I hadn't reviewed my income / expense in detail in a few months, so this question prompted me to get that all sorted since I'm coming up on the one year mark. Here are the specifics:
- Gross Rental Income - $37,869
- Expenses - $24,859.45
- Net Income - $13,009.55
Elite's PM portal is a bit clunky, so I made some of my own decisions on how to account for various items. A number of things show up as a "positive" number in their portal, and without massaging the data, would appear to contribute to the "revenue" side of things. Some of those I categorized differently and use them as expense offsets, instead of income. I just pull the data into a different tool that's actually better at proper accounting.
So, for example, if you get a tenant paying $1250 in rent, and they pay a $500 move in fee, and Elite refunds you a $750 credit, the $1250 shows as a negative, and the $500 + $750 show as positives. I don't count the $500 or the $750 as rental income. If you just lump together all the positive numbers in the portal and call it income, you'll be high balling your actual gross rental income. Instead, I have an expense category for "Tenant Sourcing". The $1250 is counted as an expense in that group, and the $500 + $750 are counted as offsets in that category. So, that expense category nets out to zero dollars, and the positive numbers are not inflating my income category "Rental Income".
Anyway, that sort of stuff aside, the details of my expenses are as follows:
- Repairs & Maintenance - $1787.27
- Tenant Sourcing Fee - $0 (however, there are $5085 worth of debits / credits in this group, as described above)
- Insurance - $1660
- Mortgage Payments - $14,456.70
- Landscaping Services - $1440
- Utilities - Electric - $928.04
- Utilities - Gas - $1133.64
- Property Management Fees - $2885.52
- Utilities - Water - 568.28
Unless I fat fingered something, those should add up to the $24,859 expense total, resulting in $13,009.55 in net income. With total down payment of about $80k, that's cash on cash return of 16.25% for year one.
I should point out the big caveat (in my view - there may be others). While that number looks very close to the projected returns from the inventory spreadsheets, once you get to year 2 and beyond, you don't get reimbursed for the tenant sourcing fees. Since I ended up with 4 tenants (one flaked out and left), that resulted in the $5085 worth of sourcing fees. If I hadn't been reimbursed, my total expense would have been $29,944.45, resulting in net income of $7924.55, or just under 10% cash on cash return from my $80k down.
Add to that, that as years go by I expect maintenance costs to go up as the rehab becomes less "fresh". So the returns could be even less than 10%. The flip side of that criticism is that 3x units at a market rate of $1250/mo for 12 full months is $45,000 gross instead of $37,869, so if I get some years with little or no vacancy, that additional revenue more than offsets the sourcing costs, and you're back to or above my current 16% return. (quick napkin math gets me to about 19% based on $45k revenue and $29.9k expense = $15k, over $80k invested = ~ 19%).
So, hopefully that additional detail helps. I still think it's a good alternative investment vehicle, but as something that diversifies against other types of investments. I wouldn't put all or most of your investment capital into these based on the simplistic view that you might see 18% annual returns (you should never put everything into a single investment category anyway, but it's worth reiterating). I think you need to believe in the appreciation upside here as well (which I do), in order to make these more attractive than keeping your money in the market.