This was the very first house I ever purchased and also ended up being my first rental property. I was 24 years old and I could not have done this without the help of my beautiful mother. She is the sweetest person on earth and she paid the 10% down payment for me. At the time I purchased this house I was completely clueless about financing, real estate and just the world really. I had zero intentions of ever profiting from this house. It was just a place to live. As I grew older I started learning about real estate investing which led me to purchase my first investment property.
Years later (late 2013) when I was finally ready to fast track my road to freedom I decided I would convert this house to a rental and purchase a new house to move to. I had saved up enough down payment money and by this time I understood real estate investing and knew exactly what I needed to do and what I wanted. Anticipating this move, I refinanced this home to a new 30 year mortgage so that I could lower my mortgage payment and to help provide the most possible cash flow I could get. I spent right around $3000 to make this house rent ready making all the repairs myself. Since this house would not be far from my new primary house I decided I would self manage the rental and save some money by not having to hire a property manager. I prepared all the advertising myself to market this house and screened my own tenants. It took me less then 2 weeks to find a qualified tenant and I officially had my first rental.
Here are the numbers. I don’t break down the numbers on this one like I did all the other ones because I was not sure how to calculate the numbers properly with how much money I have put into this house because it was my primary house for so long. So the numbers below are purely from just a cash flow perspective and what my numbers look like from day 1 as a rental property.
As you can see, not too shabby. The rent values have actually increased and my tenants is paying under market value at this time. It should be rented for at least $1300 however I made the executive decision to not raise the rent that high because he is an unbelievably awesome tenant. Takes care of the house and pays on time every month. I would rather not lose this tenant and deal with turnover costs for an additional $70 per month. Please note though that I did increase it to $1230 from $1200. A small bump which he had no problem paying.
Do you think I should have increased the rent an extra $100 per month or do you think I made the right call by only increasing it $30 to retain the tenant?
Hey man, I think I came across your site from a link you posted in an msn.com comments section, but I can’t remember for sure. I really enjoy your blogs and you have the exact same RE investing strategy that I do–with similar assumptions and requirements for expenses and COC returns.
I think you made the right call by only bumping $30. That is a manageable increase and if you have an awesome tenant it makes a lot of sense to not run them off. I was in the same situation myself recently, and could have jumped $100 probably but opted for $50 because they have been great tenants in my former primary residence turned rental.
Hey Nate! I can tell you and I would be great friends! Believe it or not its hard to find other people out there that have the same RE investing strategy as I do and I am glad we are on the same page.
Yeah I just really do not want to lose this awesome tenant. You made the right call too I see on that. If and when my tenant ever moves though, believe me I will be listing that thing back at full market rent.
I love this site, I have one rental that used to be our primary residence and want to really get into property investing. I have an itch to start putting my money to work and this seems like the easiest to jump into and to top it off I plan on doing alot of the repairs myself on the rehabs. Do you share the excel sheet that you do your analysis for rental properties on the site somewhere? I am primarily looking to invest in my own area first and then maybe to other cities. I would love to chat with you and pick your brain 🙂
Hi Chris,
Thank you so much for the kind words. Really happy you like the blog. My excel spreadsheet is available for download when you subscribe but I can see you already did that. Let me know if you have questions on it. Feel free to shoot me a contact message or email me at cashflowdiaries @ gmail.com if you have any questions.
I sure did…it is great…my inlaws have a multi unit house they are looking to get out of and I would love to purchase it from them….ive been running numbers in your spreadsheet for the last hour 🙂
Hey I think the numbers disappeared from your blog post. Its says see below but nothing’s there. Can you fix it? I’m curious to see the breakdown! Cool site you got here
Hi BigAl,
The numbers show to me. Try this URL: http://i2.wp.com/www.cashflowdiaries.com/wp-content/uploads/2015/05/firstRentalNumbers.png
Or you can try using a different browser or clearing cache or something I dont know.
This is awesome, thanks for sharing! I’m starting to look into my first rental property, doing all the research now of reading books and blog post of expereinces.
Everything I’ve read though, it’s always worth having good tenants over increasing rent. You just can’t beat a good tenant.
Hey Wallet Squirrel! Cool blog name by the way. I like that!
Im glad to hear you are looking into your first rental. These rental properties are going to change my world. Im hooked on real estate and I think you will too as long as you purchase properly.
I agree, it really is about the tenant, one bad tenant can destroy you.