May Financial Update

This has been a whirlwind of a month. Our crashing investment accounts have been offset by home values, so we’re still over $3 million net worth. But those investments are very low; it’s the first time I’ve seen a negative in my 12-month performance history for my ‘401k.’

HELOC

A couple of months ago, we were standing outside playing with the kids when a neighbor walked by and introduced themselves. Being that we easily have $150k worth of equity in our house, we started talking about how we should open a Home Equity Line of Credit to be able to float a future purchase. The process was initiated, but not really started, when we made an offer on another house to be our personal residence. More to come on that. But we close on the HELOC today at $100k, which was the maximum she could do as an “administrative authorization” (for lack of a better term, and to pull on my government background), which essentially just meant no appraisal cost.

NEW HOME PURCHASE

We’re about 3 weeks in being under contract on a new house. We’ve submitted all our files to an online bank that we’re using as our loan, and we’ve locked our rate at 4.0% on a 5 ARM. Closing is expected to be 6/15. We’ll need about $75k or 80k out of the HELOC for closing on that.

We found out that our appraisal that was ordered for this house got cancelled. A quick inquiry to our lender and we found out that they decided our credit profile doesn’t need one! They’re going to refund us what we already paid, which was a pleasant surprise.

PART TIME WORK

I worked the weekends in April at the local racetrack. It’s good money and only required 8 days of me actually working. This meet’s experience was slightly different, and I didn’t enjoy it as much as the Fall meet, but I made more than I did in during that meet.

RENTAL UPDATES

We had a tenant abandon a property on April 1st, so that was a lost month of rent that we weren’t expecting. Our finances aren’t in a position that we need that money. It also helps that we don’t have a mortgage on the property. But we still put over $2,000 into the house (including two appliances) and a week’s worth of our time in turning it over since it was left in poor condition. We’ve been fighting Home Depot on getting a dishwasher delivered and installed, and that still isn’t resolved.

We had our usual suspects not pay rent on time. One did manage to pay in full (not the late fee though) by the 7th. The other I finally told that paying on the last Friday of every month is no longer acceptable, and it needs to change. She sent a nice email back, but we still haven’t seen a dime from them this month.

We had one rent increase go into effect; it went from $1025 to $1100. That also increases our property management cost by $7.50 going forward.

We had an insurance company drop us by not renewing us since they found out we moved out of state. We told them we have a property manager, so there is someone available taking care of the houses, but they didn’t care. Luckily, not all insurance companies have such a requirement, and our agent was able to find someone with nearly the same price that accepted a property manager.

We have officially paid off one of the loans that we had with our partner. We had intended to pay the loan off this month, on our terms. Instead, because the balance was about $400, the loan company took it upon themselves to use our escrow and close the account. We were purposely waiting until after escrow paid the taxes due this month, and now we need to scramble and figure out the tax payment.

NET WORTH

SUMMARY

We now commence a very busy time of life. We have several trips planned, we expect to turnover a rental that we’re kindly asking a tenant to vacate, and we have a lot of work we want to do on our new personal residence. Hopefully the turnover of the one house goes smoothly, we get the house that was abandoned in April re-rented, and that there are no more surprises in our rental world. We also had our AC go out in our 18 month old house, so here’s to hoping there are no more surprises in the personal expense world too.

April Financial Update

The market has recovered a good bit, so our net worth jumped. Our retirement accounts were at an intriguing low, but they’re back on track now. We also saw a few sales in the neighborhoods where our rentals are, so that increased our net worth based on the comps. We added a new property over the course of the last month as well.

NEW HOUSE IN OUR PORTFOLIO

We closed on a new house on March 24th. We worked on it for a few days, I held an open house, and we were able to get it rented as of April 8th. We had 16 days of vacancy. While showing it, most people were looking for a May or June start date, so we were lucky someone qualified for an April date. Back in 2016-2019, we were looking to follow the “1% Rule.” That means that if you buy a house for $100,000, your goal is to set rent at least $1,000 per month. This house isn’t even close. This market doesn’t allow for such a goal anymore because housing prices are soaring. The next goal would be to list for about $1/square foot. This house is 2100 square feet, but since the upstairs has smallish rooms and the basement is all open, we thought it wasn’t really worth pushing for $1/sf.

We bought it for $240k net, and ended up renting it at $1750. I wanted $1800, Mr. ODA wanted $1695, and when I went to list it, Zillow suggested $1750, so we went with that. Multiple people commented on how they appreciated the price, so we may have been able to get $1800 without an issue. I’m happy to have it rented, and I think these people are going to take good care of the house.

RENTALS

We put more money towards the house that we’ve been paying off, which is owned with a partner. We put our half towards it ($8,500), and it has a balance of about $600 now. The pay off quote required us to pay the anticipated taxes that will be paid out of escrow in May. We didn’t appreciate that, so we just went ahead and paid it down. We’ll let the May mortgage payment go through, wait for the taxes to get paid out of escrow in mid-May, and then pay it off. That’ll make 7 houses that are owned outright! But that also means I need to stay on top of insurance and tax payments.

