The first quarter of 2021 was great for my rental properties. Honestly, I have very little to complain about this quarter, things went great overall. Also, I finally closed on my 5th property and can not be happier to have that deal behind me.
I have a friend whose father is thinking about selling his house sometime soon. He reached out to me and asked if I would be interested and I told him absolutely! I’m not sure if this deal will happen or not but if it did I would be moving out of my owner occupied two-family and into that house. I’m pretty excited for the possibility.
Property 1 – Owner Occupied Two Family
I’ve owned and owner occupied this two-family since 2017. All things considered, this property has been great to me. I purchased the property for $75,000 and put 20% down. In late 2019, I was able to get a HELOC on this property for just over $40,000. Here’s the spreadsheet for the first quarter of 2021 below:
It was a good quarter for this property aside from a couple little hiccups. I expected the gas/electric bill to be a bit lower starting out this year for a number of different reasons. It was a pretty mild winter, less Covid restrictions and there is one less person living in the house (my tenants girlfriend moved out when they split up). For whatever reason, that didn’t happen, but no big deal.
We had a couple very windy days in March, which led to an unfortunate event. One of my trash cans got blown into my exterior screen door and absolutely destroyed it. On the same day, my german shepherd Harvey attempted to jump through a window to get at a squirrel or something outside (absolute lunatic, he just turned two in April). He shattered the window but thankfully he didn’t get hurt or manage to make it outside. This is actually the second time he’s done this. The window was an old school single plane, wooden window with the big metal weights in it. It needed to be changed eventually anyway, Harvey just thought it should be changed a little sooner than I did. Between the screen door and the window it ended up costing me $330.48 and a few hours of time.
It has cost me an average of $391.56 per month to owner occupy this house so far during 2021. Although, I paid $126.26 towards the principal on the mortgage in January and February. I could have owner occupied this house for $307.14 per month without those extra payments. In March and going forward, I will be putting that $126.26 towards my HELOC that I drew on to purchase my 5th property. It has a higher interest rate and it is variable. Considering the alternative of owning a single family house or renting, ~$300/month for housing is pretty cheap. If/when I were to move out, I would rent my apartment for around $850, leaving around $500 cash flow per month based on these first quarter numbers.
I still plan on doing some more work to this house this year. More windows, exterior paint, interior paint possibly, some flooring. We’ll see.
Property 2 – “Cool” Two-Family
I just closed on this property in February 2021. The purchase price was $115k and I put 25% down. I will be referring to this two-family as the Cool property. Here’s the spreadsheet for the first quarter of 2021 below:
Being that I closed late in the quarter, there isn’t a whole lot to look at here. One of the units was vacant when I closed so I had to get that filled first thing. The unit was basically ready to go aside from a few small things and some cleaning. Changed the locks, fixed some cabinet doors, a little bit of painting, fixed an exterior railing, replaced a few lightbulbs, etc. It cost me just $89.75 to do everything I needed to do. It’s worth noting that I have paint, lightbulbs and plenty of other stuff on hand, otherwise this would have cost a bit more money.
As you can see, it cost me $80.61 to own this property in March. When I got the vacant unit filled it was almost half way through March, resulting in prorated rent. I expect to see pretty solid cash flow from this property going forward.
Property 3 – “East” Two-Family
We refer to this two-family as the East property. This is the first of three properties from a multi-property deal back in 2018. My father and I partnered 50/50 on this three property deal. We purchased this property for $80,000 and put 0% down. Here’s the spreadsheet for the first quarter of 2021 below:
This property got off to a great start this year. Much improved over the lackluster year last year. We did have a tenant move out March 1st and it was the easiest, most seamless transition I’ve yet to experience. The old tenants were great about communicating their plans and allowing us to show the apartment before they left. We had 0 vacant days and had minimal work to do on the apartment in between. If only it went that smoothly every time.
The property has cash flowed $630.09 per month so far during 2021. I don’t want to jinx it, but this may finally be the first great year for this property.
- 2021 Projected Capitalization Rate – 9.45%
- Total Cash-on-Cash Return – 210.99%
- Internal Rate of Return – 48.64%
Property 4 – “North” Three-Family
We refer to this two-family as the North property. This is the second of three properties from a multi-property deal back in 2018. My father and I partnered 50/50 on this three property deal. We purchased this property for $80,000 and put 0% down. Here’s the spreadsheet for the first quarter of 2021 below:
So far so good here. No issues, no changes.
The property has cash flowed $520.77 per month so far during 2021. This property has done great year after year and I see no reason why it won’t continue to do so.
- 2020 Capitalization Rate – 7.81%
- Total Cash-on-cash Return – 528.51%
- Internal Rate of Return – 144.56%
Property 5 – “South” Two-Family
We refer to this two-family as the South property. This is the third of three properties from a multi-property deal back in 2018. My father and I partnered 50/50 on this three property deal. We purchased this property for $50,000 and put 0% down. Here’s the spreadsheet for the first quarter of 2021 below:
Again, no changes here. Smooth sailing so far this year. This property will need updates eventually, time will tell when that comes to fruition.
This property has cash flowed $548.97 per month so far during 2021. This property always does well, but it is my least favorite and I kick around the idea of selling it frequently.
- 2020 Capitalization Rate – 13.18%
- Total Cash-on-Cash Return – 469.39%
- Internal Rate of Return – 130.46%
If you want to check out last quarters update you can find it here: Rental Property Update – Q4 2020.
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