2024 Annual Portfolio Checkup
Since the beginning of my journey with cash flow rental properties, I’ve been committed to creating full transparency in the performance of my portfolio. It’s one thing to write about they way these properties can and should perform in the long run (and I do plenty of that, to be sure), but it’s another thing to show how my portfolio is ACTUALLY performing.
With that in mind, I sit down each January to compile all my numbers for the year. In this report, you’ll be able to see my exact cash flow, equity growth, occupancy, the amount I spent on both maintenance and CapEx, and more. I hold nothing back — I stand before you, fully exposed and naked. (Metaphorically speaking, of course.)
This will be the fifth installment of my Annual Checkup, covering my cumulative numbers for 2024. (You can check out the previous years here.) It will follow a similar format as in previous years, including the following elements split into two large sections:
A Financial Results
A1 Cash Flow vs. Projected Cash Flow
Review of Maintenance & Repair Costs
Rate of Rent Increase
A2 Change in Equity
True Appreciation
Mortgage Paydown
Capital Expenditures
Total Change in Equity
A3 Total Returns (Cash Flow + Change in Equity)
B Tenancy Results
B1 Occupancy Rate
B2 Tenant Turns
Frequency
Duration
Cost
I purchased no new properties in 2025, so this will cover all 25 properties in my current Memphis portfolio. Also note that I’ve updated each property’s annual results in the Property Spotlights section of my blog. Scroll down to the bottom of each post to see the annual figures since I purchased each property.
Alright, let’s get into it!
A Financial Results
Evaluating my total financial results over the year will help me to answer questions like these:
Did my cash flow meet expectations?
Were maintenance & repair costs in line?
Was I successful in raising rents?
How much did my total home equity increase (or decrease)?
What were my Total Returns on the cash I’ve invested?
The answers to these key questions will provide insights into my property manager, the state of the real estate market, and of course my properties themselves.
A1 Cash Flow vs. Expected Cash Flow
Cash flow always comes first in my analysis. When it comes to my rental properties, cash is king.
It’s the cash flow from my portfolio that allowed me to achieve more freedom and flexibility in my life, including the freedom to quit my lucrative but soul-smushing corporate job. Appreciation of home prices is nice, but as I’m fond of saying, you can’t buy groceries with home equity. So it’s critical for me to understand if my portfolio is producing the cash I’m expecting it to.
I model my expected returns ahead of time, so that I know how much cash my properties SHOULD produce. This kind of model is frequently called a pro forma. For my modeling, I use the RIA Property Analyzer (and you can, too, because I make it available as a free download!) This tool quickly calculates an expected average monthly cash flow, after all expenses are accounted for; it also calculates an expected rate of cash-on-cash returns.
When I put together the numbers for my portfolio in 2024, and compare them to the pro forma model, here are the results:
Overall, my properties generated $101K in cash flow, which was about $3K short of expectations. This translates into a cash-on-cash return of 9.3%, a bit below the 9.6% pro forma. Overall, then, this was a decent cash flow year, but as we’ll see later, it was hindered by unexpectedly high maintenance & repair costs.
As I do each year, I need to pause for a moment here to explain why these numbers do not perfectly align with my December monthly update, which showed I fell more than $10K short of my cumulative cash flow expectations for the year. Notice that the actual cash flow in both places is the same — about $101K — it’s just the expected cash flow that’s different. In other words, my expected annual cash flow in this yearly analysis is ~$7,500 less than the sum of the monthly expectations as outlined in my monthly reports.
This discrepancy is due to mid-year rent increases. When I calculate the “expected cash flow” for each property in the table above, I’m using the rents as they were in January 2024. So when a property’s rent increases during the year, this results in a small “bonus” vs. the expected annual cash flow. Conversely, in my monthly updates, rent increases are immediately incorporated into my expected monthly cash flow. Therefore, the sum of those monthly pro formas exceeds the annual pro forma for any property where the rent increased mid-year. I don’t store the pro forma cash flow values by month by property, so this isn’t something I can solve for. (And in fact, I think it’s just as reasonable to do it this way.)