We were just informed that one of our properties in Lexington that’s under a property manager hasn’t paid rent. She said it’s unlike them and that they aren’t even responding. She’s going to go to the house tomorrow to check on the situation. Since we’re paid a month after rent is received, this hasn’t affected us. A neighbor reported that they were moving out last month, but the tenant denied it. Perhaps they abandoned the property.

Once again, our two usual suspects didn’t pay rent on time. However, both of them actually made a better effort than they have been. One has paid this month’s rent in full, but has a balance of $286.31 (seriously…) to make up several late fees. I’m happy to waive late fees when it’s someone who communicates and isn’t always a fight to collect rent, but I’m holding this one to the balance owed. Another one told me that they wouldn’t pay until the last Friday of the month. I drafted an email to tell them that this is unacceptable because it’s been several months that they’re paying this late, and we need to work towards getting back to paying rent at the beginning of the month. Right after I drafted that, she sent half of this month’s rent. Better than nothing!

SPENDING CHANGES

Over the past month, we didn’t go out to restaurants very much. We haven’t been traveling because my family came into town for our daughter’s birthday party, and then I’ve been working on the weekend. Most of our spending went to gas (going back and forth to Lexington (half hour drive) multiple times per week!) and expenses to get the new house ready for a tenant.

I’m flying to my sister’s baby shower next month, so that another large and unusual expense on our credit cards ($250).

SUMMARY

We still have our state taxes to get paid. We went through the process of entering all our taxes, but we haven’t hit submit just yet. Surprisingly, we’re expecting a refund from the Federal side. The amount owed and the refund basically end up as a wash.

Our new property’s loan is a commercial loan, so it doesn’t get paid on the typical mortgage schedule, but on the 1 month anniversary of the opening. Therefore, the next payment is due on 4/24, and there’s no “1 month without a payment” type thing.

Clearly, our cash balance dropped significantly since last month because we had the closing. That was about $46k that we wired out, which was the expectation when we completed all the maneuvering with the cash out refinances in January. Our credit cards reflect our lower spending too, coming in about half what the balances were last month.

March Financial Update

We have been surprisingly busy around here. I’ve been juggling a few rental issues, staying on top of some billing issues, and trying to make it through a commercial loan process.

At one point, most of our loans were held by one company. That was a more simple life. Even though we’re down to 6 mortgages under our name, it’s through 5 different companies. I’m really struggling keeping up with them and getting in a groove after our most recent refinance. I’ve mis-paid things 3 times now. I’m always on top of our payments, but something just isn’t clicking right now for me. I just paid one of our mortgages due April 1 instead of changing the date to be an April pay date. At the moment, we have a buffer in our account because we’re getting to this closing next week, but we usually don’t, so hopefully I have this figured out now that I’ve made so many mistakes.

RENTAL PROPERTIES

LEASE RENEWALS

We had 3 properties process their renewals this past month. Each of them had cost increases to their lease renewal (875 to 950 effective 5/1, 850 to 900 effective 8/1, and 1025 to 1100 effective 5/1). We have another property that will have a renewal offer go out this week. Then we have 3 that will need action by the end of April because the leases expire 6/30, and one that will need action by the end of May because it expires 7/31.

MAINTENANCE

We had a tenant reach out to us that they found bugs in their bathroom tub. She sent pictures and, sure enough, they were termite swarmers. I have way too much experience with termites. I called our pest company, and they sent someone out for an inspection to confirm they were termites. Then I got a call that because we didn’t pay the annual fee to keep our warranty current for the last 3 years (we had the house treated for termites in February 2019 when we bought it because there were active termites and extensive damage by the front door that needed repaired), they could charge us $650 again. However, since we’re considered a business account, she’d be happy to let us back pay the termite warranty and they’re treat it. So I paid $294 for the treatment instead (split with a partner on this house). She also informed me that they had cut off the hot water to the kitchen sink because there was a leak. I don’t know why tenants don’t tell us these things right away! I had my plumber out there the same day, and he replaced the whole faucet. That was $378. That’s one of those charges that’s frustrating because we could have replaced the faucet on our own, but we don’t live there anymore. Oh well; it’s also a cost split with our partner, so that helps.

We had another tenant reach out saying that her kitchen sink drained slowly. She’s been with us since we bought the house and never asks for anything. She’s on top of communication and was super appreciative each time we agreed to renew her lease. We had done a huge sewer line replacement project at this house, so I was skeptical of the issue. It turns out there was a plastic fork lodged down there, but I just let it go (meaning, she’s then technically responsible for the cost). Our property manager let her know that if it happens again, she’s financially responsible, but we’ll cover the cost ($200) this time.

RENT COLLECTION

We FINALLY got the check for one of our tenants that had an approved rent relief application. They submitted an application in November to cover December, January, and February rent. By mid-December, they ended up paying December rent because they hadn’t heard (and the application expires, meaning their protection from eviction expires (not that I would have pursued eviction for this group because they’ve been great tenants for several years)). They received approval for 3 months worth of rent and 2 late fees on January 11. We received the check on March 4th. So frustrating in that process, but still better than an October approval and us getting those 3 months paid at the end of January.

