The rental cash flow for the month was almost perfect. The June rents came in like clockwork. 23 for 25 by the second of the month, one collected on the third, and 25 for 25 in the bank by the 6th of the month. Similar to all of my other recent months. I did generate an extra $75 for a late fee. I challenge most any other landlord to beat that record. More details on how to do that is in the rest of this post.
I had to do some advertising to get two new tenants for July 1, and I initiated a larger capital project. The retirement countdown has been adjusted for the new data.
Finding Quality Tenants for Rental Cash Flow
I filled two apartments for July first. There is not expected to be any vacancy expense, as the new tenants are moving in right after the old tenants move out. Both sets of tenants have ~750 credit scores, and high household incomes. The previous tenants were great, but these tenants are even better on paper.
The incoming tenants are paying $75 and $50 more than the existing tenants, for a total of $125 month additional, adding $1,500 to my annual top line revenue. Most of that goes right to the bottom line, as my expenses do not necessarily go up much with the rent increase. Hopefully rents continue to go up, and with any minimum wage increase it gets easier to get higher rents.
Expenses Were High
The month of May was not too busy for me in regards to maintenance of the rentals. I had to make a screen frame, and fix another screen, but that was most of what I can remember in terms of maintenance. I did buy some new solid corrugated stainless water heater hookup lines. I am replacing the braided stainless steel water heater hookups taht are not code, and I have had about a 30% failures rate with.
Most of the May expenses were related to assets, not renters. The screens probably cost a total of less than $10 and some time. Since I already had the screen materials, it really didn’t cost anything this month. If you are a landlord, know how to fix and make screens. It will save a ton of money. If you are a homeowner, learn how to make and replace screens.
Expenses for May were a bit of a doozy. Property taxes that I pay myself, and are not escrowed, were about $6K, and I have another $6K due in October. That much again is escrowed every month for the properties I have mortgages on. I pay over $26,000 every year in property taxes.
In Minnesota we pay property taxes twice a year, on May 15th and October 15th. That $6K property tax payment follows an expensive April, which was also an expensive month, as I had to pay taxes to both the state of Minnesota and the federal government.
Rental Capital Improvements
Coming up for 2014, I will be doing a major capital improvement for siding at one of my duplexes. I will be installing Norandex Polar Wall siding. That is a very high-quality material, with insulation built into the siding. It will provide a bit of R-value, and hopefully save me some heating and cooling costs.
The color will change from white with black trim, to a color called Saddle, with white trim. The saddle was on a special, for only .60 a foot. Normally it is $1.99 a sq ft. At ~2,500 square feet for the project, that is quite a savings.
As luck? Would have it, I had a contractor called me about a month ago. He said there was some hail damage on the existing aluminum siding, and wanted me to initiate a claim. I did, and the insurance company will cover a significant part of the siding. Since I have a commercial building, and the insurance only covers the two sides that have damage, I have to pick up the tab for the remaining two sides. Luckily, those sides are smaller, and I got a great deal. It will be a $13K+ project.
I was thinking of painting the aluminum siding, but this will work out better, and be about the same price. It should add a significant value to the building, and I am sure the tax man will recognize that as well. I am already paying almost 11% of my rents in property taxes for the building.
Do you have any capital improvements for your rentals, or your own home?
I hate those months when taxes or insurance hit. Feels bad but the next month usually redeems its self. But as for your siding I thought I remember MN being a matching state. Seems like insurance should have paid to wrap the entire building instead of just two sides. I used to be an adjuster and did a lot of work up there.
Thank you for the comment!
MN is a matching state, but since this is a rental, it is considered a ‘commercial’ building. So they only replace the affected sides. It was old siding anyway, and lots of just dings and scratches, and it was looking ragged.
I am considering shopping for a new policy, it seems expensive.
Got ya. I did residential so that would make sense. But from what I remember the policies were crazy expensive. But thats what happens when every homeowner that gets hail damage has their entire house wrapped. Its great when it happens to your house but not so fun when you dont have a claim.
Only expense that we had was some landscaping and extras from the good old Home Depot. We are getting bids for waterproofing the back of the house where the ground is not level so when a huge storm comes it leaks in a little bit. Any idea on prices for that in your area? It’s about a 8-10 ft across.
You can also use rain gutters. Get some dirt dropped off in the driveway, and a good wheelbarrow. Fill it in. It always takes more dirt than you think. If you need manual labor, hire someone on Craig’s.
You are likely getting water due to the slope of the ground being towards the house, and it needs to be away from it.