Rental Income 2016-02

Below are our monthly updates.  (disclaimer: I am pulling the data out of our Quicken system. I may on occasion make category revisions, therefore the month by month updates may not tie exactly to the year to date or year end totals.)

Gross Revenue : +$2,695

Duplex Unit#1: $1,375

Duplex Unit#2: $1,320

House: $0 – This property gets a tenant mid March

Expenses : -$3,766

Duplex: -$1,919

This breaks down to $1,885 in mortgages, and $33 in painting supplies.

House: -$1,848

Our House payment was $1,452 split between a first and second mortgage.

During the month we continued to get the house ready for rental, we spent $120 on paint and painting supplies.  We spent $41 on cleaning supplies.  And spent $173 on smoke detectors and other electrical supplies.

Utilities during the month were $62.

Monthly Profit : -$1,072

Duplex: $776  – Satisfied

House: -$1,848 – not satisfied…..continued duh

The property is almost there, it definitely took a lot longer to turn than it should have.  One of the difficulties in buying and then moving every year or so is that it is draining to simultaneously move/unpack in your new house while spending effort to get your last house ready to rent.  Especially as in this case we bought in November right before Thanksgiving and Christmas.  In addition we did some remodeling to our new house and then did some painting and other work on our old house.

The good news is that March, knock on wood, is shaping up to be a lot better and we should hopefully see the earnings/cash flow of these rentals take shape.

Advertisements

Rental Income 2016-01

As I may have mentioned in other posts on my blog, we own a couple of rental properties.

We bought a Duplex in the summer of 2013 and lived in one of the two units for a year.

In the summer of 2014, we bought our second property, lived in it a little over a year and in the fall 2015 bought a third house that we just moved into.  Our second house was rented as of March.

Below are our monthly updates.  (disclaimer: I am pulling the data out of our Quicken system. I may on occasion make category revisions, therefore the month by month updates may not tie exactly to the year to date or year end totals.)

Gross Revenue : +$2,695

Duplex Unit#1: $1,375

Duplex Unit#2: $1,320

House: $0 – This property gets a tenant mid March

Expenses : +$6,619

Duplex: -$2,019

This breaks down to $1,885 in mortgages, and $134 in expenses.

$6.64 in mailing expenses, $21.48 for a new fence latch, $1.02 for a light switch and $104.42 for water/trash.

House: -$4,599

One of the lessons I have learned as a landlord is that it is really expensive to turn a property.  Between the vacancy, the cleanup , repairs etc.  The costs always skyrocket.

Our House mortgage was $1,452 split between a first and second mortgage.

In Jan we spent $300 on a make ready cleaning, that included a generous tip since our housekeeper cleared her schedule to get to our place.

We had some electrical work done $1,125, bought some of the lighting supplies, cans, covers, pendents & bulbs $263.  A new mailbox $70.  A new dryer vent $39.  A couple of new appliances including a dish washer $910 including installation. Towel racks $243, respirators $27 (we did some cleaning and painting).  Utilities $170.

We have a premium property in an up and coming neighborhood, so we spent a fair amount to get the house ready to rent.

Monthly Profit : -$3,924

Duplex: $676  – Satisfied

Rent was paid on time, minor repairs and this profit reflects cash out of profit.  Ie it ignores the pay down of principal, depreciation, tax benefits etc.

House: -$4,599 – not satisfied…..duh

Certainly not a positive month for the house.  But we are looking at some up front expenses, and I think this house will cash flow very nicely in the future.

 

 

 

.

Net Worth 2016-02

Total Net Worth in February: $313,826 ($8,943)

February was a solid month.  The stock market particularly KMI rebounded, and we didnt have a ton of major expenses.

Assets: +$0

We continue to take a conservative view of property price appreciation, and have made no changes to the listed values of our real estate holdings.

I haven’t typically updated the value of the properties.  But I think going forward I will update our assets a couple of times a year and will probably do a full update next month.

Net Cash Accounts: (-$1,168)

Our cash balances were down slightly.  We did a lot better on spending and our credit card balances (which we pay off in full every month) were down $1,000.  Our checking account was down $2,500 as we made an extra payment to our personal loan.

