Rental Property Update October 2009

By | October 8, 2009

This post is an update on my rental property in Philadelphia. In this section, I talk about my landlord experience – the good, the bad, and the ugly. All my posts that are related to the rental property can be found in the Rental Property section, including the bad tenant saga series).

In September, I received a call from my property manager, Earl about a flooding problem in the house. The tenant’s daughter took a bath on the second floor and water leaked down to the first floor.

I called my contactor to look at the issue. He was the guy I usually called and had helped me with the last flood. The contractor went to the house a few days later. He filled the tub with water to simulate a bath but no water leaked. I guess it was good news to know that it didn’t happen again.

The contractor tried to charge me $50 for his time. The flooding would not have been a problem if he had fixed it on the last job. I told him that I would give him $30 for his time and I said that I would call him if the flooding issue happened again. He said it $30 was better than nothing.

Below is a snapshot of the rental income and fees since the new tenants have signed the lease in June 2009. Boston renter suggested to add in my monthly expenses such as insurance, taxes and interest on the mortgage to see the true cash flow. I have added those numbers in this post. The net is not so pretty. See for yourself.

Rent Payments
$900 Jun 2009
$900 Jul 2009
$900 Aug 2009
$900 Sep 2009
Total: $3,600

Fees
Real Estate Agent Service Fee for Finding Tenant $900 (one month’s rent)
Property Management – Service Fee: $0 Jun 2009 (first month free)
Property Management – Service Fee: $63 (7%) Jul 2009
Property Management – Service Fee: $63 (7%) Aug 2009
Property Management – Service Fee: $63 (7%) Sep 2009
Total: $1,089

Mortgage Interest
$517.96 Jun 2009
$517.27 Jul 2009
$516.57 Aug 2009
$515.87 Sep 2009
Total: $2,067.67

Fire Insurance (All State) (paid $407.20 in Oct 2008 for one year)
$33.93 Jun 2009
$33.93 Jul 2009
$33.93 Aug 2009
$33.93 Sep 2009
Total: $135.72

Liability Insurance (All State) (paid $160 in Oct 2008 for one year)
$13.33 Jun 2009
$13.33 Jul 2009
$13.33 Aug 2009
$13.33 Sep 2009
Total: $53.32

Property Taxes
$112.58 Jun 2009
$112.58 Jul 2009
$112.58 Aug 2009
$112.58 Sep 2009
Total: $
450.32

Net: $-196.03

Read more:
Rental Property Update November 2009
Rental Property Update September 2009

4 thoughts on “Rental Property Update October 2009

  1. Tom @ Canadian Finance Blog

    I like how you break down all the expenses related to your rental property. Too many people think that real estate is easy money and don’t look at how it can easily have a negative cash flow.

    That said, congrats on getting closer each month to being in a positive position!

    Reply
  2. Robert

    I didn’t know fire insurance was so high. One would think the liability insurance would be more than that. Do you think your net profit is worth the time you spend maintaining the property and dealing with tenants?

    Reply
  3. Smarty Sean

    Tom, you are right that investing in a rental property is not always easy money. This is my first rental property and I have taken a huge hit in both the property value and the annual cash flow.

    Robert, as of today, my net profit is negative, so I would say that the rental property has not been worth my time.

    Reply
  4. Pingback: Rental Property Update September 2009 | Growing Money

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