detailed cleaning. So I am getting very close.
Tenant Turnover(s)
I have only one more apartment to be filled. The tenant is scheduled to arrive on 7/1, and the place is vacant now, so I have plenty of time. Although it is vacant for the entire month of June, the previous tenants paid until 6/15 as they gave a later notice. It was ~40 days, not 45 days. So I just asked them to pay for half of June. If they had moved out and didn’t pay anything for June, I might have deducted from the deposit.
Here are my 2015 vacancies to date. I have also added where I have increased rent on existing tenants.
| Date | Prev Rent | New Rent | Difference | 2015 Vacancy Days |
| 01/26/15 | $1,210 | $1,270 | $60 | 21 |
| 03/15/15 | $1,150 | $1,100 | ($50) | 14 (no pets) |
| 03/15/15 | $1,050 | $1,100 | $50 | 0 |
| 04/01/15 | $925 | $950 | $25 | Increase |
| 05/01/15 | $1,025 | $1,100 | $75 | 0 |
| 05/16/15 | $1,100 | $1,150 | $50 | 0 |
| 06/01/15 | $1,075 | $1,150 | $75 | 0 |
| 06/01/15 | $975 | $1,000 | $25 | Increase |
| 07/01/15 | $1,020 | $1,150 | $130 | 15 |
| 07/01/15 | $925 | $950 | $25 | Increase |
| 07/01/15 | $1,000 | $1,025 | $25 | Increase |
| 07/01/15 | $950 | $975 | $25 | Increase |
| 06/01/15 | $995 | $1,020 | $25 | Added Pet Rent |
| Total | $540 | 50 |
Other Notable Cash Flow Items
My Quadcopter still has not arrived… It has been about 2 months, and I initiated an inquiry from Amazon. I am not worried about my money, just getting the equipment.
What was your cash flow like? Did you have any unexpected expenses? Any major improvements? Do your HOA dues increase every year?
I really enjoy your posts. My question is regarding deposits. I had a prospective tenant relocating from a different state. She mailed me a deposit to hold the rental. When she arrived she did not want the property. I want to keep the deposit because I took the property off the market and held it for her when other prospective tenants and realtors with clients wanted to show it. What do you think. I feel that I should be able to keep 100% of the deposit.
Thank you for the comment and question.
You can absolutely keep the deposit. She should have made an agreement to come out and look at the property right away, like within 7 days. Then, after reviewing the property with the 7 days, she might have the right to get the deposit back.
She cannot expect you to hold a property (and maybe several others), until she gets a chance to review them all.
You should have done a holding fee agreement too, but it is not 100% necessary. If you only had the deposit for less than 7 days, you should have continued to market the property and give the money back.
Good post.. Like the vacancy report. I do one every year as well. As we self-manage and hold full time day jobs – we really strive to avoid vacancies – (even to the point of leaving a few dollars on the table).. i.e. rents are a bit lower than they could be..
Love the retirement countdown.. Good luck to you.
Vacancy is your number one avoidable expense as a landlord. I am considering leaving/retiring a bit early, but for now, that count is good.
Do you have any posts where you detail what to look for in an association? It seems that most associations I’ve interacted with are a behind on reserves and have a tough time raising dues (these are lower middle class neighborhoods).
I do not have any specifically geared towards what to look for in an association. If the Association is behind on reserves, you should be able to get the property very cheap. Also, once you have a solid amount of turnover, the dues can be raised and properties that cannot pay can be foreclosed on.
A multifamily HOA is much more critical than an HOA full of single family homes.