Well, that sums up 2020. This year has been nothing short of crazy. Thankfully, all my properties did pretty well throughout the year. While writing this I own four rental properties but, I’m in the middle of a deal to close on my fifth. I suspect that deal will close before my Q1 – 2021 rental property update. (Subscribe so you don’t miss it!)
I have a friend whose father is thinking about selling his house sometime between now and spring time. He reached out to me and asked if I would be interested and I told him absolutely! Nothing has come of this yet, but I plan on reaching out again after I close on the deal I’m in the middle of. I would be moving out of my owner occupied two-family and into that house if the deal works out.
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 my spreadsheet for the year 2020 below:
Unbelievably, either unit required any repairs at all this year. Aside from that, rent was increased from $700 to $725 in October. This is lower than market value, but I’ll likely leave it alone in 2021. Gas/electric and water increased by a total of $303.60 and $78.06, respectively, from last year. Not bad, I’m sure some of that increase is quarantine related and I expect both to be a bit lower next year.
It cost me an average of $324.48 per month to owner occupy this house. Although, $126.26 per month of that amount is paid towards the principal on the mortgage each month. I could have owner occupied this house for just $198.22 per month. Considering the alternative, owning a single family house or renting, I’m pretty happy with that. If I were to move out, I would rent my apartment for around $850, leaving around $525.52 cash flow per month with the extra mortgage payments or $651.78 cash flow per month without.
I plan on doing some work on the exterior of the house and some upgrades to my unit next year. This will likely increase my cost to own significantly, depending on how much I actually decide to do next year. A lot of that decision will be dependent on the single family deal.
Property 2 – “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 my spreadsheet for the year 2020 below:
It was a rough year for this property. We had to replace the boiler which ended up costing over $4,500 and a refrigerator that cost over $800. Shockingly, Gas/electric and water decreased year over year by a total of $537.74 and $50.55, respectively. Some of that can probably be attributed to the newer more efficient boiler.
The property cash flowed $86.43 per month in 2020, down from $252.49 per month in 2019. This decrease is mainly because of the boiler replacement. Without that huge expense, the property would have outperformed 2019 considerably at $468.54 per month.
This property has yet to have a great year. 2018; vacancy and full apartment remodel. 2019 vacancy and full apartment remodel. 2020; boiler replacement. On the bright side, all of the work done in the last few years should set this property up to perform well going forward. Unfortunately, one of our tenants is moving out March 1st. The unit shouldn’t need much work so the outcome will really just depend on how soon we can fill the vacancy.
- 2020 Capitalization Rate – 4.95%
- Total Cash-on-Cash Return – 169.98%
- Internal Rate of Return – 74.41%
Property 3 – “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 my spreadsheet for the year 2020 below:
It was another great year for the North property. We had some small repairs here and there but nothing major.
The property cash flowed $661.88 per month in 2020, down from $707.55 per month in 2019. There was no large expense that can be attributed to this decrease. Rather, a bunch of smaller increases to taxes, gas/electric, water and home owners insurance.
This property has performed great each year we’ve owned it. I’m hoping the ball keeps rolling going into 2021.
- 2020 Capitalization Rate – 9.41%
- Total Cash-on-cash Return – 494.62%
- Internal Rate of Return – 337.24%
Property 4 – “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 my spreadsheet for the year 2020 below:
Not much in the way of repairs for this property this year. I know that we’ll have some big expenses at some point at this property, but nothing imminent.
This property cash flowed $613.12 per month this year, up from $519.58 per month in 2019. In terms of cash flow, this was the best year so far for this property.
This property has also performed great each year thus far. Here’s to a great 2021!
- 2020 Capitalization Rate – 10.41%
- Total Cash-on-Cash Return – 433.67%
- Internal Rate of Return – 267.34%
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