HAPPY NEW YEAR! Team CF wishes you and your family great prosperity and health through frugal living and good investing.
Now, on to business. In this case the business or Real Estate. We will first look at the month of December 2016 to see what happened with our properties, next we will take a short look at the forecast for 2017 and expected developments regarding income and expenses.
December 2016 – Real Estate Report
December was fortunately unexciting (mostly). All properties were rented out and all rents were received on time, distribution is as follows:
Expenses this month were higher due to the interest payment on a personal family loan (as of 2017 this will be paid monthly). Other expenses such as mortgage costs and property management fees were normal. We had some negative expenses (i.e. a refund) on the insurance side. This was the result of a new assessment on the value of one of our properties. No maintenance costs for this month, but we had the heating systems serviced for two units. Bills are expected for January and will come in higher than planned due to placement of carbon monoxide sensors (€35 each) and issues with fine-tuning during boiler maintenance…..small setback.
At the end of the day, December and 2016 as a whole looked like this:
For 2016 we had about €9400 income, €6400 expenses and a net profit of €3000. Not bad for a year in which we really got going on the real estate side.
For 2017 the forecast is as follows:
- €35.000 rental income (don’t expect empty units this year, buy you never know!)
- €19.000 expenses (includes €9000 for large scale external maintenance for two units)
- €16.000 net income = about 7% net yield (before taxes)
The large maintenance for the two units was expected and we have been saving up for it as well. These two units are old (1910-ish) and the outside paint work will be removed and replaced with stucco. This way the units will have lower maintenance going forward (no more masonry or paint work required in the next 10-20 year, depending on the quality of work). Windows frames will also be repainted. After this final large reno work, these two units are in tip-top conditions and should need very little work over the next decades.
We also found that the moisture issues (migrating through the outside wall), as discovered in one of the new units last year, is worse then expected. We are getting a contractor in next week to have a look. We have made some reservations for this one too. But this is the large unknown for 2017.