We had our usual suspects not pay rent. On the one house, they didn’t tell us they weren’t paying rent for the longest time. Now, they tell us they’ll pay us on a later date. I let it go this month, but with them paying on the 23rd, that means we’re in a perpetual cycle of not getting rent on the 1st. We have a partner on this house, so I plan to address it next month if they claim another 3+ week delay in getting us the rent. On the other house, she let us know in February that she’d struggle to pay rent and she gave us random amounts throughout the month. I let her know she was still $106 short from February and that she was now in default of March’s rent, and I got no response. Then Mr. ODA had $1000 show up in his account on Friday. She still owes $371 between the two months, but at least we have the mortgage payments covered. She’s also the tenant that we plan on not renewing her lease because she’s caused issues throughout her tenure.

BUYING A NEW PROPERTY

We’re still in the process of getting through closing on a new rental property. We’re expecting to close not he 24th, so we’ll see how that goes. It’s a commercial loan, and it operates different from residential mortgage underwriting, so we’re in the dark. Communication has been next-to-nothing. We’re currently waiting on the appraisal to come back. That was our one hurdle to getting into the house. I said once the appraisal clears, then we (as the buyer) shouldn’t have any risk in getting to closing. Therefore, we were hoping to have the house painted before we close (I would do the painting), then we could refinish the floor and get the rest of the cleaning done the weekend after closing, and get it listed for rent for April 1. I suppose I wouldn’t be trying to get to the house before Friday, so I guess I can be patient and wait to see what happens with the appraisal for a few more days (even though the appraiser was on site last Tuesday, and I’ve never had it take more than a day or two to get the paperwork).

REFINANCE FOLLOW UP, STILL

We still have an issue with the mortgage that I ended up paying 3 times for the 2/1 due date. Our refinance was difficult, and the communication continued to be difficult after closing. I asked on 2/1 whether our loans had been sold yet because I was surprised I hadn’t heard. Usually, I see a note saying to pay the new company before the first payment, thereby not paying the first payment to that “first payment notice” place that comes with the closing documents. The company’s contact said to keep paying them because they hadn’t sold the loans yet. I didn’t open the attachments in his email because I assumed he was reiterating what he said in the email. Turns out, one of the loans was already sold, and I should have paid the new company. Well, I processed a paper check to go to a completely different company (started with a C, and I didn’t catch that I selected the wrong one in bill pay). Luckily, that company sent us our check back, saying they think our loan is closed with them and they can’t process the payment (thank goodness we once had a loan with the address I put in the memo line so they could clearly make a connection and say “we don’t want this!”). When I noticed my mistake on the 14th, I sent a handwritten check that I rushed to the post office at 4:55 to get post marked. In the meantime, I found out that I was able to set up an online account with the new company even though I didn’t have the loan number yet (they gave it to me over the phone). I paid the new company online to make sure I didn’t have anything on my record claiming I didn’t pay by the 15th and it was late. I figured I’d rather manage 3 payments being made than fight the credit companies to change my credit report. Well, the initial company cashed my handwritten check, but they still haven’t sent the money to the new mortgage company. They just kept telling me they have 60 days to get it to them, and I said that’s unacceptable that they’re holding my money. That was a week ago that I was told I’d get a call back, and I haven’t heard from them.

PERSONAL EXPENSES

Now that the basement is done, I had a strong urge to finish projects. There were several things that were starting but not completed. Those final punch list items always seem to take forever. I was impressed that Mr. ODA pushed to get some of the things in the basement done right away, even though they weren’t on a critical path. However, I didn’t uphold my end of the project by painting those things, so I got back to that. I mentioned several of the projects in a recent post, and I’ve done a whole lot more since that post. But all that to say, I’ve spent a lot of money in the last month. I bought a lot of supplies to finish off these open projects. I also had big purchases of cabinet hardware, a dining room table, a desk, and a wood. We haven’t done very much out of the house, so we don’t have a lot of other expenses than these projects, which means our credit cards are actually have the usual balances. We did book an AirBnB for a trip at the end of the summer with friends of ours. That was a big hit on the credit card for a week at the beach, but they reimbursed us for their half.

SUMMARY

It feels like I just keep lowering the balance in our investment accounts each month, but I went to look at February 2021 to see the total. Even though some balances have decreased, we’ve still contributed to the accounts, so overall they’re $21k higher than last year, which is encouraging. I guess I should also focus on the property values raising significantly. We’re over $500k higher than last year in our assets, and our liabilities (i.e., mortgages) are about 13k less than February 2021. We’re also still over $3M on net worth, even if we’re hovering right around that. We’ll add about $50k to our net worth by the end of the month, as long as we close on the new property on time.

Year in Review: Part 1

Just over a year ago, I decided it was time to put more effort into sharing what we’ve been through. When I’m looking to learn something new, I like to find examples of how other people handle it. I want to know the places they struggled and how they learned. I find it a better way to form my opinion than by reading an article that doesn’t have any meat in it, only providing an outline.

In the last year, I learned that blogging wasn’t as easy to keep up with as I thought it would be. I have a list of topics still to cover, so it wasn’t a matter of content. But raising two kids hinders my ability for an uninterrupted thought process to write an article, unless I get to it before they wake up.