The results at the individual property level varied, but followed the normal pattern that I’ve seen in previous years: most individual properties exceeded their pro formas. If a property does not experience a turn or vacancy during the year, this is a bonus vs. the model, which plans for a 5% vacancy rate — so unless there are significant maintenance expenses, that property is likely to end up in the green. This was true for 16 out of my 25 properties last year.
The biggest problems houses this year were those where I experienced a turn or vacancy, which is also typical. Here are some of the lowlights:
Property #23 missed its target substantially, and had cash flow of negative $6K on the year. (Ouch!) This was due to an eviction and turn that prevented me from collecting rent for more than 6 months.
Property #7 had a very tough year as well, thanks to an expensive turn, and it also had negative cash flow for the year ($2K). But more importantly, I also experienced a huge amount of CapEx at this property, which we’ll discuss later on in this report.
Property #6 had the misfortune of a large neighbor’s tree falling on it, which resulted in a nearly $20K rebuild. Even with the insurance payout defraying much of that expense, it was too much to overcome for the year: cash flow was almost neutral, but this fell short of target by ~$4K.
Property #5’s turn also wiped out all its cash flow for the year, and it missed its target by $4K.
Other properties had small misses due to higher-than-expected maintenance costs.
Review of Maintenance Costs
The biggest variable component of a rental portfolio’s expense structure is maintenance & repair costs. (In fact, I dove into this topic in a detailed article this year — check out The True Cost of Maintaining Rental Properties.)
Across all 25 properties last year, my model budgeted for $37,850 in maintenance & repairs. The actual number came in much higher at over $68K! As has been typical for me, turns (aka Rent Ready expenses) were a significant contributor to those costs:
You might be confused at this point: if my maintenance & repair costs were $30K+ above expectations, how in the world did I only fall $3K short of my annual cash flow goal? Well, there were three factors that together nearly closed the gap caused by my maintenance overage:
The aforementioned mid-year rent increases account for a $7K “bonus” vs. my pro forma
I collected $13K+ from my insurance payout when the tree fell on Property #6 (accounted for as income that offsets the expenses incurred at the property)
My occupancy is modeled at 95%, but in reality came in it nearly 98% — that’s another $9K in benefit vs. my pro forma
Despite making a change a few years ago to increase my budget for maintenance & repairs, I have still managed to exceed those budgets (by a small margin in 2023, and a large margin in 2024.) Still, I’m going to stick with these budgets for another year, to see whether 2024 was an outlier. I certainly hope it was!
Rate of Rent Increase
Each year, I look at how much I was able to increase rents in the course of the year. Rents must increase to make properties profitable in the long run. Why? Because all costs other than my mortgage — such as property taxes, insurance, and repairs — are certain to go up over time, so rents need to (at least) keep pace with those increasing costs.
In my portfolio, my property manager is responsible for leasing vacant properties, and renewing existing tenant leases. Therefore, the rate of rent increase is really a way to measure how well my PM has managed rents across my portfolio — though of course it also reflects larger market forces, and in some cases my own decision to freeze rents for certain properties.
My rent increase target is 2%. That may not sound like a lot, but it’s the figure I always use when modeling long-term returns for a property — so anything more than that is icing on the cake.
So — did I meet my 2% target last year? Here’s a look at where my rents were in January 2024, and where they are now a year later:
Overall, rents across these properties increased 3.6%, which easily exceeds the 2% inflationary target. This is slightly less than last year (4.6%), but I’ve achieved solid rent increases in every year so far:
2020: 3.4%
2021: 4.6%
2022: 10.2%
2023: 4.6%
2024: 3.6%
A typical rent increase at an individual property is ~4%, but there are a few notable outliers to explain:
Larger increases were achieved in a few properties where newly-placed tenants replaced older ones (Property #7 and Property #13). However, rent fell at Property #12 when a new tenant was placed.
