My rental cash flow and rent collections for March 2016 went very well. All but one was collected by 3/5, although I did have more difficulty than in previous months. One renter still needs to pay an additional $150, which will be paid on 3/18.
When a renter need to make the rent payments in multiple days, make sure you get a sizable chunk at the first of the month. Do not let a renter pay on the 15th, and more on the 25th. At some point, you will be evicting, and you will be a month behind.
I had another renter that may be an issue, and some vacancies coming up. The month was not as smooth as previous months, here is how the rental cash flow went…
I did have three tenants that had issues in the past couple of months.
The rents for March were collected on time except for $150. That will be paid late, and it’s my tenant that I have had the longest. She always pays, so I am not worried about it.
I had a bounced check in February. My tenants got married, switched the accounts to a combined account, and wrote the check on the ‘wrong’ account.
- They called to let me know after it had bounced, and before I knew it was going to bounce. That is good.
- They were in Mexico at the time… That is bad.
- I charged a late fee and a bounced check fee. $105 total. That is good.
I went to deposit a check I picked up on Friday, and since the tenant banks at the same bank as I do, I requested immediate availability of the funds. The teller could not do that as there was not enough money in the account. I still have the check in my wallet, and will attempt to do it before Monday before the banks close. The tenant said it would be good by Monday when I asked her about it.
On Monday the check was still not good, so I ask the tenant to make it good, move out by the weekend, or I would evict in the morning. She assured me it would be good on the 11th, so I let it ride and it was good. Next month, I am worried about already. I waived the late fee, but will likely have to get a new tenant soon.
All the apartments have been full since December 5, 2015, almost 4 months. It’s almost a bit surreal; as I typically have more things to do other than just collect rents. I do perform a few small fixes, but even those items are rare lately (*cross fingers).
When I am full, it’s close to $26K in gross rents. By mid-summer, it should be over $27K in gross rents, as I have an additional rental coming online, and am raising rents a bit.
I have a rental turn on 3/15, which I have already filled. I also have another tenant that will be moving out on 3/31/16. That is a 6-year tenant, and the turn will require a full paint job, new carpet and installing a washer and dryer. Once those improvements are complete, I should be able to get an extra $100+ from the apartment.
I received notice that my tenant that moved in last year will be leaving on 5/31. I have started to advertise it and have received ~20 calls and emails in the first day.
I have given 6 rent increases so far. The first one is due on 4/1, for an extra $25. Four more are due on 5/1, for an extra $100. Another tenant got a new dog, so that’s an extra $25.
I generally only raise rents by a small amount, and most renters do not have a problem with paying an extra $20. They know my expenses go up, and their income is going up.
This year, I have a created a list so I do not wait too long before I raise the severely under-market rents. Every $25 collected is another $300 at the end of the year. I anticipate being able to add another ~$250 in rent increases, or more per month, in 2016.
|Date||Prev Rent||New Rent||Difference||2016 Vacancy
New Rental Purchase
The rental I picked up in January should be coming on-line in terms of rents collected on 4/1/16. Since I purchased the property from the renters, sort of, I am giving them a bit of a deal at first. I will explain in a future post, as soon as all things are 100% finalized just how the property was acquired.
The property was non-MLS deal. It is a 3 BR, 2 BA single family home. It had a new roof in 2012, and has vinyl siding, and a newer furnace and water heater. It was purchased with cash, although it was really a certified cashier’s check. The rent will be $830 per month, which is significantly under market. It was purchased for about 1/3 of what the Zillow price is, and about 50% of what I think the actual market value is.
I am giving them a break on the first two month’s rent, and they will pay $415 for April and May and will pay the full $830 for June 1st. Once this is fully functional, I should have in excess of $27K in gross rents.
Considering my mortgage payments are only $3,340, it’s not a bad cash flow number. Once I pay off the mortgage I am focusing on by year end, it will even be better.
Rental Maintenance Items
There really wasn’t too much maintenance that required a significant sum of month since the first often year. I like low maintenance costs. I did replace a furnace, which I 100% hired out. I did not have the time, or the ambition to do it myself. I have replaced several in the past, and it’s about a $500 savings to do it with a friend. In the winter, you need to make darn sure you can complete the job the same day.
Here are a few expenses that I incurred.
New Furnace $1,875
Fix range element $20
Fix tub spout $20
I do have some significant expenses in April. I am upgrading the electrical panels in three properties. The new property will be changed from a fuse panel to a circuit breaker panel. The other two properties will be changed to a more modern panel that may eliminate some flickering light issues. I have seen this issue before, and the problem can be fixed with a new panel.
New Electrical panels on three properties ~8K.
Have you had a solid month in terms of savings and cash flow? Did you stick to your budget?