The blog was started by Mr. ODA in 2018. He wrote a few posts, and then it sat for two years. I decided to pick it back up in January 2021. During 2021, we published 65 posts. Each month, I wrote a post about our financial update; I included any major expenses, how management of rental properties was going, and how our personal spending may have changed month-to-month. I shared our purchase of 11 out of 13 of our properties, our sale of one property, refinancing mortgages, paying off mortgages, renting properties, maintaining properties, etc. I also shared just general life decision making along the way.


Part 1 for my year in review will address what happened with our rental properties. I’ll dive into our personal finances in Part 2.

As a quick recap, we have 12 rental properties. Nine of them are in Virginia, and three of them are in Kentucky. Two of the houses in Virginia are owned with a partner because we still had cash available to buy more houses, but at the time we had the maximum number of mortgages allowed by Fannie/Freddie (max is 10). The houses were purchased between February 2016 and September 2019. All 3 houses in Kentucky are managed by a property manager, who gets 10% of the monthly rent each month. I manage 5 of the Virginia houses personally, and then we have a property manager who manages the remaining 4, who also gets 10% for each house.

RENTAL PROPERTY MORTGAGES

In January 2021, we completed a refinance of one property, and then in December, we completed three cash-out refinances. The loan balances on these 4 properties increased; one increased because closing costs were rolled into the loan balance, and the other 3 included $190k worth of equity taken out from the houses and creating new loans.

We went from 11 mortgages (two of which are actually owned by a partner) down to 8. House 6 had a balance of $26,447 coming into 2021, and that was paid off by June. Two other houses had a total balance of $157,500 at the beginning of the year. Their balances dwindled through regular monthly payments and one lump sum payment right before we completed the cash-out-refis and completely paid them off.

We have been working on paying down another mortgage that is owned with a partner. Between the two of our families, we paid off about $44,000 additional principal for that mortgage. We’re matching each other’s additional principal payments so that the math is easier to follow, so we can only make additional payments in line with what he can do also. We each owe about $10k on this mortgage now.

Even though there were so many mortgage-related transactions in the year, our overall loan balance only decreased by $6,000.

The market has continued to rise due to the limited supply, and so our home values on the rentals actually increased over $500k over the last year.

RENTAL PROPERTY LEASES

We turned over 1 property the whole year! The tenant that was living there had already told us that they were renting until they found a place to buy, so we knew they wouldn’t be long term tenants. We had a relationship with them from a previous house, when they had moved out of the area and then back. They had a poor experience renting in another area and reached out to us since they appreciated us as landlords. They found a house towards the end of their first year, but we let them out of the lease early. Their lease was slated to end October 31, 2021. We don’t usually have leases that start/end in the Fall if we can help it, but we had let the previous tenant out of her lease early to purchase a house also. The tenant said she was able to be out at the end of August, and we preferred moving the lease closer to the summer months anyway.

We raised the rent on 6 properties.
– The one house that was turned over went from $1200 to $1350 per month. However, we added a property manager who gets 10%, so our cash flow only increased by $15 per month.
– Two of our properties have long term tenants; the rent is significantly below market value, but we value not having to turn over the house. These houses are on a cycle where we increase the rent $50 every two years.
– Our KY property manager tried to increase rent on the 3 properties she manages. One was increased by $25, another by $5, and the other one cried that she couldn’t afford an increase. That’s the one where we plan to increase by $75 next month, and if she doesn’t accept, we’ll turn it over and get $75-$100 more per month.
– We increased rent by $150/month for one of our properties that we have with a partner. It was a risk, but this is a house that claims 3 people live there, but they have 5 queen size beds in the house. We figured either they leave and we get several big things fixed up that have been deferred because of all their things in the way, or we make up for all the years that we didn’t manage their rent and didn’t increase it. They accepted the increase.

RENT COLLECTION

We were very grateful that we made it through those initial months of the pandemic without tenants not being able to pay rent. We had a few people let us know that they were laid off or unable to work (e.g., restaurant business), but we learned most of our tenants worked in the health care field. So while we made it through 2020 without many issues, 2021 brought more challenges. Nothing was insurmountable, and it wasn’t debilitating financially, but it was still something to manage.

We had some big struggles with non-payment of rent on one house. She was 31 days late paying August rent, then she didn’t pay September’s rent, and then she applied for rental assistance to cover September, October, and November, which we didn’t receive until February 2022. That was all on top of her generally being a week late in paying through the beginning of the year too. She doesn’t maintain employment, she doesn’t communicate, and we’ve just had something new and different pop up as an issue every few months. We eventually received January 2022’s rent, but we still haven’t received all of February’s rent – just in time for March rent to be due.

We have another property (the one that was raised $150 per month) that is perpetually late. They eventually pay, and they’re getting better about actually paying the late fee (when they pay rent 20+ days late…), but they were late for 10/12 months of the year.

Everyone else paid their rent on time. In general, we’re lenient with late fees and issues. If you reach out to us and mention that there was a hiccup and you’ll need one more pay check to pay rent, our response is typically: please pay what you can now, pay the rest next week, and don’t worry about the late fee. However, when you don’t communicate and/or you’re consistently weeks late and we’re having to carry the expenses, there needs to be a consequence to incentivize you getting back on track.

