2020 Mid-Year Rental Property Performance Report: How Are We Doing So Far?

We’re halfway through this nightmare of a year 2020 and I thought it would be fun to pull the numbers on our rental property performance to date after a lot of good feedback on the 2019 annual report.

So far, our gross rent on 4 properties (now technically 3 since we sold one in May) was $23,336. After expenses and mortgage/interest/property tax payments, our properties have netted $7,027 in cash flow through June 2020.

Here’s my spreadsheet breaking down all income, expenses, and equity built from our properties:

The quick breakdown of how we arrived at that cash flow number:

Gross rent: $23,336
Operating expenses: $7,449
Mortgage payments: $8,860
Cash flow: Income ($23,336) – Expenses ($7,449 + $8,860) = $7,027

If you extrapolate these numbers out for the rest of 2020, it would look rosier than I anticipate. Our tenant in the Jacksonville property is leaving at the end of July and there is some deferred maintenance we’ll have to take care of at the turn.

Hopefully we don’t also have to deal with turning the STL and Indy properties if the tenants don’t renew, but that’s all part of the game.  

Our First Cash-Out Refi

Nearly every market in Florida has appreciated well since 2017, and rates have come down too. So we decided to do a cash-out refi earlier this year on the Jacksonville property.

Unfortunately, the appraisal came in much lower than we were expecting. We were only able to pull out nearly $6k but decided to go through with it anyway since it only caused our mortgage payment to go up by $10/month. Our cash flow wasn’t going to take a major hit and I’ll take a couple thousand dollars to help us reinvest (and it lowers our total cash invested in the property, which will juice our cash on cash returns).

My biggest takeaway from this first refi:

1. Don’t fully trust Zestimates. They typically only account for square footage and bed/bath count, without factoring in things like condition of the property.
2. If you have deferred maintenance, try to hold off on a refi until you get those things fixed. I’m convinced that doing $3-5k of work would have added at least 2-3x that amount on the appraisal.

What We’re Up to Now

We’ve been looking for a 4-6 unit building in new market that I’ll talk about more once we make a move there.

New listings have been slow, we’re not seeing a ton of opportunities for what we’re looking for, and any decent property is getting multiple bids and going under contract fast. So I might test out doing some direct mail to owners to see if we can generate some off-market deals.

Stay tuned…