Investment Property Balance Sheet – 2015 Edition

23 Jun
Duplex Balance Sheet

(photo by frankieleon)

Our annual look at rental income and expenses, averaged across 12 months. We own duplexes so these numbers represent 6 units across 3 properties, purchased between 2011 and 2014.

We also perform this analysis when seriously vetting a new rental property to help spot unexpected surprises (property in a flood plain? outrageous HOA dues?) and verify cash flow.

Duplex #1

  • Total cost: $181,350, latest comp $245,000 (Feb 2015)
  • Down Payment: $45,350 (25%)
  • Mortgage: originally $136,000, currently $127,830
  • Estimated Equity: $117,170

Duplex #2

  • Total cost: $144,000, latest comp $189,000 (Apr 2015)
  • Down Payment: $36,000 (25%)
  • Mortgage: originally $108,000, currently $93,223
  • Estimated Equity: $95,777

Duplex #3

  • Total cost: $201,000, latest comp $216,000 (Apr 2015)
  • Down Payment: $61,500 (30%)
  • Mortgage: originally $139,500, currently $137,395
  • Estimated Equity: $78,605
Revenue Duplex #1 Duplex #2 Duplex #3 Monthly Total
Unit A $1,025 $975 $1,050  
Unit B $1,095 $950 $1,050  
Vacancies
-$41 -$37 -$40  
Total Income $2,079 $1,888 $2,060 $6,027
         
Expenses        
Principle & Interest $699 $531 $738 $1,968
Taxes $352 $365 $365 $1,082
Insurance $69 $76 $63 $208
Repairs
$150 $150 $150 $450
Carpet Fund ($800/5yrs.)
$13 $26 $26 $65
HOA $50 $0 $0 $50
Property Mgmt (10%) $212 $193 $210 $615
Leasing & Releasing (30%-60%) $80 $72 $79 $231
Umbrella Insurance $12 $13 $13 $38
Tax Prep
$12 $12 $12 $36
Total Expenses $1,649 $1,438 $1,656 $4,743
         
Cash Flow $430 $450 $404 $1,284

Some Highlights & Observations:

  • Stagnant Cash FlowLast year I predicted our cash flow to slowly increase past our typical $400/property/mo. average because I thought most expenses had been accounted for – but we found a few more. 🙂 Technically it has risen because we got property #3 to market rate, but we also added additional protections and conveniences like umbrella insurance and tax preparation fees. Maybe next year!
  • Rent Appreciation – While cash flow remained stagnant, property #1’s rent has increased 27.5% since our first balance sheet in 2011 – bringing in $457 more income (the cash flow equivalent of having a whole other duplex). Unit A is currently under market rate, so if you assume $1,095 for both sides that would be a $527 increase!
  • Average Cash Flow vs. Actual – Since spending tends to have peaks and valleys, I’ve been charting my actual monthly cash flow throughout 2015 so I can share that perspective in the future. The $150/property/month is really a best guess… some months are SURPRISE! and others months nothing remarkable happens at all – cha ching!
  • Umbrella Insurance – I was hoping to have an umbrella policy setup by now, but no dice – so this is merely a conservative estimate using the most promising quote I have at the moment. I’m guessing insurance agents must not make a lot of commission on umbrella policies, because they sure don’t seem eager to provide quotes for them.
  • Tax Prep Fund – This was the first year I realized we could deduct a portion of our tax preparation fees on our rentals’ Schedule E. Previously we’d been applying it as a miscellaneous itemized deduction… fat lot of good that did us. Oh well, live and learn. I cringe paying a professional for something I used to do myself with online tools, but I still don’t feel reasonably qualified to handle rental tax details like cost basis calculations, depreciation schedules, and improvements vs. expenses.
  • Vacancies & Leasing/Releasing Fees – A guestimate that assumes 1 unit from each property will be vacant for 2 week a year. Using these same vacancy assumptions, I budgeted one renewal fee (30%) and one releasing fee (60%) per year, per property.

Previous Statements:


“Plan specifically so you can implement flexibly.”  – Dallin Oaks

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One Response to “Investment Property Balance Sheet – 2015 Edition”

  1. No Nonsense Landlord August 13, 2015 at 6:28 pm #

    Not bad cash flow. Pay off one of those mortgages and increase it 50%.

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