RENTAL EXPENSES

We replaced the flooring in House3 ($4,000), hot water heater in House9 ($1,500), HVAC in House10 ($3,300), washing machine in House10 ($250), and HVAC in House12 ($3,900). We also had various electrical and plumbing work that needed to be done in several houses. We also spend about $7k per year in property management fees.

Usually turn over is an area that requires us to put a lot of money into a house. Luckily, the one house that we turned over this year only required some paint work, and we didn’t have any other turnovers.

While it’s nice that our assessments have increased and our housing values have increased in our net worth calculation, it comes at a price. Our taxes have increased on all the properties. In total, they’ve increased over $2,500 in just the one year (meaning, that doesn’t include all the previous years worth of assessment increases that have occurred!).

GOALS

In this year, we hope to add one more rental property to our portfolio. We’ve been actively working on it, but this market is crazy! We’re not willing to overpay on a property and get into a bidding war just to be done with the search. It’s interesting to see that we haven’t bought a new rental property in almost 2.5 years, when we had purchased so many all at once. We had gone back and forth with saving for another down payment or just paying off more mortgages after we paid off House6 in June. Once the cash-out-refi was a possibility, we decided to go ahead with purchasing another property. We’ll self-manage whatever we acquire. We had been looking in Virginia and Kentucky, but have started to settle into a Kentucky property (I like the laws for tenant/landlord relationships better in Virginia) so that we can save the 10% management fee and the expensive leasing fee, since housing prices are significantly higher than what we’d prefer for the rent ratio we’d be getting.

We have 8 houses that still need negotiation and/or lease termination coming this year. Two houses have already agreed to their rent increase, and we just need to get the new lease signed. Five houses will be offered a new lease term with a rent increase (averaging about $50 per month on the increase). One tenant will be asked to leave at the end of her lease term.

We want to remove the tenant from House2 at the end of her lease term. She has been a concern in numerous legal ways, does not hold steady employment, and the house is well under market value rent. Turning over that property will require us to go to Virginia to work on it. It’ll need repainted, the carpet will probably have to be replaced, and I worry that she’ll do some damage when we tell her we’re not interested in renewing her lease.

SUMMARY

I like to look at the details of the rental properties all at once in this format. Sometimes, I get caught up in all the things that I need to get done, and I feel like it’s so much work. In those moments, I forget that there are most days of the year where I don’t even think about the properties. Even when expenses seem to be piling on top of themselves, to look back and see that our expenses totaled less than $15k over 12 houses is encouraging. We’ve also reached the point where we’ve replaced most HVACs and several roofs, which are areas that can create problems that compound on themselves, whereas a replacement is expensive, but then I don’t have to get all the calls that something went wrong.

February Financial Update

This month is basically just story telling, from insurance tidbits to mortgage annoyances, while not addressing the decline in the market and our investment accounts. 🙂

It seems all my mortgage payments are increasing on 3/1, so I’ve been managing those changes. I mentioned recently that one of our houses had the escrow analysis done incorrectly. Luckily, that was addressed, and the increase in our mortgage payment is only about $100 instead of nearly $200. Our personal mortgage increased by $16, another property increased by $52, and then our last 3 mortgages were all refinanced in January and this ‘first payment’ has been a bear. The information out of the refinancing company has been contradictory, they requested a bunch of information weeks after closing to support all the money they already gave us, and it’s just been rough. Rough enough that I ran to the post office to get a check in the mail at 4:48 pm today, only to get home to an email saying that I had to send that check (due tomorrow) to a different address. Ugh.

I was excited to share some positive news this month, but that got overshadowed by these mortgage payments! Anyway, we came home to some surprises after our vacation.

First, I had a medical procedure done in January. It was originally scheduled for November, but the week of the procedure, I had my heart go crazy on me. That cancelled my procedure because I couldn’t go under anesthesia until they knew my heart would be OK. We got my heart sorted out enough that I was cleared for the procedure, but once I was able to reschedule it, it went into 2022 ….. a new deductible year. They said that I needed to pay half the cost of the procedure before they’d schedule it. Since I had been waiting since September for this, I wasn’t going to question anything, and I gave my credit card number for $1200. Well, my insurance hasn’t processed the procedure yet, but I guess since I paid in advance, some sort of system review showed I had overpaid, and they refunded me $1196. I don’t know how they decided to keep $4, but I’ll cross that bridge when I see my claim is processed on my insurance website.

Second, I’ve mentioned before that you need to stay on top of insurance! I received a bill for my heart-related-ambulance-ride for over $900. The last time I was in an ambulance, I ended up owing the full bill, which was $500 at that time. When I saw $900, I figured, gosh 10 years later and a new jurisdiction, and THAT is what I owe. It said “we billed your insurance, and this is your balance.” Hmmm. Log into my insurance website and see there’s no claim history for an ambulance ride. I then learned, for the first time ever, how to submit my own insurance claim. I let the fire department know I submitted the claim, and then they said they’d do it for me! Why did your paper say you already did?! Well, the surprise I got was that my insurance covered all but $46 for the ride!!! I couldn’t believe it. That’s the happiest I’ve ever been to spend $46.

