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My Real Estate Investment Performance (Q2 2019)

Here is my latest rental real estate cash flow performance report through the halfway point of 2019. This is the most recent update in my ongoing quest to track and monitor how these investments are holding up.

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Here is an overview of how the performance numbers are being tallied:

  1. I am only looking at cash on cash returns. 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 for the acquisition of each property. Appreciation, principal pay-down, and tax benefits are not a part of this 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 are updated semi-annually (this used to be quarterly). Anything more is 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) = 9.5%
2017 Best Performer = 24.2%
2017 Worst Performer = -8.7%

2018 Cash on Cash Return (Combined) = 10.1%
2018 Best Performer = 33.8%
2018 Worst Performer = -11.3%

2019 Cash on Cash Return (Combined through Q2) = 2.4%
2019 Best Performer = 7.8%
2019 Worst Performer = -1.4%


A detail of performance through the second quarter of 2019 can be found by clicking the box below. Feel free to download this same Excel template to help track your own real estate investments.


OBSERVATIONS:

  • Total cash flow for the first 6 months of the year has come in at $5,965. This equates to a partial-year return of 2.4% based on the overall outlay of $243,474 to buy the 9 properties. My objective is to hurdle a 10% cash on cash return each year so at first glance this appears a bit disappointing, but do continue reading below.

  • Since I had the funds available, I decided to pay all the real estate taxes and insurance premiums at the beginning of 2019. Historically I have spread these costs throughout the course of the year. Paying them all up front has lowered my cash flow numbers for the first half but will provide a nice tailwind for the remainder 6 months. I anticipate a strong end to the year which should bring these numbers up to my targets (fingers crossed!).

  • Property 9 is now up for sale but I’m having a hard time moving the home. The tenant has been difficult to coordinate with when showing the property and also leaves the place a sloppy mess when a showing has taken place. I’m resigning to the fact that I might have to just hold out until the lease expires to make the home presentable. The whole experience with this location has been a painful lesson learned on investing in sub-par neighborhoods. I will never go this route again.

The latest project. A future photo should present a dramatic improvement to the aesthetics.

The latest project. A future photo should present a dramatic improvement to the aesthetics.

On some rather exciting news, at the beginning of July I entered into a partnership deal on my first commercial property. The property includes a stand-alone building with a garage and 4 apartments, all connected to a 10 lot mobile home park. I am excited to step into this new space and learn the ropes. The property is located in a very nice community but does need some TLC. If handled correctly, this can be a project that provides a nice boost to both the neighborhood and the wallet.

If you have been following along, you will remember that my primary goal for 2019 was to acquire my first multi-unit property. Making this happen has been a nice win but now the true work has begun. To this point my properties have been managed, buy-and-hold investments. This is a different animal as it will be much more labor (and time) intensive.

Stay tuned for updates on this latest project, along with the continued performance tracking of the remainder of the rental portfolio. The last 6 months of 2019 are shaping up to be very eventful!


Want to start your own path into real estate investing but don’t know where to begin? Feel free to book an appointment where we can review your financial picture and create a personalized road map to get you started.