Several properties had no change in rent. This is usually due to a 2-year lease, but in two cases (Property #14 and Property #16), we froze rents because the tenant was already at or above market rent.
A2 Change in Equity
While cash is king in rental property investing, appreciation is still part of the equation. Particularly when using leverage, small increases in home prices can mean big returns — you capture all the appreciation, even if you’ve only put 20% or 25% down on the house. You also get the paydown of mortgage principal on those properties, yet another way to create positive returns. (Further reading: I published a detailed article this year on Cash Flow vs. Appreciation.)
Capital expenses must be considered in this section as well. As I’ve argued before, capital expenditures are not true expenses, and are better understood as increases in the cost basis of the home; therefore, CapEx reduces your appreciation, not your cash flow. Here is where that reduction in appreciation will come into play: if the value of the home goes up $5K, but I spend $5K on a new furnace, then I haven’t really gained anything.
Let’s look at each of these pieces that are part of the equity calculation — true appreciation, mortgage paydown, and CapEx — and see where those numbers landed in my portfolio last year.
True Appreciation
This one is pretty simple: how much did the value of each home increase in the last year? I track home values using the Zillow Zestimate, which has its flaws but it is nonetheless a straightforward way to see changes over time, and takes my own personal bias out of the equation.
Just like in 2023, home prices were relatively flat again in 2024. Let’s compare my home values now to where they were a year ago:
Overall, my home values increased by about 1% last year. This recoups the 1% drop I experience last year, but the long-term gains are still quite significant thanks to the rapid home price increases we saw post-pandemic. Here is the last 5 years of appreciation I’ve seen in my portfolio:
2020: 12.9%
2021: 33.5%
2022: 10.7%
2023: -0.9%
2024: 1.0%
Prices continue to be relatively stable, so I wouldn’t expect to see a large shift either way in 2025 — but we’ll have to wait and see. My long-term models only ask for inflationary increases, so anything 2% or higher I’d be happy with.
It’s interesting that we see much less “herding” in this data than we did years ago; Zillow’s home price algorithm now has more sensitivity by neighborhood and property than it did, say, in 2020’s annual checkup.
Mortgage Paydown
Home equity also increases each month on leveraged properties due to the loan principal slowly being paid off. This is the portion of rental property returns that is pretty much guaranteed — and it accelerates over the life of the loan.
Here’s a picture of the reduction in loan balances I experienced in 2024, which added another $26K to my annual returns (you’ll notice that four of the properties have no mortgages):
It sure is nice to see your loans melt away over time. This is one of the numerous reasons why conventional mortgages are your precious “golden tickets”!
The percent reduction of each loan is a function of the loan’s interest rate — the higher the interest, the lower the percent paid off in the early years of the loan.
The maturity of the loan also matters: because mortgage payoff accelerates over time, older loans (mostly toward the top of this list) tend to have larger payoff percentages than the newer loans at the bottom.
Capital Expenditures
While I have MORE equity due to appreciation and mortgage paydown, I have LESS equity due to capital expenditures, which increase the cost basis of the property — in other words, they increase my cash invested into the house.
My capital expenditures for last year were just over $62K, nearly triple what I’ve spent in any previous year. This huge outlier in CapEx is one of the biggest stories of 2024 in my portfolio. Though my cash flow (as measured above) was passable, I had to put more than half that cash flow back into the portfolio in the form of CapEx. Which definitely hurts.