The most random thing that happened was a check from our electric company from our Virginia house. We sold that house in September 2020. Our mail forwarding isn’t active anymore and it was sent to our old address, so I really have no idea how we got it. It was $31.09 due to a required review of all accounts every 3 years. It’s not anything crazy or life changing, but that was truly a surprise!

RENTAL UPDATES

We had our usual suspects not pay rent earlier this month. One flat out said they won’t pay until the 23rd. I’m not even sure how to handle them anymore. I keep reminding myself that we raised their rent $150/month to get them to leave, but they accepted. So at least we’re in a good position there? The other paid us $700/$1150 on Friday (late). She at least emailed us with the awareness that we shouldn’t have to hunt her down for rent payments, so she got a pass because I was about to send the default notice at 12:01 am on the 6th. I’m also once again in a position of tracking down a rent relief payment on another house that’s supposed to cover December, January, and February. While the tenant ended up paying December rent, we’ve still been floating the January and February finances. The approval of their application (that was submitted in November) was January 10. As of today, no information from the State and no check in the mail.

I got a tenant renewal processed this morning. We increased their rent by $50/month (starting 5/1 when their current term ends), after it having been steady for 2 years. Our usual baseline to keep a good tenant is a $50 increase every 2 years.

We gave two property managers notice to increase rents on 2 properties that are up for renewal on 4/30. We do 60-day notices. It’s not entirely necessary, but I look at it as a way to negotiate with the tenant for a month, and then if they don’t agree to new terms, we have a month to get it rented. One ‘cried COVID’ last year, and we let her by. She’s been there 2.5 years at the same rate, and she even got the house under market value originally because it was November (bad timing). She’s at $875 and we said we’d go to $950. That’s a larger increase than we usually do, but the market rate for the house is $950-1000. If she balks, we’ll manage the turnover and get a new tenant in there. For another house, they’re at 1025 and have been since October 2019. They even negotiated a discount back then for an 18 month lease, so they’ve been under market. Despite our efforts to grieve our taxes, the City thinks this house is in an affluent neighborhood and has charged as such. We’re offering them a bump to $1100. Again, more than our usual $50 increase, but it’s been more than 2 years and $1100 is under market value. Then we had a 3rd person say she wants to stay in the house, but her lease isn’t up until August. She’s been there since August 2017 and has been at $850 rent since then. We’re looking to increase her rent to $900. She’s an awesome tenant that never needs anything, and I know she’s in grad school without much money. We’ve made her so happy for the last several years by renewing her without an increase, so I hope she understands the need to increase it now.

I paid the insurance on our townhome, which is a property we own outright, so I need to manage the escrow-type transactions. That was $210.

After our cash-out-refis in January, we have been looking for a new property to purchase. We’ve made 4 offers that have been out-bid. Mr. ODA has been trying to work the off-market angle. We made a full price offer for one of the houses contingent on seeing it, and the guy said that he’d now prefer to sell off his portfolio as one instead of each individual house. He declined our full-price-off-market offer. Sketchy. Then another guy said he wanted to wait until the new flooring was installed in his house before letting us see it, and then he won’t respond to messages now a week or so later. Interesting. We’re now trying to work another off-market deal through our Realtor, but the seller and our Realtor are out of town. I ran the comps on it and come to $235ish, while they were expecting $250k. I don’t deny that they’d get an offer in this market at $250, but I don’t know that it’s worth it to us. Then again, to be done with this driving around, seeing houses, making offers, and losing out, may all be worth an extra $15k.

PERSONAL TIDBITS

This month, we went on a trip for just about a week. The flight was paid for in a previous month, so that’s not captured in our spending. We stayed with a friend, and she made us nearly all of our food. We paid for our brewery visits with her. It was a great trip, and I definitely recommend Bend, OR! We did a last minute change from Touro for our rental car to a ‘regular’ car rental place at the airport, so that charge shows up in this month’s finances. We also booked 2 last minute hotel rooms, once for the night of our arrival and one for the night of our departure (we flew in/out of Portland, which is about 2.5 hours from Bend, so it was easier with the kids sleep schedules to be near the airport those two nights instead of arriving really late or leaving really early).

We bought Hamilton tickets. We were late on that band wagon until we finally found a friend with Disney+ who wanted to watch it with us even though they had seen it 257 times. Since December 2020, we’ve watched Hamilton a whole lot. We got on right when tickets were being sold and were about to accept the $200+ ticket price until Mr. ODA found the ticket sales through the actual venue were only $130! It’s not until June, but that’s something to look forward to!

We finished our basement over the last year and have been using for the last month now. We had a projector on hand that we used as our TV down there, but it started to die shortly after we hooked it up. We bought a new projector and have been really happy with it, and I was happy with it only being $270.

While our electric bill was surprisingly low last month, it was surprisingly high this month. They did an estimated meter reading, putting the estimated kWh usage at the highest it’s ever been. When I questioned their estimation process and shared the current meter read, they said that next month will probably be an actual reading and since it’s not more than 1000 kWh difference, they’re not going to change anything. Sure, I can afford this $414 bill that may be offset next month, but many people can’t. Their estimation process shouldn’t put the projected energy usage at an all-time-high, thereby dumping surprisingly large bills on people. Regardless, it’s something that works itself out, and isn’t something I’m going to fight any harder on right now. It’s just annoying knowing that our energy usage was high last year because we had a broken unit without our knowledge, and then with a working unit, they’re estimating that we’ve used more than ever.