Net Cash Rental Accounts: ($476)

We were slightly positive on our rental accounts even though we continued to spend money getting our house ready to rent.  Great news, we have new tenants that have signed a lease and will be moving into our house in March.

Hopefully with both rentals fully leased, we can see some improvement in this area over the next few months.

Retirement accounts: ($4,300)

The month was solid, KMI, knock on wood seems be turning the corner and rebounded from $15/share back to $18.52.   I still like the company for the long run, it has fantastic assets but its been tough to hang in there over the last year or so.

During the month, we moved about 1/4 of the cash in our 401K account into our other funds.  The market seemed oversold and each time we get a 10% pullback I try to move money from cash into equities.  In addition I turned off new contributions to the Vanguard Healthcare fund.  The Healthcare fund has been a huge winner over the last few years, but I believe this fund is at risk from being targeted in this political cycle.  Pharmaceutical companies  could be challenged for a while.  I don’t plan on selling anything in the fund, but its time to put contributions in other places. (Value, S&P, Small Cap)

Liabilities: ($5,335)

This was a much better month.  We were able to pay down our personal loan by $4,239 in Feb.  Hopefully we can have it paid off in March or at the latest in April.

The remaining improvement (approx +1,100) was just due to regular amortization on our other loans.

How did you do in Feb?

Net Worth 2016-01

Total Net Worth in January: $304,882 (-$21,727)

January was one of our worst months in years from a ‘Net Worth ‘ perspective.  The stock market was terrible, we had moving expenses and additional rehab expenses.

Assets: +$0

No change in this area.

We continue to take a conservative view of property price appreciation, and have made no changes to the listed values of our real estate holdings.

I did a back of the napkin calculation.  We likely have our 3 properties listed as much as $100-110K less than they are worth.  Duplex $20-25K light, Old House $60-70K light, New House $20K+ light.

I don’t update the properties because of the difficulties of identifying market value without selling them and we aren’t in the market to sell.  Plus there is a lot of transaction costs to buy or sell a property.

 

Net Cash Accounts: (-$4,196)

Our cash balances were down this month as we paid about $15,000 towards house remodeling expenses, Plus a couple thousand more went to moving expenses.  We offset this by taking on a $10,000 personal loan.

Net Cash Rental Accounts: (-$2,492)

We were negative this month as we spent money to get our old place ready for rent.  We bought a dish washer, paid for a make ready cleaning etc, replaced some hardware like door locks, towel racks etc.

Unless we have something unexpected happen, I would expect this area to be a lot more positive over the next few months.

Retirement accounts: (-$6,113)

Its been a tough few weeks, our contributions have been offset by continued losses in the market.  Not much is going well.

We bought some more Disney, and in our 401K account we move some money (5% of the total) from cash into mutual funds.  If we get down 20% off of the highs, we will move another 5% of cash into the market.

I know the market will return, and we try to be counter cyclical to the market, ie move money in a disciplined way out of cash and into the market when the market is doing poorly, and trim a bit of our high fliers/winners in an up market.

Liabilities: (-$9,195)

Ok….Not happy with this one.  We had a cost overrun with our rehab projects.  Honestly it was on us, during construction we found additional things and chose to get the house into a live-able condition before we moved in, we ran over and decided to take out a short term personal loan (3 yr, $10K).

I think taking out the loan was the right thing to do, and overall we have added a lot of equity to this house.  We have a couple of additional things left to do, one of our bathrooms is only roughed in.  We need to install tile throughout, install fixtures and add a vanity/countertop.  In addition we need to install new flooring.

Our 2016 goal is STILL to reduce this category  in 2016.  I hope we can have this personal loan and 401K loan paid off this year (assuming we can get our old house rented).  I will be really disappointed if we dont make some real headway in Feb in paying things down.

2016 Goals

Part of the reason I created this blog was to hold myself accountable to financial and personal goals.

With that, here are mine for 2016.