Here is the annual trend in CapEx:
2020: $10,882
2021: $16,915
2022: $21,772
2023: $22,468
2024: $62,039
Here’s the long (LONG) list of CapEx by property in 2024:
Property #2: $3,267 for new LVP flooring (completing work that was started in 2023)
Property #3: $11,173 for new roof and new LVP flooring in the bedrooms
Property #5: $5,287 for new LVP flooring in the bedrooms, and new security doors
Property #7: $23,874 for a new roof ($15K for this roof due to it being a complex roof system, and having to replace the entire roof deck and the carport roof); also new HVAC ducting and new subfloor
Property #10: $5,120 for a sewer replacement and tree removal/landscaping
Property #11: $1,400 for a new water heater
Property #13: $4,107 for new countertops, new dishwasher, and exterior paint
Property #14: $2,497 for a garage door replacement
Property #17: $3,762 for new LVP flooring (water damage from HVAC leak)
Property #22: $1,550 for a new water heater
Individual components and projects did not cost markedly more than they have in the past — there were just a lot more of them. At times, it felt like the perfect storm of expensive issues across my portfolio. In a sense, that would be good news: it would mean that 2024 was an unlucky outlier, and things will return to a more normal baseline in 2025 forward.
This begs the question: how do most investors model capital expenses? Some assume a percentage of the value of the properties each year, typically 1%. Others prefer to use a percentage of rent, usually 8% or 10%. Some prefer a fixed dollar amount per month per unit, such as $100.
Using each of these three methods yields slightly different values, but all of them are less than what I spent last year (but MORE than what I spent in previous years):
1% of home value: $3.7M x 1% = $37,000
8% of rent: $367K x 8% = $29,400
$100 per unit per month: 26 x 12 x $100 = $31,200
So…how do I feel about the huge CapEx costs in 2024? Despite the financial pain of it, all the work was needed, and improved the properties to make them more valuable and more rentable. So I’m glad the work got done. Also, I know this is a perfect illustration of the normal ebbs and flows in the rental property business; it’s a long-term game, and there will inevitably be some rough terrain to navigate.
Also, higher costs in 2024 balance out lower costs in earlier years. If you look at the last five years, I’ve invested a total of $134K in CapEx, or about $27K per year. That’s very much in line with normal/expected totals, so I think it’s quite reasonable to assume that 2024 was an outlier, not the start of a trend.
Total Change in Equity
Now let’s put all of these pieces together — appreciation, mortgage paydown, and CapEx — and calculate the total change in equity for the year:
As you can see, my total equity barely changed, increasing just over $2K. Let me also explain the two percentages I calculated here:
Equity ROI: Compares the total change in equity to the value of the property at the beginning of the year.
Equity RoC: Compares the total change in equity to the total cash invested into the property.
Said a different way, my total equity across these 25 properties increased at a rate of 0.1% relative to their value at the start of the year, and at a rate of 0.2% relative to the amount of cash I have invested in the properties.
The results here are mediocre for the second straight year. The combination of stagnant home prices and significant CapEx combined to hurt my numbers here. Despite those headwinds, though, I still managed to tread water in terms of equity, which I consider a win (or at least a hard-fought draw.)
Plus, I’m in the fortunate situation of achieving such large equity gains since the pandemic that several years of lackluster equity growth would hardly make a dent.
A3 Total Returns
To calculate total returns, we’re simply going to add together the cash flow and equity portions that we’ve already calculated. Total returns is an important number — particularly your rate of total returns on cash invested — because that’s what you would mentally compare against other types of investments. For example, the stock market has historically returned ~10% total returns (before adjusting for inflation); if your rental properties are yielding total returns on cash of 10% or more, then you can assume that you’re beating the stock market. (Yes, I know that doesn’t include real estate transaction costs, taxes, and other factors — but my epic Stocks vs. Rental Properties article contemplates ALL those factors, if you want to dive deep into that perennial debate.)
Anyway, here’s what my Total Returns look like for 2024, putting together all the numbers that we’ve looked at so far:
Here’s how I calculated the three rate-of-return metrics above:
Total ROI: Compares Total Returns to the value of the property at the beginning of the year.
Total RoE (Return on Equity): Compares Total Returns to my total equity in the property at the end of the year.
Total RoC (Return on Cash): Compares Total Returns to the total cash invested into the property.
Or said a different way, my Total Returns across these 25 properties were equal to 2.8% of their value at the start of the year, 4.7% of my current equity in the properties, and 9.8% of the amount of cash I have invested in the properties.
