Nine rental properties, nine very different personalities. For years I judged which ones were winners by gut feeling and how much cash happened to be sitting in my account at the end of the month. Then one January I finally sat down and calculated the real profit per property, and found that two of my nine were quietly losing about 18,000 yen a month once I factored in maintenance reserves and vacancy. That was the year I built the simple tracking system I still use today.
If you own more than one rental, you need a way to see profitability property by property, not just as one blurry combined number. Here is exactly how I do it, using nothing fancier than a spreadsheet and about 20 minutes a month.
Why I Stopped Trusting My Gut
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Gut feeling is a terrible accountant. My oldest property, a small two-unit building I bought 15 years ago, felt like my best performer because the rent checks came in like clockwork. What I was not accounting for was that the roof was 30 years old and I was quietly setting aside almost nothing for the repair that was coming. Meanwhile a newer property I considered mediocre had almost no near-term maintenance risk and a much higher real margin. Gut feeling had the ranking backwards.
The Simple Spreadsheet Method I Use for All 9 Properties
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I keep one spreadsheet with a tab per property. Every month I enter four things: rent collected, every expense (even the small 3,000 yen hardware store run), any vacancy days, and a set-aside amount for future repairs equal to roughly 5% of gross rent. At the bottom of each tab, one formula spits out net monthly profit. Once a quarter I stack all nine tabs side by side on a summary sheet so I can rank them from most to least profitable at a glance. It takes maybe 20 minutes a month to enter data and about an hour each quarter to review the rankings.
The Numbers I Track Every Month
Not every number matters equally. Over the years I have narrowed it down to the handful that actually predict whether a property is healthy:
- Gross rent collected versus rent scheduled (this catches late payments and vacancy immediately)
- Total repair and maintenance spend for the month, no matter how small
- Property tax and insurance, divided by 12 so they do not distort a single month
- Loan principal and interest, if the property still carries a mortgage
- A 5% maintenance reserve set aside even in months with zero repairs
- Net cash flow after all of the above
The reserve line is the one most landlords skip, and it is the one that saved me from a nasty surprise when a water heater failed on property number 4 and cost 210,000 yen to replace. Because I had been setting money aside monthly, it barely registered as a bad month.
Cap Rate vs Real Cash Flow
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Cap rate gets thrown around a lot, but it only tells you about the purchase price relative to income at one point in time. It does not tell you whether a property is profitable to run today. I calculate cap rate once, when I buy, using purchase price and expected net operating income, and then I basically ignore it. What I watch every month instead is real cash flow after the reserve is set aside. A property can have looked great on a cap rate of 8% at purchase and still be a drag five years later if repair costs crept up faster than rent did. Two of my properties are exactly this story: strong cap rates on paper in 2014, mediocre real cash flow by 2020, until I renegotiated a management task and brought both back to roughly 12% net yield.
Red Flags That Tell Me a Property Is Quietly Losing Money
A handful of patterns show up months before a property becomes an obvious problem. If repair spending exceeds the 5% reserve three months running, something structural is going on, not just bad luck. If vacancy days creep past 30 in a year, the rent is probably set too high for the area or the unit needs updating. And if net cash flow after the reserve drops below about 8,000 yen a month, that property is barely earning its keep once you account for the hours I spend managing it myself. When I see two of these signs at once on the same tab, I know it is time to dig deeper rather than wait for the annual review.
What I Do When a Property Falls Behind
Falling behind does not automatically mean selling. My usual first move is a targeted renovation, often something I can do myself over a weekend, like replacing worn flooring or repainting to justify a modest rent increase. If a property still underperforms after that, I look at whether self-management is actually worth it there versus handing it to a local agent for a percentage fee. Only twice in 15 years have I actually sold a property because the numbers never recovered, and both times the spreadsheet made the decision obvious months before I acted on it emotionally.
That is the approach I use across all 9 of my properties, and it is the reason I no longer get surprised by a bad year. The numbers tell the story long before your bank balance does.
Renovation Cost Reduction Checklist (60% Savings Method)
My step-by-step process management template that cut renovation costs by 60% across 3 apartment buildings over 15 years.
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15 years of landlord experience u00b7 3 apartment buildings u00b7 DIY renovations that saved millions of yen. Browse all articles at diytosan.com
