The focus of this blog is on the dividend growth investment strategy I am pursuing with regards to my dividend portfolio. I generally write about potential recent stock purchases, and how my investments have impacted my portfolio. While I love the DGI strategy and am committed to its long term success, I realize that there are more than one ways to make money. In fact, real estate investing is an excellent way to invest money and earn a decent return. This post is on my first rental property income received from my real estate investing, since moving out of my home.
Rental Property Income
Having moved out of my house, the property management company I hired was finally able to secure my first tenant. I initially didn’t want a pet in the house, but I was afraid of a longer vacancy and so I allowed the tenant to have a small sized pet. So, it turns out that the new tenant has a pet, but was also able to move in at the beginning of September. Well, I received my monthly statement from my property manager which comes at around the mid-month mark. And, it shows that after all the expenses and fees, I earned a whopping $193.60 for the month. This wasn’t profit, but the total amount.
Now, I know it gets better. But the expenses and fees for this first month was kind of ridiculous. They include a $155 charge for lawn maintenance. I’ve never paid that much while I was living in the property. Of course, there is the property manager’s finder’s fee which is half of the first month’s rent and which is so annoying. There are other fees/expenses as well, which I don’t feel like getting into. Still, I got back $193.60 from a source other than my salary. Plus, I expect next month that the income will be enough to cover the mortgage and the property management monthly fee, leaving about $250 in “profit.” But to be clear, that $250 does not cover repairs or vacancies, etc. It only represents the difference between rental income and payments to both the mortgage company and the property management company for their fees.
How to Save Rental Property Income?
I’ve decided that I’m going to save the $250 I get per month into a separate account. What’s interesting is that I contacted my bank and asked how much interest I am getting in that savings account. The answer was 0.03%. Thanks Chase. Wow! However, although I’m not earning money (in terms of interest from the bank), I do think that having your funds in a separate account that’s easily accessible is a good thing.
The goal is that should there need to be repairs on the house or cover vacancies, I will be able to use that money. In the beginning, I might have to fund some of those costs out of my own pocket. But, I’m trying to get to the point where the house can pay for itself, so to speak. That is, the ‘profit’ I am making is enough to cover the expenses and pay me rental income that truly represents a profit.
So far, I think I’m off to a good start. I would love nothing more than to diversify my sources of income so that by the time I retire, I will have multiple streams of passive income. Investing in real estate is a viable source of income, as long as the numbers make sense and you’re up for the challenge.
Let me know what you think by commenting below.