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You are here: Home / Elizabeth's Real Estate Strategy / “Bare It All” October Monthly Rental Income Report

“Bare It All” October Monthly Rental Income Report

November 1, 2015 by Elizabeth Bennett Colegrove 22 Comments

This post may contain affiliate links.

Many landlords are reluctant landlords trying to survive and hold on until they can get out. Many have been burned by housing prices, losing money on their rentals or are jaded because of horrible tenants. I would be lying if I didn’t say that being a landlord had many ulcer-inducing moments. I have lost money, had lots of pain and agony and even had over a $4,000 repair bill on three houses in less than 36 hours. Let’s just say I was very thankful for that emergency fund!

The biggest thing I have noticed over the years is that this is the one industry where the naysayers are VERY VERY loud. How many times have you read in the New York Times, the Washington Post, MSN, or any of the other mainstream outlets about the awful effects of being a landlord. In most industries you see the success stories and the failures are swept under the rug. In the Real Estate industry it is the exact opposite.

October Monthly Rental Income Report

My Mission is to change this Philosophy here at Reluctant Landlord. I will celebrate the victories and all the achievements that makes me love this life. I will also tell you about the moments that drive me to drink coffee before 5pm and wine afterwards. I will share my mistakes and hopefully help you avoid those mistakes.

I started reluctantlandlord.net because I wanted to provide the resource for the average person to be successful in Real Estate. Whether you are truly a reluctant landlord who just wants to get rid of their house as soon as it’s economically feasible, a small time landlord who is a happy with 1-3 houses, or a empire builder like myself, I promise that on this site  there will always be honesty and transparency.

Being a landlord has been scary, challenging, stressful and yet the most financially beneficial thing I have ever done for my family. It will be the reason why we will accomplish our dream of retiring early in 14 years. It will be the reason I can stay home with my future children and still earn an income from anywhere. It is going to be the financial funder for future entrepreneurial endeavors and the cash cow that lets us enjoy my husband’s Navy career (port calls, balls, weekend adventures).

As a numbers girl I believe the best way to show you the blessing, heart pulling, and ulcer-inducing moments is through the numbers. Starting this month, October 2015, I will be doing a monthly income statement with all numbers exposed. Although, I do warn you I am a financial analyst; not an accountant. I am guilty of rounding up and won’t be precise to the penny. You will still see it all. There will be months where the valley of despair is my financial state and also months that I feel like I just climbed and beat Everest.

Without further ado, let’s get into the October 2015 numbers. My first ever, “Bare It All” Monthly Rental Income Report!

October Rental Income Report:

Authors Note: For those that are new, here is a brief background on our strategy and goals. We buy houses for as little down as possible and are empire builders. We have bought using VA loans, investment loans; both foreclosures and short sales. We buy houses as personal property that we live in and also houses as pure investments. All of our houses have mortgages on them. We are lovers of good debt, while believers of always having a back up plan. Every house is purchased with the intention of being a rental one day.   

Octobers Financials

House #1
October 2015 Income Report House 1
House #2
October 2015 Income Report House 2
House #3
House 3
House #4
October 2015 Income Report House 4
House #5
October 2015 Income Report House 5

Note: This house is special. The cash flow numbers are artificial due to the fact that our house was a short sale and significantly below the value the sellers paid. In California, the buyer has to continue paying the seller’s tax bill, until they recalculate it. The county will refund you at the end. Since our house was worth almost 1/2 of what the sellers paid when our original payment was calculated out it was based on our numbers not the seller’s.

So when taxes came due, our escrow account went into the negative because the county had not reassessed the home yet. Taxes were due at double what were originally predicted. When the mortgage readjusted the escrow it was readjusted from $260.95 to $769.17 a month to make up the difference. When the new tax bill comes there will be an overage of money and it will be sent back.  So it will take a year for it to be fixed. Once it rights itself it will go back to a little over $200. Until then, there is nothing we can do, except show an artificial loss.

House #6

October 2015 Income Report House 6

Notes: This is our personal house that we live in today, so it currently does not make any income and is not considered in the numbers. Once we are transferred and rent it out then it will be considered a rental and will be in the monthly reports.

House #7

October 2015 Income Report House 7

House #7 – This house was artificially high this month. We had $2,800 in break lease fees. Our tenants have decided to vacate due to personal reasons. Thankfully our break lease laid out the rules in black and white for how this would be done. If we hadn’t have had the break lease we would have had to replace the tenants anyways without protections in place. Did I mention how important a break lease clause was in your lease? This is a prime example of why I include it in my lease.

