2012 Passive Income: Rental Property
Its been several years since I did a thorough analysis of our rental property performance and investment return. Here is an analysis of our 3 rental properties for 2012 that should give a pretty reasonable view of how these investments are performing. All three rentals are single family homes that we have acquired over the past 12 years.
**Property Taxes, Insurance, Repairs & Maintenance, Advertising, etc
*Potential Free Cash Flow assuming 2012 Rent, 2012 other expenses, and minimum mortgage payments. This is the best indicator to me of the potential income we would receive from these investments when we are financially free.
These days I prefer to look at these rental investments together. After all, I tend to eliminate the highest interest rate loans first and as a result have eliminated debts on certain properties, etc which skews the results. If you combine them together I think you get a more reasonable view of our return.
I can't complain about a near 7% return that ignores asset valuation changes. The main downside of these investments is they also consume some of my time and energy and that isn't factored into these returns. Back in 2006 when I started this I tried to do everything myself to keep the explicit expenses as low as possible. Today, being so time poor, I only attempted to do 1 repair and handled re-renting 1 house myself this year. The rest of the work I outsourced to contractors and other folks to minimize the amount of my time required. When we are financially free I suspect I will move back to doing much of the work myself to boost our net income.
Related in Rental Property:
Why Invest in Rental Property (Mar 13, 2012) The real estate investing infomercials of the housing boom suggest that real estate could make you rich - the benefit of real estate being exponential returns of your investment. While I only have a few small real estate investments there...
Rental Property Investment Breakdown (Sep 27, 2011) Here is some overdue financial record keeping from our latest rental investment in August 2011. This breaks down all our out of pocket costs to purchase the property and get the 1st tenant in place. Out of Pocket Investment in...
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