October was a great month, and it had a different focus than any other month this year.
In October I decided to focus on our personal finances.
We have never considered ourselves to be frugal people, and have never used a budget in our personal or business finances.
I could write an entire post on this topic, but it all boils down to my belief that what you focus on expands. So if I were to focus on cutting expenses and budgeting, the focus would be taken away from increasing our passive income streams, which is the path that we took to achieve financial freedom.
Although, every now and again I like to do a “spring cleaning” of sorts and review our personal finances and look for ways to increase our income steams and occasionally look for ways to be more efficient with expenses.
As a small business owner I’m responsible for maintaining life/auto/homeowners/health/disability insurance, a retirement plan, wills & trusts, health care directives, HSA’s, LLC’s for our rentals, S Corps for our businesses, annual tax returns, quarterly tax payments, payroll, payroll taxes, utility payments, property taxes, mortgage payments, P&L’s and a ton of other stuff that I can’t even think of after going through that entire list.
Rome wasn’t built in a day and neither was setting all of this stuff up. So I tend to spend more time on the proper set up so that I can move on to the next piece of the financial puzzle.
So in October I went through all of our finances and found some missing pieces and discovered some opportunities for improvement.
Switching phone carriers from AT&T to T-Mobile – $110 per month savings
We are currently paying $220 per month for two iPhones and two iPads. My phone and the two iPads are paid off, but my husband has a newer iPhone since leaving his old one on the bumper of his truck after leaving one of our rental properties. It was later sold off to some random person who then tried to ransom it (which we didn’t go for).
T-Mobile has a newer plan that is $120 per month (including taxes) for unlimited everything for two lines. It also includes Netflix which we currently pay $10 per month for.
Starting an HSA
Like almost everyone I know, health insurance premiums for 2018 have gone up.
Ours went from $567 to $716 a month for the highest deductible/least coverage plan. Mr Money Mustach’s blog post about increasing insurance premiums had me thinking for a second about paying the penalty and self insuring, but instead I found another solution that is less risky – setting up an HSA.
Since my real estate sales business pays for our health insurance premiums, the HSA will help offset the out of pocket expenses. Since this is still new to me I am not going to even attempt to explain, so if you’re at all interested check out the Mad Fientist’s epic blog post.
Rent out land to tiny house people – Possible $600 per month extra income
In early October I had an idea that we would build a tiny house on wheels and rent it out on Airbnb on a section of unused land at our property in Snohomish, WA (40 minutesish North of Seattle).
I found a few tiny house listings in peoples backyards on Airbnb so I did some research and based on their booking calendar and nightly rates they seemed to be raking in the dough.
The only challenge was finding the time to build a tiny house.
Travis is pretty busy working part time for a friend who owns an excavation business, and he hasn’t even touched the 1960’s ford truck that he purchased last year as a side restoration project.
So, my next best option was to list our land for rent on tryittiny for people who already owned a tiny house, but needed a place to park it.
Based on the rates in my area, I’m hoping to get $600 per month in tiny house space rent until we find the time to build one.
Using the Birch app for reward hacking
I recently discovered the Birch Finance App, and have been obsessed with it.
Running multiples businesses, owning rentals and just paying a lot of bills in general means I had to get pretty creative to be able to collect rewards to pay for our travels.
I have the capital one Venture Card, the Alaska Airlines VISA Signature, the Capital One Spark Card and the BankAmericard Visa Signature cash rewards card. I use each card for different bills so that I can easily keep track of expenses, and earn rewards along the way.
The Birch app tracks your rewards and helps earn more by being more efficient in using certain cards for certain transactions.
In October I missed out on $147 in rewards by using the wrong card when I could have used a different card for more rewards.
Best of all, Birch is free!
Moving on from the personal finance updates….
The fourth week of October I attend FinCon, a conference for people in the financial services space, mostly bloggers, podcasters and media companies.
I wasn’t really sure what to expect, I am a frequent attendee of annual real estate conferences but I had never attended a “personal finance blogger conference”.
The first night there was a niche group round table, and I instantly made connections with some amazing real estate investing bloggers! A small group of us ending up hanging out almost every night talking about the different ways that we use real estate to build wealth and passive income, and I am excited to share that everyone I asked agreed to an investor interview! Be on the look out for those to be published soon.
