The Cash Flow Rentals Hustle Report #3 (QTR 3 2015)

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Hey fellow hustlers!

 

This report has become increasingly difficult to put together this quarter because we’re in the middle of shifting a lot of our systems and we’ve become swamped with running our own businesses but we’ve updated this report a bit (to be shorter) from the feedback we’ve gotten (so keep it coming!).

 

Executive Summary:
Cash Flow Rentals, LLC’s focus is on generating residual passive income (rather than appreciation) for it’s owners (Diego and Pascal) through any means of real estate.

 

The Quick & Dirty:
  • We are currently under contract of 2 new homes. By the end of the year we should have 4.
  • One of our tenants has been passive aggressive causing a lot of problems in the house with email chains, telling other tenants to fuck off, etc. We feel an eviction coming…
  • We’ve been migrating everything over to quickbooks to properly track our finances, it’s not completely up to date but you’ll get a good idea of how we’re doing.
  • Because of issues we’ve had with collecting deposits and misc. tenant issues, we’ve updated our leases with a few new clauses.
Financials:

Recent Highlights: 
  • Some things that you don’t really realize when you get into real estate is exactly HOW MUCH TIME everything takes. Things like finding properties, inspecting homes, writing posts on craigslist, vetting applicants, showing homes, signing leases, responding to client maintenance requests, dealing with tenant issue, doing lawn care, managing the utilities, accounting, making sure rents and deposits are collected on time and properly, preparing our books for taxes, making sure legally all of the right documents are in place for our properties… Plus all of the things we haven’t run into yet, it’s an entirely new business. I dig it, but I see why so many people are afraid to jump into it.
  • Why the switch over to Quickbooks? I currently have an accountant that I have running over my books for my Online Ad Labs business so I’ve had them take a look at and arrange our books for Cash Flow Rentals. We’re still in the midst of balancing the books but having everything in quickbooks will make it significantly easier to file our taxes than how we had it before with my excel spreadsheet that I had to manually update every week. We’ve been looking at AppFolio, where we can run reports specifically on each property, have tenants sign leases on site using our phones or tablets but at $200/mo it eats into our profit margins too much.  Quickbooks runs us around $11/mo.
  • For the first time we’ve ran into the issue of tenants having a problem with one another. We’re talking about extremely loud sex that everyone can hear, yelling and just a lack of common courtesy. We’re sorting out the issue right now and we think this will be the first eviction we’ll have to deal with. This is also something we’ll need to update in our lease agreement that we have the right to evict a tenant if they’re making other tenants feel uncomfortable or not safe. We’re getting this resolved quickly so it’s out of our hair but we’re not exactly looking forward to it.
  • Because we just wanted to have the house filled, we’d allow our tenants to move in and setup our automatic rent billing once they’ve moved in. That’s now becoming a problem as we’re constantly having to followup to make sure the rent is collected and it’s become a huge pain. Slap on collecting money for utilities as well and we’ve doubled the pain. For that reason we’ve now changed the process so that our tenants must sign up and make sure Cozy is setup properly before moving in.
  • We have 2 new properties under contract and should be closing on our first one in the middle of November. I’ll be in Japan during the closing so figuring out how to sign the closing documents in Tokyo will definitely be an adventure. The good news is we already have several potential tenants checking out the rooms of the properties to move in.
  • Because of the issues above the last 3 months haven’t really been enjoyable to say the least but they’ve been really the only problems we’ve had and after we get them resolved and our new systems in place we should be able to avoid those situations in the future. Of course new problems will arise but there’s nothing a good system can’t fix!
Asks/Questions:
  • We haven’t done the research yet but should the downpayment for the houses go into our profit and loss statements for the year?
  • Other than separating principal & interest payments along with HOA fees and Insurance, is there anything else we should be accounting for in quickbooks to prepare our taxes?
  • What KPI’s are you measuring for your rental real estate investments?
Pascal & Diego:
  • Pascal – My Facebook & Google advertising business is growing and I’m visiting the team that I’m building in the Philippines and the end of the month. Right now I have a team of 4 and am looking to scale that to 8 so that I’m able to take on more work and grow my company. I’m in the midst of systematizing everything I know and building a well oiled machine! I’ve also been able to visit Kuala Lumpur, Singapore, the Gili Islands and have a bunch of travel in Asia ahead like South Korea, Vietnam, Japan and the Philippines to meet my team. Work and travel is awesome but it’s definitely not all roses. I’m extremely limited by my internet connection and taking on appointments is ridiculously hard when you don’t know how good your internet connection will be. Needless to say I’m excited to be back in the states in December to focus on growing my business. Other than that I’m missing my family but am excited to spend Christmas together in Florida!
  • Diego – Finally quit my full time job as a software developer! I am now a realtor with Keller Williams and on the path to closing 20 deals by the end of the year. I have teamed up with another realtor, Victor Nino, and will be putting systems in place to create a business rather than working every part of the transaction. I am also working with Gobundance as the community manager for the M1 program. Early October I flew to Orlando so surprise my mother for her birthday and to attend a Marc Anthony concert. Her reaction was priceless!
And here’s a photo of Diego and I climbing Gray’s Peak in Colorado with the GoBundance Mastermind Crew! Honestly it’s one of the most inspiring and best groups of men Diego and I could be apart of. We’re so grateful to be able to help out!

 

Always Hustling,
Pascal &  Diego

 

PS – Please send us a reply and let us know what you liked about this email update or potential concerns you have for us being in our position. It’s because of the feedback from these emails that we’ve already avoided a few obstacles! Plus we love hearing from you (so don’t be shy)!

 

PPS – You can find all of the quarterly reports to this point here:
http://makeawesomeshithappen.com/category/quarterly-reports/