This year, as in 2023, my cash flow drove nearly all of my total returns. And that’s just fine. Sure, equity gains are nice, but far more important to me is that the portfolio continues to meet its expected rate of cash returns, which provides the foundation for the financial and work freedom that I currently enjoy.
B Tenancy Results
The second large section of the Annual Checkup will be a close look at tenancy — specifically occupancy rate and tenant turns. While these factors contribute to the financial results that we’ve already calculated and reviewed, it’s important to break them out separately to understand them — just as the variable costs of maintenance & repairs can make or break a property’s financial results, so can your ability to keep your properties occupied with quality tenants.
Or, more accurately, your property manager’s ability to do so. Because my PM is fully responsible for keeping my properties occupied with strong tenants, this entire section is largely a reflection of their degree of success with this critical task.
B1 Occupancy Rate
This key metric is simply a measure of the percent of the time that your properties are occupied. In my pro forma modeling, I always use a 5% vacancy factor (assuming 95% occupancy), because I know that some percentage of the time I won’t be collecting rent on properties, such as when they are being turned between tenants.
So the question here will be: did my portfolio exceed the 95% occupancy goal that I budget for?
Calculating vacancy rate is pretty simple. Each combination of a month and property (i.e. October at Property #5) is a slot to be potentially filled, which serves as the denominator of the fraction. The number of slots that were, in fact, occupied, is the numerator. For example, if you owned two properties for a full year, that’s 24 “tenant month” slots; if the first property had no vacancy, and the second property was vacant for one month, that’s 23 out of 24 tenant months occupied. So your occupancy rate would be 23 divided by 24, or 95.8%.
One quick caveat: I count a property as occupied if I’m collecting rent on it, whether or not a tenant is actually living there. For example, in a lease break situation where I retain a 1-month security deposit after the tenant moves out, I count the property as occupied for that additional month. Conversely, if a tenant IS in place but I’m never able to collect rent for that month, then I count the property as vacant. This aligns with my pro forma modeling, which does not budget for vacancy in the strict sense of the word, but instead for months where rent is not collected.
Using this math across my 2024 portfolio, here’s what we find:
In total, these 25 properties maintained an occupancy rate of nearly 98%. And this isn’t a fluke — I’ve consistently achieved better than 95% occupancy:
2020: 98.1%
2021: 95.5%
2022: 98.8%
2023: 97.4%
2024: 97.8%
Blue highlights indicate periods of a tenant turnover. As you can see, I had five turns in 2024 (Property 18’s turn was included in last year’s report.) I’ll discuss these five turns in more detail in the section below.
Red highlights indicate evictions. There was only one true eviction, at Property #23. The eviction at Property #11 was canceled when the tenant got current on their rent — a happy outcome for all parties involved.
B2 Tenant Turns
Turning properties between tenants is a big driver of cost in any rental portfolio. They’re costly in several different ways: not only do you have to pay for the work to get the property ready for the next tenant, you’re also not collecting any rent during that period. (To add insult to injury, you also have to pay for utilities and lawn care during the turn!)
Proper management of tenant turns can therefore be critical to ensure the success of rental property investments. There are three primary objectives when it comes to turns, and they’re all worth monitoring in my annual checkup. In a perfect world, I want turns to be:
Infrequent. By screening tenants properly upfront, providing them with a quality home, and responding professionally to any issues they’re having, my PM can make it more likely that tenants will stay longer, which decreases the number of turns I have to do in any given year.
Short. If turns must occur, I want them to be as short as possible. This is a measure of how efficiently my PM can complete the rent-ready work, and get a new tenant in place.
Inexpensive. If the home was maintained properly during the tenancy (by both the tenant and the PM), and if the property was up-to-standard beforehand, then turns should be relatively cheap; if not, they can get quite costly.
Let’s see how well I achieved those three turn objectives in 2024.