New Construction Project Update
The other major milestone that happened in October was the submittal (technically resubmittal) of our new construction project.
Super quick timeline/Cliff notes version on this project:
- I Purchased two lots on January 30th 2017 in Everett, WA. One lot had a single family home, the other was vacant and zoned multi-family
- In February we had both properties surveyed, which was required to submit a building permit. We discovered that the single family home was over the property line by 1.6 feet, which meant we had to do a boundary line adjustment
- We went to work renovating the single family home for resale with the plan of building a fourplex next door. In May we submitted plans for a four plex but were turned down due to one small detail – parking is not allowed in front of a multi-family building.
- We had to go back to the drawing board and instead found a loop hole which allowed us to build the same exact floor plan with parking in front, so long as we built two duplexes side by side. This required us to go through a different set of approvals, and we had to get a geotech to do a soils analysis, and hired a civil engineer to do a drainage report and drawings for frontage improvements, utilities and storm.
- On May 10th we listed the single family house for sale, accepted an offer 18 days later and closed on July 3rd.
- On October 31st we finally had the preliminary plans, civils, drainage report, SEPA checklist and the master permit application submitted to the county for the first review.
We are now waiting for the first review comments, which should be completed in December. After that we have to address the mark ups, resubmit and then wait for construction approval to build frontage improvements before we can start on the buildings.
Having built many properties before the permitting process is not new to me, however we have never used this specific project type to build multiple buildings on one lot. Now that we’ve gotten this far and know what is required to submit I am looking for more projects where we can build multiple duplexes on one lot and maximize the return on investment.
In October I made my first ever investment into an apartment complex through a syndication deal using my self directed 401k. I had $30,000 sitting in my Wells Fargo brokerage account since I’ve been letting my Peerstreet loans get paid off, so I was looking for another passive investment to make.
As luck would have it, Lane from Simplepassivecashflow.com had sent over a syndication offering for a 192 unit apartment complex buy in San Antonio. Their offer was for an 8% preferred rate of return, and offered a decent investor/sponsor split. I went through all of the details and decided to go ahead and invest their minimum investment amount of $25,000 using those 401K funds.
That deal should close in December and I’m excited about my teeny tiny percentage of ownership in an apartment complex!
The rest of the portfolio had a few repairs to be made, though they were minor.
A leaky toilet was repaired at our mount vernon duplex, and in Indiana we finally took care of the moldy cabinet issue which was caused by my forgetting to have the furnace lit when gas was turned on.
We also had new tenants placed on our Arlington property after asking the tenant who moved in in June to vacate due to several issues. On the bright side, we were able to get a higher rent this time so instead of $1250 per month we are collecting $1300 for that property.
I did not make any offers on properties in October, though my agent partner in Indy found an interesting 4plex with an extra lot that is zoned for 16 units for only $155k.
That’s pretty much the entire month in a nutshell, see below for the income break down.
Rental Portfolio Passive Income
Peer To Peer Lending Passive Income
I did receive my interest payment with Instalend but had reported it in last months report so I left it out of this months.
I’m still testing the waters with InstaLend. Their rates are really great, but they are a newer company and after going through two foreclosures with Peerstreet I am proceeding with caution.
If you haven’t heard my experience with Peerstreet, here’s the cliff notes version. The largest amount I invested was in the first loan for $17,621 in September 2016. I only received one interest payment before the loan became delinquent. For a year they had to deal with a bankruptcy, then the foreclosure, and an eviction. As of this week they evicted the tenant so now the property can be prepped for sale. I’ve lost out on $1680 in interest on this loan which has really thrown off the return on my entire portfolio.
I have one other loan that is in the foreclosure process, and I haven’t received an interest payment since June. Fortunately that is only a $2,500 investment.
All Passive Income
Yet again my rental portfolio passive income trumps all other sources of passive income.
Keep in mind, I’m only sharing sources of passive income here. I do earn income from other businesses BUT the passive income is what’s important and I am hoping to turn the other business income into strictly passive income and when that day happens it will show up here 🙂
Net Worth Update $1,785,321
All in all October was a great month, I made some positive changes to our personal finances, met some awesome people at FinCon, got my new construction project resubmitted, and am having fun along the way to becoming a better version of me every month!