Have you ever wondered how much you can make from owning an apartment complex? Well, in this video by Austin Rutherford, he shares his personal experience and reveals the numbers behind his monthly income. With an eight unit apartment complex, Austin earns a whopping $7,200 in income every single month! However, as he breaks down the expenses, you’ll see that not all of that money goes straight into his pocket. Around $4,000 is allocated for his mortgage, $300 for property taxes, $200 for insurance, $400 for repairs, and another $400 for vacancies. After deducting all these expenses, Austin is left with approximately $1,900 in positive cash flow profit each month. If you’re curious to learn more about real estate investment and how you can achieve similar financial success, be sure to check out Austin’s video and grab a copy of his book “Get Free Houses” today!
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Monthly Income and Expenses
Managing your monthly income and expenses is a critical aspect of maintaining financial stability and achieving your financial goals. By understanding your income breakdown and expense breakdown, you can calculate your profit and make informed decisions about your finances. In this article, we will provide you with a comprehensive guide on how to effectively manage your monthly income and expenses.
Income Breakdown
The first step in managing your monthly income is understanding its breakdown. This involves identifying all the different sources of income you have, such as rental income from units, dividends, interest, or any other additional sources of income. By having a clear understanding of your income sources, you can better plan and allocate your funds accordingly.
Rental income from units
If you have invested in rental properties, your rental income from these units will be a significant portion of your monthly income. It is essential to keep a record of the rental income from each unit separately to track the performance of each property. By maintaining a detailed record, you can identify any potential issues, such as vacancies or late payments, and take corrective measures to ensure a consistent rental income.
Total monthly income
Summing up the income from all sources will give you your total monthly income. This total amount represents the funds you have available to cover your expenses and save for the future.
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Expense Breakdown
Now that you have a clear picture of your income, it is important to understand your expense breakdown. By identifying each expense category, you can make informed decisions about your spending habits and prioritize your expenses accordingly.
Mortgage payment
If you have a mortgage on your rental property, your monthly mortgage payment will likely be one of your significant expenses. It’s important to keep track of your mortgage payment and ensure that it is paid on time to maintain a good credit score and avoid any potential penalties or fees.
Property taxes
Property taxes are another essential expense to consider. These taxes are paid to the local government and are usually based on the assessed value of the property. It is crucial to budget for property taxes and ensure that they are paid promptly to avoid any legal consequences or additional fees.
Insurance
Property insurance is essential to protect your rental property from potential damages or liabilities. This expense covers the cost of insuring the property against risks such as fire, theft, or natural disasters. By having adequate insurance coverage, you can minimize the financial risks associated with unexpected events and safeguard your investment.
Repair costs
Maintaining a rental property involves regular repairs and maintenance. From fixing plumbing issues to repainting the walls, these costs can add up over time. It is crucial to set aside a portion of your income for repairs and maintenance to ensure that your property remains in good condition and retains its value.
Vacancy costs
Vacancies can significantly impact your rental property’s income. When a unit is vacant, you lose rental income and may incur additional expenses while looking for new tenants. It’s important to account for potential vacancy periods and set aside funds specifically for this purpose. By planning for vacancies, you can mitigate the financial impact and ensure a consistent cash flow.
Total monthly expenses
Summing up all your expense categories will give you your total monthly expenses. This figure represents the amount you need to cover each month to maintain your property and keep it profitable.
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Profit Calculation
Calculating your profit is a fundamental step in managing your monthly income and expenses. By subtracting your total monthly expenses from your total monthly income, you can determine your positive cash flow profit.
Income minus expenses
To calculate your profit, subtract your total monthly expenses from your total monthly income. This simple calculation will give you a clear understanding of whether you are generating a positive or negative cash flow.
Positive cash flow profit
Generating a positive cash flow profit is the goal of every property owner. A positive cash flow means that your income exceeds your expenses, leaving you with surplus funds that can be used to reinvest, save, or pay down debt. A positive cash flow profit is a strong indicator of a financially healthy and sustainable rental property business.
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Conclusion
Managing your monthly income and expenses is crucial for maintaining financial stability and achieving your long-term financial goals. Understanding the breakdown of your income and expenses allows you to make informed decisions, monitor your financial performance, and identify areas for improvement. By calculating your profit, you can assess the health of your rental property business and take steps to ensure its profitability. Remember, a positive cash flow profit is the key to financial success in property investment.
