Did your first investment property cash flow?

[Kevin OBrien]

Hi everyone,

  I had a friend talk to me the other day. She was saying that her first rental was a house that she and her husband picked up from a neighbor they knew who was moving. But she said it didnt cash flow much for a while because they paid more than they should have.

What are others experiences with their first rental property? Did it cash flow well? Did it take a while? What are others experiences?

[Joe P.]

My duplex in NJ has yet to turn a profit. I've had it since August 2018. My biggest mistake was assuming there wouldn't need to be much done upon pickup of the property, but deferred maintenance killed my CAPEX/maintenance budgets, which were calculated at a "house is stable" rate.

Any property I do moving forward, I'll have a 5k to 10k deferred maintenance budget set aside for the first year. This way its more of a purchase expense -- if it gets used, ok, my initial COCR is lower than year 2, but I'm covered for any gotchas. If I don't use it, great, its money I didn't have to spend.

Obviously, I was a little discouraged, especially early on. But we've got the property stabilized, took care of most of the needs, and now on the road to black. All-in-all I'm down about $2,000 on top of my initial investment, which is not horrible. This doesn't factor in any tax advantages/appreciation/pay down of debt, which some of us overlook but is part of the long term plan.