Frequency
How often should you expect to turn a property? My original expectations were for tenants to stay at least 3 years on average, which would mean that in any given year, I should expect to turn less than a third of my properties. However, based on six years of experience with my portfolio, I’m increasing those tenancy expectations to at least 4 years on average, meaning I should expect to turn less than 25% of my properties in any given year. We’re examining 25 properties in 2024, so turning ~6 properties would have been an average year by this new standard.
Instead, I only turned 5 properties. This is lower than anticipated, and continues a trend that I observed in the last three years. This indicates that my tenant “churn” has been much slower so far than my baseline expectations, which is great news for my occupancy rates and overall performance of my portfolio.
Duration
Were those five turns performed efficiently? Let’s take a close look at them:
These turns are reasonably efficient, and an improvement over 2023. In general, I’d say that any turn completed in less than 60 days is great. Only when the turn stretches into its third month would I start to become concerned. My average this year (depending on exactly when the new tenant moves in at Property #5) is ~56 days, which is pretty good.
Each step of the process was generally done in a timely fashion: delivery & approval of the scope of work within about a week; completing the work within 4 weeks after that; and placing a tenant within 4 weeks of the completion of work. So there are no specific learnings to apply to turns in 2025, we just need to keep to this schedule.
Cost
I expect a typical turn to cost between $2,000 and $6,000 — any turn under $2,000 is cheap, and one that exceeds $6,000 is expensive. Here’s a glance at the four turns I did in 2024, and their costs:
As we’ve already seen, turns were a significant driver of my maintenance expenses in 2024, just as they were in previous years. This is normal.
Some additional color on these turn expenses:
The turn at Property #7 was expensive despite having done an expensive turn there previously in 2021. This is an older house that has required a lot of investment to bring up to standard and maintain.
The turn at Property #12 was very cheap and efficient, just like the previous turn there in 2020. Conversely, this is a much newer home built in 2017, and it has been super-easy and cheap to maintain. (I wrote an in-depth article this year examining maintenance expenses in my portfolio, and one of the takeaways is that newer home tend to cost less than older homes — just as you would expect. Check out The True Cost of Maintaining Rental Properties.)
The other turns all fell into the normal expense range.
Conclusion
Finally, here is the dashboard for my portfolio in 2024, incorporating all the key areas and metrics we’ve reviewed in this article:
Here are my key takeaways from this annual checkup:
Maintenance expenses far exceeded expectations. This was partly driven by turns, but also by ongoing maintenance. However, this looks a bit worse than it truly was because of the falling tree damage at Property #6, much of which was reimbursed through insurance.
CapEx just kept coming. I spent nearly triple on CapEx compared to any previous year, and even compared to the higher ~$30K/year expectations that I set in last year’s annual report. Thankfully, there’s no reason to expect this to recur (though of course, it still might.)
Sound operations helped to cushion the blow of an expensive year. From occupancy rate to rent increases to management of turns, my PMs have been reliable stewards of my portfolio. There are always things to tweak, and I’ll continue to partner with them on those things — but overall, they are delivering reliable operations.
It seemed like a bloodbath, but in the end…it was OK. At several points this year, it felt like things were really falling apart in my portfolio. While the final numbers do confirm that this was my toughest year so far, it wasn’t THAT bad: I still made nearly 10% total returns on my invested cash, and 8% on my equity. If that’s a BAD year, I’ll take it. And this reinforces the single most important skill a rental investor has: the ability to keep your eyes focused on the long-term horizon, and weather the short-term storms that the business will inevitably throw at you.
About the Author
Hi, I’m Eric! I used cash-flowing rental properties to leave my corporate career at age 39. I started Rental Income Advisors in 2020 to help other people achieve their own goals through real estate investing.
My blog focuses on learning & education for new investors, and I make numerous tools & resources available for free, including my industry-leading Rental Property Analyzer.
I also now serve as a coach to dozens of private clients starting their own journeys investing in rental properties, and have helped my clients buy millions of dollars (and counting) in real estate. To chat with me about coaching, schedule a free initial consultation.