Octobers Numbers in Summary

October Cash Flow Summary

This month even though I had over $4,070 in expenses, I still had a positive cash flow of $538.57 due to the break lease clause. My normal cash flow without the repairs or the break lease fee is $1,808.57. Since I leverage my houses by putting as little down as possible, my tenants also pay down my mortgage each month. In October it was $1,633.78.
October Rate of Return
October Rate of Return
As discussed, we are believers in investing as little as possible into houses in the form of down payments. The reason why is that we want our tenants to pay down the houses and we are  inputting sweat equity by managing them. We don’t analyze our rate of return with a CAP rate, but with Cash on Cash.
Over the years we have invested approximately $154,600 into each of our houses before we have turned them into a rental. This month our cash on cash rate of return was .35% return or a 4% for the year. If you include our principle pay down, our cash on cash rate of return would be 1.41% for October or 17% for the year. Obviously these will change every month based on our actual expenses.
This Month’s Lessons
As a landlord who is always learning, the only way I can survive this marathon is to adapt, learn, and grow strong. I can learn from my past mistakes by taking time to reflect. That’s why every month I will share the lessons I’ve learned.
  • Emergency Funds are Vital  – See our $4,000 expense in less than 36 hours.
  • Hold Your Tenant’s Feet to the Lease – Our tenants didn’t want to pay the break lease but after numerous conversations they did.
  • Break Lease Clauses are Important – The  break lease issue came up right before our trip to Fiji. Without the break lease clause we would have been scrambling with no protection.
  • Tight Firm Leases are Important – Our 16 page lease saved us. We had a few issues come up this month and we were able to show where it was stated on the executed lease.
  • Always Double Check Your Lease for Errors – When we were having issues with our lease it was brought to our attention that one of the blanks was not filled out. Luckily it didn’t affect us too much but it was a reminder to always double check.
Even after the tenant issues and an expensive repair month, I am still thankful for the opportunities that being a landlord provides my family.
Next Month’s Plans and Projection
We are currently working on a cash out refinance. Houses 3 and 4 have done very well and we hope to pull out a combination of $60,000 to reinvest into house number 8 and hopefully number 9. We currently are in contract on house 8, so check back to learn all the glorious details when we are done!
This post is not to brag, it is not to twist your arm or “force” you to feel obligated to invest into real estate. I am a huge believer in paying it forward and this is how I am led to pay it forward. Trust me, you would rather my property management advice and not my cooking skills. Lets just say I am not allowed in the kitchen because I cannot seem to cook a meal without burning myself. Yet real estate and business matters make sense to me. Real Estate is my passion and skill I am on a mission to prove to you that anyone can be successful. My husband and I are very ordinary if anything and we are overcoming the impossible.
  • Moved Multiple Times – We have completed 4 moves (TX – Corpus to TX – Kingsville to VA – Virginia Beach to CA- Hanford), 3 long distance moves in almost 6 years of marriage.
  • We self-manage all of our properties. – This includes the cross country homes and when I travel. I love to travel. Last year I visited Bahrain, Singapore and Abu Dabhi. That was only my international trips. I also traveled domestically. I was still self-managing the entire time. I  started a break lease from the airports in Abu Dahbi on my smart phones.
  •  Limited Income – I have worked less than 3 years on a Masters Degree level salary over our 6 years of marriage. While my income has played a part in our houses, being frugal, creative, and thinking out of the box has also been important. Doing things such as downsizing and living in a hovel during my husband’s deployment or having roommates have made a huge difference.
  • We put as little down in the houses as possible – Our goal is that the tenant rent and our sweat equity through self management will pay down our houses. 

The only way you will be successful in Real Estate is if you pursue a strategy that works for YOU no matter the public opinion.

As you can see we have not followed any of the traditional rules that people advocate in real estate. Yet we have been very successful. Do not be afraid to think out of the box, try new territory and bust down stereotypes. As long as things are ethical and legal, I will always think about it. Many of my crazy ideas have crashed and burned or never even made it beyond ponder. Yet those that are successful and amazing were some of the best ones ever. 
Want to check out more investors strategies and income statements? Check out these other investor monthly income reports. They have very different strategies, markets, down payments, environments and they also are successful.
  • Afford Anything – Check out her income report. She is also very successful while having a totally different approach. She uses property managers, and carries fewer mortgages than myself.
  • Cash Flow Diaries – Check out his income report. He is a turnkey investor. Totally opposite of my self management principle.

Are you signed up for our newsletter? You won’t want to miss any of my monthly reports, or other great resources coming out soon. Sign up here.

I need your help!! Did you like this post? Was it helpful and inspiring? Could you help me with my goal of getting this monthly Income Report in front of as many people as possible? While pins, tweets and comments are always much appreciated I would REALLY appreciate it if you would share these articles. It would mean the world.