  1. Hit 400K in net worth.
  2. Payoff 50K in debt.  We would like to payoff the 401K loan and most of the loan listed as Mortgage #2.
  3. Max out Roth by the end of the 2016 tax year (some of this may actually happen in 2017)
  4. Get our wills and other documents in order.
  5. Lose 30lbs.
  6. Have a successful marriage.  Don’t get me wrong, my marriage right now is really good.  But I don’t ever want to take it for granted.
  7. Learn to install tile.  OK, a random one.  In an effort to be budget conscious with our new property, we decided to do the tiling work for a bathroom that we had redone.  We have two other baths in our house so we have some time to do the work ourselves on this one.
  8. Take a trip.  (see #6), my wife and I really haven’t gone on any ‘real vacations’ since we got married.  Although we regularly go back to the Midwest for the holidays to see family, we really haven’t taken a vacation just to take a vacation IE a beach, a winery, a foreign country, a national park.  Hopefully we can change that this next year.
  9. Be successful in my career.  Honestly, knock on wood, I feel pretty good about things.  I have been with my current company about 8 years now.  I know the ropes, get along with my boss, like my company, the work life balance and am comfortable with my compensation.  However my company is merging for the second time in 12 months, so there is a chance that I could end up looking for a job.  Hopefully things work out.

What are your goals for 2016?

Net Worth 2015-12

Total Net Worth in December: $326,610 (-$11,823)

December was a tough month, we had a really bad downturn in Kinder Morgan.  In addition we spent a significant amount of money on rehabbing our house.

Assets: ($757,556) -$2,974

This month, I updated the KBB values for our autos, something that I hadn’t done in a while. Also, I dropped the assumption for the quality of the cars (good vs. very good condition).

We continue to take a conservative view of property price appreciation, and have made no changes to the listed values of our real estate holdings.

Net Cash Accounts: (-$3,419)

Our cash balances were down this month.  We had Christmas expenses, travel, gifts etc.

In addition, we paid just under $6,000 towards house remodeling expenses. I would expect about $10-15K more will be paid out in January as we finish up the work we are having done.

Net Cash Rental Accounts: ($1,677)

Cash for our rentals was up this month offset by some repairs/improvements.  As an example we installed some additional security lights, bought some new light fixtures and a couple of new faucets.  Short term we are investing our cash flow in repairs and upkeep.

Our long term strategy is to have well maintained properties that are easy to rent and where we can continually attract high quality tenants.  Over the long term we should be able to charge higher rents, have fewer vacancies and eventually earn more money.

Retirement accounts: (-$8,475)

Its been a tough few weeks, our contributions have been offset by continued losses in KMI.  There may be some additional downward pressure, but over the long haul, they have some of the best assets in the business, and KMI will benefit from the long term trend to natural gas.

Liabilities: ($1,368)

The liabilities went down due to our regular monthly payments. Our 2016 goal is to reduce this category by $50K

Net Worth 2015-11

Total Net Worth in November: $338,432 (+$21,147)

It was a great month, ok maybe I am a little biased, we closed on a new house in November.  We broke thru the $330K mark for the first time.

Assets: ($760,530) +$205,000

We added a new house this month.  Our intent is to move in (after we do some improvements), and then lease out our last property.  I am assigning a reasonably aggressive number to the value as $205K is more than we paid.  (But less than our real estate agents estimate).

Otherwise we are taking a conservative view of property price appreciation, we made no changes to the listed values of our other real estate holdings.  The value we have listed for all of our properties combined is conservative.

We used the same KBB values on our vehicles as last month.

Net Cash Accounts: (-$9,255)

This section contains the balances of all of our cash accounts outside of our rental property.  Emergency funds, banking, savings accounts, HSA, FSA and credit cards. We pay the credit cards off in full every month, but the balances obviously change from month to month.

Our cash balances went down due to closing on our house.  This was offset by increased savings.  I expect it will down more in December as we pay for some home improvements on the new place we bought.

Net Cash Rental Accounts: (-$1,426)

Cash for our rentals was down this month.  We spent some money to buy some demo tools to take down a wall and bought some locks, air filters and other misc items, In addition we paid for pest control and water/trash.

Retirement accounts: (-$144)

Its been a tough few weeks, our contributions have been offset by some very bad losses in KMI.

I still have a lot of long term faith in Rich Kinder (CEO of KMI), even after they cut the dividend.  I think it is a broken stock not a broken company.  And having traded in the midwest, I know NGPL, and why it is an excellent pipeline and key to the midwest. Especially as coal plants continue to be shut down and replaced with natural gas.

I have been very wrong so far, but we will stick it out.

Liabilities: (-$173,030)

The negative is entirely due to the addition of a home loan.