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My Real Estate Investment Performance (Q1 2017)

For anyone that is interested (or just nosy), this will be the first in a series of blog posts that track my current and future real estate investments.  I've been a bit lazy about digging into the actual performance of the properties, so this will also serve as an incentive for me to take more of an initiative in tracking them.  Before going straight to the numbers, there are a handful of items we should note for this first round of calculations.

  1. I am only looking at cash on cash returns (for now).  These are simple percentage returns (non-annualized) based off of the total net cash flow received versus the total out-of-pocket cash amount put down at the acquisition of each property.  Appreciation, principal pay-down, and tax benefits are not a part of the calculated return.
  2. Cash flows and returns are separated by calendar year.  This will help spot trends in performance over time.
  3. Cash flows and returns will also be updated quarterly.  Anything more would seem to be overkill when it comes to a long-term investment like real estate.

 

HERE ARE THE HEADLINE NUMBERS:

2016 Cash on Cash Return (Combined) = 13.6%
2016 Best Performer = 24.1%
2016 Worst Performer = -2.1%

2017 Cash on Cash Return (Combined) = 4.1%
2017 Best Performer = 6.6%
2017 Worst Performer = -7.3%

 

OBSERVATIONS:

  • These properties were all freshly rehabbed before tenants were put into place (all turnkey investments); thus, capital expenditures are low now but will certainly pick up over time.  I am setting aside a percentage of gross rent each month (roughly 10%) to have in hand for when these expenses do rear their head.
  • The purchases of most of the properties here included a year of free property management, which is expiring and will negatively impact performance going forward.
  • Property 4 had some damages to repair during turnover of a tenant.  The $1,024 in repairs were on top of the $1,050 security deposit that was retained for the damages.  A family has since taken over the lease (instead of the two 20-something year-old guys prior) which should help lower the odds of this reoccurring.
  • Property 8 was acquired in October of 2016 but sat vacant until March.  This property will be producing going forward (with a 2 year lease!) and should help offset future management fees and expenses/vacancies.

Despite a couple of road bumps, I am very happy with the performance of the properties thus far.  In addition, three of the neighborhoods in which four of these properties are located have seen modest to generous appreciation over the past year.  Although I did not go into this venture banking on appreciation, witnessing it happen can leave one fist pumping the air.

We will reevaluate these numbers after the 2nd quarter comes to a close.