Starting Next Month I will do a Q & A video answer to posters’ questions from the previous month’s comments. So leave you questions, comments and feedback. I look forward to answering them.

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Filed Under: Elizabeth's Real Estate Strategy, I am a Small Time Landlord, I am an Empire Builder, Self Management Tagged With: Income Report

Comments

  1. Chance says

    November 4, 2015 at 1:40 pm

    I love your article and my wife and I will be sharing them to the world (I found you through Mark Ferguson, and you and I are friends on BP). Its 1135pm here in Egypt so I need to go to bed, but I plan on reading everything you have tomorrow.

    How do you continue to keep using your VA Loan? I used mine on a house in NC, the VA told me I could use it again but the house had to be a minimum of 119k and like a max of 240k.

    But I was under the impression that eventually you max out that VA entitlement, it looks like you have been able to continue to use it…How?

    My wife is in SC with her parents and we were thinking of grabbing house number 3 with the VA loan while she is there and I am deployed to Egypt.

    Reply
    • Elizabeth Bennett Colegrove says

      December 21, 2015 at 11:31 pm

      Chance,

      Thank you for your kind words. You might enjoy my VA Loan Guide where I go through all the ins and outs I have discovered. While we did use the va entitlement twice, unfortunately it is tapped out. Now we are using conventional loans.

      Reply
  2. Dean says

    November 4, 2015 at 1:51 pm

    What a gem of a blog you have here and nice resource for us newbies! And thank you for being so transparent with your business. After years and years of just talking about it, my wife and I finally close on our FIRST rental property tomorrow. We’re scared to death but excited all the same. I look forward to visiting your site as often as I need to for your wisdom. God Bless!

    Reply
    • Elizabeth Bennett Colegrove says

      November 4, 2015 at 10:15 pm

      Congratulations on your first rental. You got this! Our first rental was the hardest. We learned MANY lessons but in the end are beyond grateful for our rentals.

      Reply
  3. Diane says

    November 6, 2015 at 3:33 pm

    how were you able to have two VA loans at the same time, were both of you in the military or is the combined total loans less than a certain amount – $417K? Just curious but thanks for the answer

    Reply
    • Elizabeth Bennett Colegrove says

      November 6, 2015 at 3:41 pm

      Check out my this VA GUIDE article. I explain how every area has a set amount (minimum of 417) and you can have as many houses as you want for 0% as long as you are under your local area. You can still borrow above your left over amount but now you have to put 25% down. I go into full explanation with examples and link back to VA guidelines. Hope that helps! Good luck!

      Reply
  4. ThirtySomething says

    December 8, 2015 at 4:20 pm

    I’m curious about the lease break clause. Seems the amount could be 2 months (?) ($2800) rent. How’d you convince them they wanted to pay? Do you ever waive / lower the amount? Just curious as seems to have helped quite a bit.

    Reply
    • Elizabeth Bennett Colegrove says

      December 9, 2015 at 8:50 am

      Yes the break lease is 2 a month fees so depending on my rental it varies from $2400 to $3700. Its not about convincing my tenants to pay, its about holding their feet to the fire since it is in my lease and therefore a written document. My lease says if you break the lease you owe X. I have never had a tenant have issues signing that part in the lease. I personally do not waive or lower the amount as it is standard for all my rentals.

      Reply
  5. Benton says

    December 12, 2015 at 5:12 am

    It’s nice you note your principal pay down, however, what happens when the cycle turns and your principle becomes less valuable, or zero?

    Reply
    • Elizabeth Bennett Colegrove says

      December 13, 2015 at 11:30 am

      Great point! I shared principle pay down because it is also income (IRS even thinks so, they tax it!). It is important because it shows how much “profit” you are making each month. For those who paid entirely cash they also are including this amount. It is true that if the market turns we could owe more than our loan but it truly has nothing to do with principle. If you paid cash you your house would lose value too! The difference is cash feels like a sunken cost (out of sight out of mind) where as with a loan while also sunken its more active (salt is there since you are paying it every month).

      Reply
  6. Harry says

    February 7, 2016 at 3:06 pm

    Great blog. You should attach a simple spreadsheet to these reports which contains the data in the screenshots – I think everyone reading this website lives and breathes excel!

    Reply
    • Elizabeth Bennett Colegrove says

      February 7, 2016 at 4:06 pm

      Great feedback! I will definitely look into it for future income reports.

      Reply
  7. Financial Nirvana Mama says

    February 25, 2016 at 7:43 pm

    Hi Elizabeth, great job disclosing the reality of real estate while inspiring readers about your journey. I stumbled upon your website through an article on side hustle nation, what a great read. I really like the transparency and the way you presented your information. Based on your write up, you’ve made me consider presenting my income report too on my rentals, which will show the bad, the good and the ugly! Keep up the good work.

