What to do with a Real Estate Portfolio that's losing money

Happy Friday Everyone,

Just got my financial statements from my book keeper and my portfolio that SHOULD be cash flowing $12k/month is down $11k on the year.

WTF….

I thought Cash Flow was supposed to be easy…. what gives you guys??

I bought well at large discounts….

Fixed up the properties when I bought them so they should be “bullet proof”…

Have nice low interest rates…

Have tenants at market rents…

So what gives?? How am I down $11k when I should be UP like $84k??

O ya… this bitch called TIME has come into play.

All except 1 of my properties I bought between 2018 and 2022.

At its peak it was 54 units but I sold ALOT off as I started realizing the pattern that was taking place.

With TIME comes lots of inevitables with properties that slowly start to chip away at cash flow, many of them out of your my control.

We all know about Capex (and can account for that somewhat) but other things like…

Major Property Tax Increases (one property increased $7k/year!!).

Increased Insurance.

Higher material and labor costs (I remember having a $25 handyman 🙃 ).

All combined with NOT increasing rents, you know because for all of us doing well there are a shit ton of people who apparently cant afford anything.

Suddenly we have massive increased costs with reduced revenue.

All of that with a couple of large renovation items (you know because TIME makes stuff break after a while) and its a recipe for a big fat NEGATIVE on your portfolio’s P/L.

To make things worse too, everytime things start to get positive again another unexpected repair creeps up and its of course far more expensive than you ever would’ve imagined 5 years ago.

The good thing is since I bought in a great market years ago, my equity is VERY healthy.

I just can’t help but look at the paper gains next to the cash flow losses and wonder why don’t I just take my gains and sell it all?

At this point I could get better Cash on Cash returns parking my few million bucks in a T-Bill…

What’s your guys cash flow situations look like? When should you cash in that equity and move on to something else??

Hit me up on Instagram.

-Mike