How Much Income did I Make from Rental Properties in One Year?

I thought it would be cool to see what I actually made on rental properties in one versus what I thought I would make. I projected I would make $6,000 a month or $72,000 in one year from my 11 rentals, but did I actually make that much? Some investors assume the only expenses they will have are mortgage payments, taxes and insurance and have a rude awakening when a house goes vacant or needs some repairs. Most investors have different percentages for vacancies, maintenance and property management. Some investors use blanket rules like the 50 percent rule (expenses will be 50 percent of the rent not including the mortgage). I use these projections as well (except for the 50 percent rule), but I also want to look back at what I actually made to see how close my projections were to the actual returns.

You have to keep detailed records on rental properties to see what you actually make each year

One nice thing about having a team, is I do not have to do all this work myself. When I was managing all my properties and doing the books, I did not do a great job of keeping track of everything. I hated accounting and entering data. Someone on my team now manages all my properties and another assistant keeps tracks of all my books for the real estate business, the flipping and the rental properties. That leaves me more time to pursue money-making activities and greatly reduces my stress level!

You have to keep detailed accounts of all rental property expenses so that you are not paying too much in taxes. Most expenses on rentals are tax-deductible or can be depreciated. Here is a great article on the tax advantages of rental properties. When you don’t keep detailed records, you might be losing out on tax deductions or taking too many deductions, which can get you in trouble with the IRS. Keeping detailed records also allows you to see how well your investments are doing, what can be improved upon and what to watch out for in the future. Keeping detailed records shows you how much you are actually making on each property and if your projections are accurate.

Howgif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw== How Much Income did I Make from Rental Properties in One Year? did I figure I would make $72,000 in one year from rental properties?

You may see I claim to make $6,000 a month from 11 rental properties in various places on this website. This number was a projected number based off my cash flow calculator for how much money my rental properties make (I now have 13 rentals, but number 13 is not rented yet). It can be difficult to calculate the actual money I am making with rental properties, because I am constantly buying new ones and spending money to renovate them. I try to figure my returns on a monthly basis since a yearly basis can be very skewed as we will see.

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16 flips currently in progress. 159 flips completed. 19 rentals properties.
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I make about $500 a month in cash flow on each of my rentals, except for rental property number 1 which is paid off. I make about $1,000 a month in cash flow on that property, which equals $6,000 a month. Not very scientific, but I am pretty conservative on my maintenance and vacancy calculations.

How much did I make in one year on my rental properties?

I had my assistant pull a report to see how much money I made on my rentals in 2014 and the figure came back at $25,191.33. That figure equates to $2099.28 a month, which is much less than what I claim to make. Uh oh, have I been making up numbers to make myself seem more successful? No, and I will show you why.

Here are the net profits on my rental properties:

Rental property 1   $10,300.77

Rental Property 2   $7,648.61

Rental Property 3   $9,614.18

Rental Property 4   $10,465.56

Rental Property 5   $5.592.05

Rental Property 6   $(37.43)

Rental property 7   $11,754.24

Rental Property 8   $(15,199.95)

Rental Property 9   $427.43

Rental Property 10  $910.48

Rental Property 11 $(16,284.61)

Total:                          $25,191.33 

You can see the total profit was $25,191.33, but I have many negative figures on my last rental property purchases. These figures are not only counting the monthly rents, monthly expenses and monthly repairs, but also the initial fix up costs. Here is why the total profit is skewed against me.

  • Rental Property 8 was purchased the end of 2013, but needed a major overhaul. I spent over $18,000 in repairs on the property and the repairs were not done until February and the home was not rented until March 2014. It was rented for $1,400 a month, but $18,000 in repairs and additional carrying costs are hard to make up for!
  • Rental Property 9 was purchased in February of 2014 and rented in April of 2014 for $1,300 a month. The home needed minimal work and we only spent $6,000 on the rehab. The home did not make much money because it was only rented part of the year and had initial repair costs as well.
  • Rental Property 10 was purchased in March of 2013 and needed about $4,000 in repairs to be ready to rent. This house was rented in June 2014 for $1,250 moth. Again the house was only rented part of the year and had initial repairs, which brought down the yearly income.
  • Rental Property 11 was purchased in July of 2014 and needed a lot of work. I had originally thought we spent $12,000 on the repairs, but after looking at the books it was close to $16,000. This house was not rented until November ($1,400 a month), because I had 10 flips going the end of 2014 and not enough contractors to do work! Talk about a huge drag on my yearly income!
  • Rental Property 6 also had a very low income for the year and that was not due to initial repairs. We had a tenant in that house that had a heart attack who was in the hospital for months. He moved out without an eviction, but he left the house in not so good of shape and we lost a lot of rent. We had new renters in the last half of the year and then had to replace the roof! This property is why you have to account for vacancies and maintenance.
  • Details on my rentals can be found here.

