What to do with Cash Flow?

[gregg]

I find this to be a very interesting topic. With 20 buildings and 71 units I think I have run into just about everything possible including an act of God which cost me in the neighbourhood of $12,000. this summer. My reserve saved me because insurance wasn`t there when I needed them. An Act of God or Nature is not covered by insurance, sewer backup is but they double your deductible.

You mentioned utilities at $90.00 per month. Are the tenants paying the gas bills. If you just purchased the property you might not have run into the five or six hundred dollar per month gas bills that may occur (and did last winter) during the cold winter months along with snow plowing which can add up as well. Just something to think about regarding the positive cash flow. It would also be wise to have a reserve on hand equal to three months worth of mortgage, taxes and insurance. Just some food for thought and congratulations on your first purchase no matter what you run into it is a great business to be in. I spent way too much time in another line of business and this is much less stressful and despite any shortfalls, is much more rewarding.

Gregg

 

[CarrieKoch]

QUOTE (gregg @ Aug 19 2009, 03:29 PM) I find this to be a very interesting topic. With 20 buildings and 71 units I think I have run into just about everything possible including an act of God which cost me in the neighbourhood of $12,000. this summer. My reserve saved me because insurance wasn`t there when I needed them. An Act of God or Nature is not covered by insurance, sewer backup is but they double your deductible.

You mentioned utilities at $90.00 per month. Are the tenants paying the gas bills. If you just purchased the property you might not have run into the five or six hundred dollar per month gas bills that may occur (and did last winter) during the cold winter months along with snow plowing which can add up as well. Just something to think about regarding the positive cash flow. It would also be wise to have a reserve on hand equal to three months worth of mortgage, taxes and insurance. Just some food for thought and congratulations on your first purchase no matter what you run into it is a great business to be in. I spent way too much time in another line of business and this is much less stressful and despite any shortfalls, is much more rewarding.

Gregg

Yes, my front tenant is paying all the utilities but we are reimbursing 30%. We also had her set it up on equal billing.
Also we will be doing any additional plowing as required as we only live 2 minutes away from this rental.

Thank you for the congratulations! I too really enjoy it and I wish I had more money to really get going as it is the perfect fit for our combined skill set.

We are definitely going to work towards the reserve you suggested!

 

[JulieHoffman]

QUOTE (epmrentals @ Aug 14 2009, 10:51 PM) My husband and I just purchased our first duplex. Cash flow is over $600/monthly. We financed the down payment with an LOC so we are very leveraged, don`t have much there for repairs/vacancy savings.

I`m wondering what to do with the cash flow? We have a Manulife One mortgage so we can just leave it to accumulate and pay down mortgage (easily accessed for repairs or to purchase another property), or should we work on paying down the LOC`s which are at a higher interest rate, or should we go crazy and spend some of it ?? (and if we do what does it count as in our books? owners equity expense?)

Our ideal goal is to purchase another one soon so we`d like to work towards that.

Thanks!

Awesome job purchasing a positive cash flow property!

I use the Money Merge Account to accellerate how quickly I pay down debt. It is web based software that tells me what to do. It`s like a GPS for my money and for debt reduction. I use it in combination with my personal residence and my one of our rental properties.

I tell it how much income I receive, expenses, etc. and it tells me what to do with it. Obviously every month is going to be different (like my insurance company decided to charge me an extra $250 this months- yikes!), but like I said, I tell the Money Merge Account, and then it tells me how to stay on course to may my mortgages of FASTER.

It is also what I use when proposing to new joint ventures in order to have a PLAN to protect JV money and RRSP Money. Hope for the best and PLAN for the worst.

Again, good work and all the best!