According to my Integrity Policy, I want to let you know that this post contains Personal Capital referral links. Personal Capital is a free service. They are looking for high-net worth individuals as possible customers for their financial advisory services, but the expense tracking and retirement planning tools that I recommend are free of charge.

It’s all about the Benjamins. And Jacksons. And Lincolns. And Washingtons.

Finally. The new rental is finally fully rehabbed and occupied! But before we cover that…

Between the April and May 2016 financial statement, our net worth increased by 4.68%!

As I mentioned above, the marquee event for this month was getting the rehab completed on my new midwest rental duplex. It was not without its ups and downs, including a little incident that came up this past week. After approving a tenant with 4.5 times the rent in income, I got a phone call from my property manager, who sheepishly admitted that somehow the fact that one of the tenants had a recent prostitution arrest which was not reported to me when summarizing the applicants.

The truth is, I laughed pretty hard when I heard this. Nothing about this property has been easy, so it stands to reason that placing a tenant wouldn’t be either. It was a complete accident on the part of my PM, and she was reaching out to try to correct the oversight.

I informed my PM that we would have to let the applicant know that we could not sign a lease, and continue looking. I thanked my PM profusely for having the integrity to call me, as it would have been the easiest thing in the world to just sweep the unreported offense under the rug and hope for the best.

The vacant unit is in spectacular shape, though, so finding an alternate tenant took almost no time at all. My properties remain fully rented, though my new tenant won’t be moving in until July 1st. Because I pay the first month’s rent to my property manager as a tenant placement fee, I should be safe to start raking in the rental income by August.

At the moment, I have two other leases coming up for renewal, and the new lease makes tenants responsible for their water bills. In this market it’s common for the landlord to cover the water and sewer bills on multifamily properties. The problem with landlord-paid water is that tenants have no financial incentive to limit their water use, and I have had some very high water and sewer bills in the past year. I inherited one of my tenants in the property when I bought it, and I have seen some signs that he is barely making rent (late payments, notifications from the gas company that the tenant has not paid his bill and service will be shut off, etc.). The tenant let me know that he needs to move out rather than renew his lease and take on the water bill.

The very fact that the tenant informed me of his intent to move out over thirty days in advance makes me hopeful that this should be a comparatively uneventful turnover. The unit was under market rent anyway, so I see it as an opportunity to raise the rents and find quality tenants. Also, since I always work vacancy into my analysis of properties, I don’t even have to stop collecting my monthly cash flow. This is why you always budget for vacancy and save the money you allot to it!

If you hadn’t already gathered from the large increase in safe monthly income, rental properties are a huge and effective part of our early retirement plan. Because we live in the San Francisco Bay Area, where you’d have to be crazy to buy a rental, we do all our real estate investment from about 2,500 miles away. If you’d like to learn more about my real estate investment journey (and how to replicate the process yourself), check out my book on out of state and long-distance real estate investment! You can also find it on Amazon, Barnes and Noble Nook, and iBooks.

This coming month, I’m making a nice transfer into my retirement accounts, so I expect another small bump in safe retirement income. I’m going to be a little cautious for a few months, though, as unexpected turnover expenses are always a possibility. Then there’s the matter of paying for the rest of our wedding in July! If all goes well over the next three months, I’ll be in the market for another rental property by September or so, with a goal of completing the purchase before the end of the year. The $2,000-per-month mark may not happen this year, but with a little luck, $1,800 per month might be achievable!

Blog Income

As I mentioned in my Integrity Policy, I want to make sure I share any and all professional relationships and compensation I make as a part of this blog.

In May, I earned the following:

• $21.36 in Google Ad Income
• $100.00 in Personal Capital affiliate bonuses

This month, the blog made $121.36! A nice bounce back from last month’s negligible blog income, and a nice step towards paying the hosting and backup costs for the site for next year, which should be hitting in the next month or two. Thank you to anyone who has been kind enough to use one of the affiliate or ad links.

If you’re looking to start your own blog or web site, please consider using my referral link for BlueHost. I’ll get a little cash to help pay hosting expenses, and you’ll get a great hosting provider (the same one I use) starting at about $3.95 per month.

Retirement Update

Our net worth is up $11,999.75 this month. This is a smaller increase than last month’s stellar results, but still wonderful. I made a small contribution to retirement accounts, and I had a lot of costs associated with completing the rehab of my rental.

With equity and bond accounts totaling $148,115.14 at the end of April, a 4% Safe Withdrawal Rate would allow us to take out $493.72 per month. Our rental properties, after all expenses, vacancies, and short and long term maintenance are considered, produce $988.00 of safe cash flow every month.

Safe Monthly Income: $1,481.72 (+$488.07 to Last Month)

% to Goal: 29.63% (+9.76% to Last Month)

Want to Know How to Track Your Expenses?

It’s really easy. Sign up for a Personal Capital account, which is completely free. It’s how I track my balances across time, and allows me to project all my retirement progress without doing any work at all. As a disclaimer, if you sign up with Personal Capital, this site may get a referral fee depending on the size of your portfolio.