    Reply
    • Elizabeth Bennett Colegrove says

      May 19, 2016 at 11:29 pm

      Thanks!! If you post your income report let me know! I would love to link to it. Once life gets a little less crazy I plan on starting them up again. I know I love reading them as its a great way to learn from other investors!

      Reply
  8. Schaniya Clayton says

    March 8, 2016 at 5:30 pm

    Loved it! I sent you a Colleague Request on BP, I really do enjoy your insight on REI. You paying it forward can and will definitely help me and hopefully I’ll be able to do the same in my future. Keep it up!

    Reply
    • Elizabeth Bennett Colegrove says

      March 9, 2016 at 10:46 pm

      Great to connect!!

      Reply
  9. Crystal Goodwin says

    March 26, 2016 at 4:39 am

    Love your information. My husband and I now own 2 rental properties. One is totally debt free and the other one will be paid off this summer. Our first house we lived in for a number of years. We started renting it our after we bought a bigger house with a SBA loan. They have such cheap interest rates.
    Our 2nd rental was a bank foreclosure. It had last sold for $154,000.00. We offered the bank $60,200.00 and they accepted. We put $30,000.00 down and pulled the rest off of a bank line with one 3.25% interest with a goal of have that paid off within 24 months. It’s been 19 months and we owe less the $6,000.00. It house need some work, like a new roof. We spent about $17,000.00 on repairs plus we updated both bathrooms including heated floors. We’ve already gotten over $14,000.00 in rent.
    Plus, we just sold our first flip. We made over $21,000.00 in just a couple of months.
    I do have a question. When we first started looking at foreclosures. They were for sale with a realty company. Now, in our area, foreclosures are all being sold on online auction sites. Is it that way in your area too??
    Our biggest problem here is flood insurance. If we buy a house here, we have to make sure it’s elevated high enough to not need flood insurance or high enough so that flood insurance is cheap.
    It can kill the resale value. People just can’t afford to pay many thousands of $$ for flood insurance every year. It is a mortgage requirement. The federal government is raising everyones flood insurance here 25% this year and 25% every year for 4 years straight. I think we will be alot of people have to walk away from their homes. It’s kinda scary.
    Any advise would be wonderful.

    Reply
    • Elizabeth Bennett Colegrove says

      March 26, 2016 at 10:28 am

      WOW! That is amazing that you have one paid off and one that is almost paid off! We are still on the acquisition side, so we haven’t started to pay anything off. That is one of our long long term goals is to have a few paid off houses. Right now I put every extra penny we make into buying another house!

      I put an offer on a short sale on auction.com last year in South Carolina but ended up pulling it as I found a better deal in California. While I have seen the occasional online auction I have still been able to find them the traditional way so I personally haven’t messed with it yet.

      Reply
      • Crystal Goodwin says

        March 27, 2016 at 5:52 pm

        I like dealing with a bank best. Unlike what I’ve seen on TV, from my personal experience, they are fine to deal with. But in our area, auctions seen to be 90% of the market. That being said, if I’m buying it has to be a great deal. I’m not interested in paying market value, even in this market. Homes here are probably valued at 50% or less of what they were at the height of the market. The biggest issue facing buyer in all coastal areas is going to be flood insurance.
        Especially over the next 4 years as flood insurance is increasing 100% and more. Flood insurance doesn’t affect us as we are not borrowing money from a bank directly. My father has loaned us his $100,000 bank line to us as we like. It has a 3.25% interest rate and no other fees. We currently owe less then $6,000 on it.

        But flood insurance has a huge affect on resale values. So that concerns me.

        Reply
  10. kaspar says

    March 26, 2016 at 2:19 pm

    Simply wish to say your article is as amazing.
    The clarity on your post is simply excellent and that i can suppose
    you are a professional in this subject. Fine together with your permission let
    me to seize your feed to stay updated with impending post.

    Thank you 1,000,000 and please carry on the rewarding work.

    Reply
    • Elizabeth Bennett Colegrove says

      March 27, 2016 at 7:06 pm

      Glad you liked it!

      Reply
  11. DaQuan says

    July 2, 2019 at 1:33 pm

    Why didn’t you reuse the VA loan? Refinance freeing up the VA loan and then using it again as your primary residence since the old property would now be considered a rental, this would give you the ability to get a new home with no money down again.

    Reply

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I love my family, my country and real estate. My goal is to retire early through frugal living and real estate investment. I am making great strides and want to share the information I've learned through the process. Read More...

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