In 2019, my properties brought in $40,399 in rental income.

But income is a vanity metric. We want to know how much of this was profit, right?

So here’s the breakdown (thread )

Operating expenses came out to $19,508. This includes property tax, management, insurance, repairs, and HOA (only applicable on 1 property).

Mortgage payments came out to $14,218. All my loans were taken out at 75-80%, fixed rate for 30 years.

So cash flow (profit) came out to:

$40,399-$19,508-$14,218 = $6,673

This comes out to a 7.26% cash on cash return from all my cash invested through last year.

These numbers won’t blow anyone away, but there are a couple of important takeaways for me:

1. Turnovers kill cash flow.

We had a tenant leave last year after only staying in the property for 1 year and getting the property rent ready again set us back $3,500. But that’s part of this business.

2. These numbers prove buy & hold isn’t get rich quick.

It’s funny how people think u must be rich if u own property. Not true. If u don’t have a long-term mindset, you’ll give up too early. Rent growth, debt paydown, + (hopefully) some appreciation is what I’m banking on.

3. The tax benefits of real estate will offset most, if not all, of my cash flow.

Get a good CPA. Once you have some assets, they are worth every penny.

4. I need to buy better and take on properties with more meat on the bone.

I’ve primarily bought turnkey properties because they’re an easier way to get started. After a couple of years now, I’m ready to take on properties that require more work but can be bought at a discount.

5. Using financing seems like a cash flow killer, but it actually allows you to increase your cash flow and grow your portfolio faster.

Here’s a simple example I shared recently that explains this: https://twitter.com/emilshour/status/1253351216198942724