Mr. ODA changed one of our credit cards, so I’ve been all out of sorts here now. The credit card was a travel-related card, and they increased their annual fee by $100. He ran the numbers and determined the benefits didn’t outweigh the cost increase. Instead of closing the card, they agreed to change the type of card. However, all the things we used that card for are now on different cards, and this change “activated” an old card of mine. Our credit card usage is convoluted; perhaps I’ll do a new explanation and update my last post on it (and then maybe that’ll get me to remember all the changes!).

NET WORTH

Our net worth dropped about $15k from last month, but that was due to the market. While not fun to see those numbers go down, it doesn’t affect our day-to-day. Our cash balance is really high right now while we keep cash liquid for a downpayment while finding another investment property.

January Financial Update

I’ve spent a lot of time thinking about how to set up our financial updates in this year. I didn’t like the format last year. I think I’m going to focus more on how spending changed month-to-month. Since my posts are late this month, this is written as of January 20, but didn’t post until today. I want to do several detailed posts about last year’s activity, this is going to be a shell of a look at our finances, and more of a “what have we been up to” type post. As a reminder, I usually post this around the 15th of the month because I can capture the mortgage payments made in the month (we pay our mortgages around the 10th, after all our rent is presumably collected).

RENTAL PROPERTIES

We left off last month with 3 refinances in which we took cash out. We paid off 2 mortgages with some of that money and have been looking at houses to purchase this month. We made an offer on one recently, but lost to another bid that was $5,000 more. We were about to make an offer on another one, but the HOA was $100 per month, and that really ate into our monthly cash flow. In this market, we’re not even close to our 1% Rule that we strive for (rent is at least 1% of the purchase price). Today’s deal I considered was going to be $240k purchase price with $1500 (maybe) in rent. We would have lost money every month with the HOA costs and such a low rent.

I’ve spent a lot of time managing these properties over the last month, which I’ll detail in another post.

One of our houses finally had the rental assistance check cut, so that’s 3 months worth of rent, going back to September 2021, that’s on its way to us. We’re waiting to receive a check for another property’s rental assistance approval, so that has us one month behind on that house. And the original house that applied for assistance applied again for January, so we’re waiting on 65% of that house’s January rent. We had to do pest control for mice on one house, and a toilet needed fixed on another.

One property’s HOA went up $10/quarter. I had already paid the $240 bill in December to count it as a 2021 expense, so I had to add $10 to that in January after I was notified of the increase.

EXPENSES

We had fraudulent activity on our main credit card, so that had to be closed and reissued.

Our swim lessons that were scheduled last March/April were finally rescheduled. That’s been $88 sitting in suspense – we paid for the lessons, they cancelled them, and then they kept our payment as a credit until they rescheduled.

We were sick the first week of January. Between our travel to NY in December and being sick for over a week, our expenses were pretty low this month. Our gas usage was higher than usual since we drove to/from NY. We hardly ate at restaurants, and our grocery runs were more focused on meals than just randomly buying things and hoping it makes a meal later.

Our electric bill was about half of what we expected it to be, so that was a pleasant surprise. It’s been colder this month, so I expect it to be back up to the $300.

NET WORTH

Our net worth increased by about $15k since mid-December. Our taxable investment accounts increased a good amount over the last month, but our retirement accounts took a hit. Our cash balance increased, and our credit card balances are lower than usual. Our investment property mortgages didn’t decrease the usual amount because we didn’t have to pay 3 mortgages this month due to the refinance; they only decreased by $671 worth of total principal.

November Financial Update

Last month, I mentioned that there would be a lot of rental property expenses and bills being paid this month. Well, they will hit in November, but they don’t hit until the end of the month. I scheduled all the payments to be made right after our current credit card cycle closes, which is around the 20th of the month for most of our credit cards.

I had to update our 401k numbers with more recent data (usually the data I’m using is a couple of weeks old since updating those accounts involves an unnecessary amount verifications). I also updated one of the balances on our mortgages (one with a partner that I don’t have access to the account to see regular updates).

I’ve been working the second half of October and a few days in November, which has kept our spending low. This month I have the last of my Christmas shopping to do (hopeful for deals on Black Friday for items already in my cart!) and several insurance payments that will cause our credit cards to increase more than usual, but we’ll stay on top of paying them off.

We have yet to receive September, October, and November rent from one of our tenants (more information in the next post in a few days). Otherwise, everyone is paid up on rent, and we even had a tenant pay part of December’s rent!

We had several reimbursements come through this month that increased our cash on hand. Mr. ODA purchased things for our HOA on his credit card, so that was reimbursed. We had issues with our escrows and insurance payments, so the overages were reimbursed to us. I also worked, serving beer, in October, which increased our cash balance more than usual.