Even though I technically only made $25,191.33 in 2014, I did not have all 11 rental properties rented the entire year. My initial repair costs are also included in that profit number, which in my opinion should not be included. I spent $44,000 on initial repairs on properties in 2014, which I account for in my cash on cash projections. If I add those repairs back into the equation I made $69,191.33 on my rentals in 2014, without considering four of my rentals were not ready to rent the entire year. With those numbers, I made $5,766 a month from rental properties in 2014.

How much money did I make from rentals in one year if I prorate my rents for the year?

If I were to take into consideration that four rentals were not rent ready on January 1st, 2014, my income goes up even more.

  • Rental Property 8: Missed one month of rent, which would be $500 cash flow.
  • Rental Property 9: Missed three months of rent which would be $1,500 cash flow.
  • Rental Property 10: Missed Five months of rent which would be $2,500 in cash flow.
  • Rental Property 11; Missed 10 months of rent which would be $5,000 in cash flow.

If I had owned all eleven rental properties the entire year I would have had about $9,500 more in income, which would bring my total to $78,691.33. That would equal $6,558 every month from my rental proprieties! Notice in the figures above I used very basic numbers assuming I would have made $500 a month in cash flow, because that is what I have averaged historically if not a little more.

These figures also include property management for part of the year. As I stopped managing the properties myself in 2013 and had my team take over. I pay my team 8 percent of the gross rents to manage my properties for me.

How much money did I make in one year from principal pay down on my rentals?

When I figure my returns I do not include many advantages that increase my net worth, but are only seen on paper. I see $6,000 plus every month in my bank accounts, but there are many other gains rentals provide. I have mortgages on all of my rentals, except for number one. Those mortgages were paid down $14,490.74 in 2014. If you count mortgage pay downs as income (which the IRS does), then I made $93,182.07 if I would have owned the properties all year and $83,682.07 having owned four of them for part of the year.

There are more gains that are not seen, unless I sold the properties or refinanced them. My rental properties also appreciated and gained when I bought the houses below market value and fixed them up. I figured how much my net worth increased from rental properties last year and came up with $600,000.

There are also incredible tax advantages when you own rental properties. Even though I made a lot of money on my rentals, my taxes will show a much lower figure for income, because I can depreciate the properties. Here is an article with much more information on depreciation.

How would my yearly returns have looked with the 50 percent rule?

The 50 percent rule says the expenses on a house will be 50 percent of the rent, excluding the mortgage payments. For example on a rental that rents for $1,400 a month the expenses would be $700 plus what the mortgage payments are. My mortgage payments on a house that rents for $1,400 would be around $400 to $500 excluding taxes and insurance. That would mean my cash flow would be $200 to $300 a month, not the $500 I am actually seeing. There are a few reasons why I don’t like the 50 percent rule.

  • Taxes are different in every area. My taxes might be $500 a year on a property that rents for $1,400 a month and other areas may see $5,000 taxes a year for the same rent amount.
  • Single family homes typically have less expenses than multifamily, but the 50 percent rule does not account for this.
  • The expenses may not change greatly on a house that rents for $1,000 or a house that rents for $1,400, but the 50% rule assumes there will be $200 more expenses a month on the more expensive rental.


I was not sure how much money my rentals actually made my in 2014, until I wrote this article. I was hoping it would be more than $6,000 and luckily it was! In reality, I could see my bank accounts increasing every month and I knew I was doing very well with them, even with a few hiccups like rental property number 6. Once I have rental property 13 rented I will have to recalculate my returns to see what I am making per month (it should be around $7,000). Another cool fact is rental properties 1, 2, 3, 4, and 6 all had the rents raised in 2014 which will increase my returns even more in 2015. Rental property 5 also had a tenant who was behind on rent, but caught up in full in 2015.

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  5. Troy April 15, 2015
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  6. Daniel April 15, 2015
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