Real Estate Report – June 2017

Austria - Castle

It is the end of the month again, so it is time for the Real Estate Report – June 2017. It was a rather uneventful month (yay!), but we have to start focussing (and acting) on some of the longterm maintenance items remaining for the year. Tradesman/woman are hard to find during the summer in one of the best economic years in a long time. Fall will also becoming around quicker than you think. Time to step it up and finish the required works!

Rental Income

Sorry for the boring story here, but still the same tenants, same income and all on time again. We will shake it up in July when there is one rental income increase (the €250 for Unit 3 will go to €275). This will boost our rental income to well €3.000, which just looks really cool on paper.

The usual income overview is provided below:

Real Estate Update - June 2017 Income

Real Estate Update – June 2017 Income

Rental Expenses

As already noted in the introduction, no maintenance works have been performed (or paid), so expenses are minimal this month. It’s just the usual suspects and a small amount of water management/sewage fees. 

The expenses for the month include:

  • Interest costs (mortgage and loan);
  • Property Water management/Sewage fees/Taxes; and,
  • Property management costs.
Real Estate Update - June 2017 Expenses

Real Estate Update – June 2017 Expenses

Real Estate Report – Overview

We made a total of almost €2.303 in net rental income for the month of June (before taxes), our best month to date! The net cash-flow will come in at around €1.900. Our total YTD rental income for 2017 is about €11.401 (before taxes). We just crossed the 5 digit mark in net rental income, sweet!

Interesting note, if we look at our core expenses and the average net rental income for this year so far (~€1900 – assuming no taxes), we would be technically be FI! Unfortunately, from a cash-flow perspective we are not. Nor does this average net rental income correctly reflect reality. For that we need about a 10-20 year period within which we see a correct reflection of longer term maintenance items and turnover costs/vacancy effects. The shown net rental income should in fact be reduced with a long-term maintenance allowance. In short, we still would need more properties to become FI (or somehow drastically reduce our expenses, which could be done by moving outside the Netherlands).

Real Estate Update - June 2017 Overview

Real Estate Update – June 2017 Overview

Real Estate Report – Forecast

There is also some bad news, one of our tenants have let us know they are trying to buy a house and hope to move out in October. At that point they would have been living there exactly one year and are free to move on. This is rather unfortunate as they are a very nice couple and take good care of the place. So the search for new tenants by the property manager will be happening in September most likely.

We are still actively reviewing other properties and have actually submitted an indicative offer on 5 rental properties. The submitted price is very low as there are some risks associated with the rental units, which include an administration and year end statements that are still to be approved. The inside state of the properties is moderate, so we could see replacements of kitchens and bathrooms.

Another risk, albeit less of an issue for the coming decade is a somewhat stagnant rental price. Why is this a smaller risk? Because the potential return on investment is so high, that we could add another property to compensate for the stagnant rental income, inflation and associated increase in expenses. It’s a calculated risk. Will see what happens!

 

How about you? Any RE investment plans? A good (or bad) story to tell? Let us know, we’d love to hear from you!

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15 comments

  1. Going string in RE… Keep working on this and you will be FIRE before you even know it!

    (Looks like Feedly just processed now all of you posts from the last month…)

    1. The RE is going well for now, let’s hope this continues.
      Strange of feedly to suddenly forward all the post. Divnomics noted a similar issue. I personally did not change a thing on the blog.

  2. Wow, I love how balance your picture is.

    The graph looks great, your expenses went down and your net income shot up. Unfortunately for me this month isn’t as great as last month, but I’m going to keep the cash flow coming.

    Cheers!

    1. Hey Viv,
      This month was very good indeed. The cash flow is great! Looking for new opportunities, pretty difficult to find something we like.
      Happy Independency day!

  3. TeamCF, she doesn’t speak dutch or english but only french, but I keep relationship with her because she is proactive (if you know de-agreements between waloons and flemish people in Belgium… 😀 )

  4. With the current income streams, you’ve already become parttime FI 🙂

    Very good results this month, and curious how your plans with the 5 unit property will unfold. We’re still looking, turned down one unit because there was doubt of how much ‘official’ living space was included. We notice it’s getting harder to find properties though.

    1. It’s not easy to find something you like, it can take quite some time actually. Took us about 5 years before we finally bought our first property. Granted the first 4,5 years we were not very actively looking.

  5. No plans, only dreams about investing in real estate 🙂 our attention now is at our savings, mortgage and small amount of index funds that we are building up.

    1. Hi Cheesy, we have already 2 RE rented (plus the one where we live) and the accountant recommended to do another. Well… thanks for the article, it helps me, because I was thinking it’s enough how many bricks we have 😀 😀

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