There are a few line items that were changed significantly because I wasn’t working with clear data the past few months. We may have hit $3 million net worth before this update, but I know that it’s official now! At 35 and 34, that’s a fun accomplishment. It doesn’t feel like we have money to throw around, and we certainly don’t live lavishly. You can see that $2 million of this is tied up in the appraisal value of homes we own, and most of the other parts of this is tied up in accounts that we can’t access until retirement. We still make decisions for the longevity of our net worth because, well let’s face it, we’re only in our mid-30s and there’s a lot of life to live.

October Financial Update

We’ve been busy, which has kept our expenses down in our personal life. I’ve been working a few days at our local racetrack, which has been for my entertainment and a good way to bring in some money for our household. While our busy schedule has kept us from eating at restaurants and spending money on activities, the last quarter of the year brings big expenses on the rental front for insurance and taxes.

I still haven’t decided how to format these financial updates, but I did work on categorizing all the expenses for our year. I’d like to see how our spending changes through the year, and if I keep a running tally of the information, I’ll be able to consistently categorize expenses. At this point, I’ll just report for the whole year later in January, but it feels good to have that process started since there are a lot of transactions (already at 786 line items!).

RENTALS

We paid an extra $2000 towards the mortgage that we’re trying to pay off (we paid $1000 and our partner paid the other thousand). That mortgage balance is about $26k, which we’re responsible for half.

Kentucky taxes are due in October. Well, they’re actually due in November, but they give you a 2% discount if you pay before 11/1, so we of course do that. Two of our houses are still escrowed, so I don’t need to worry about that, but I had to pay one of the houses, which was about $1300. As an aside, I put it in the mail on 10/6 and it was taken out of our account on 10/8; I’ve never seen the mail and processing of taxes happen so quickly!

We had someone do the work on a house (fix bedroom doors and replace a missing section of fence) that was left over from my July walk throughs, and that was $490 (split with our partner). This house has been notoriously late on payments with very little communication, but they’ve turned a corner. They’re still late with payments, but they pay the late fee without prompting and give us advanced notice, which is all we ask for! They say they’ll be back on track with on time payments next month.

We’ve had issues with another rental, which I shared in my last post. They were approved for state assistance, so I’m expecting September, October, and November rent from the state here soon. Since there’s no timeframe for when that will come in, I’ve told her that she has to keep paying on the payment schedule we agreed to, and anything she pays will just go to December rent at this point.

PERSONAL EXPENSES

We had all the drywall for the basement delivered in September for $788. Several pieces arrived damaged from the strap that held them down. Mr. ODA called Home Depot since the delivery fee was $75 for this convenience, and they were super nice. She refunded us for the broken sheets and the delivery fee ($125!).

Only $130 spent in gas (that will probably go up next month since I’m driving to/from Lexington 3 times per week for work, plus a few more personal trips there). Only $92 spent in restaurants!

SUMMARY

While some of the expenses for rentals have trickled in, the next month is when most of them are going to hit. We’ll also have an annual medical bill come due in November.

Our net worth increased by $21k from last month. Our credit card balances are low, and then our cash balance is higher than usual because we used to just put any extra cash towards mortgages, but right now we’re trying to pay off that mortgage we have with a partner and rethink our approach (do we want to save for another down payment.. type question).

September Financial Update

Cooler weather is here! We have a full calendar these days with pre-school and sports. I’ve been managing that by setting a lot of alarms giving me a half hour warning that we need to leave the house for something. We also celebrated our son’s 3rd birthday with both sides of our family, which was so much fun. He knew all about a birthday and the traditions, did a great job at being grateful for his gifts, and hasn’t stopped playing with all those new toys. This month, his birthday party and a long weekend trip to Virginia were our big expenses, while the sports and activities kept us home and not eating at restaurants in between those things! On top of all this craziness, Mr. ODA went on a work trip, then I picked up a few shifts at the race track to help them out. And so, here we are, two-and-a-half weeks since my last post.

NET WORTH

About once a month, we have a meeting with our financial advisor. During last month’s meeting, his software system said that we hit $3 million net worth! Unfortunately, my numbers last month didn’t say that, and they still don’t, but we’re right there. I didn’t think it worth it to line up my information against how the software is reporting the number because a lot of our net worth is based on the current market value of our real estate, which isn’t necessarily an exact amount. I know Mr. ODA had a goal for the first million in net worth, but I wouldn’t say that we had a goal to hit this particular number. With the financial advisor, we’re working on our mentality. We’re basically trying to figure out what’s our true goal (instead of just this number), and if we had (and did) everything we wanted, what would that cost difference be? I’m working on two other posts about our mentality, and I’ll have to include this side of the thought process as well.

DETAILS

One of our credit cards has a balance of over $2,200 in this net worth update. That includes almost $1,000 of a hotel that Mr. ODA had for a work trip, the hotel for Richmond at $450, and an AirBnB charge for an upcoming trip of $424. It also includes Mr. ODA’s food purchases while on travel, which amount to about $180, and an Uber trip of $10. The work expenses will be reimbursed, but that’s not yet accounted for in the math since the payment hasn’t hit our checking account yet.

With the child tax credits coming in, our investments have gone up each month. We’re putting some of that into the kids’ investment accounts. We’ve also had other unexpected income, which led to another $500 transfer into Mr. ODA’s investment account. Usually, we see an automatic contribution of $1100 between our Roth accounts and the kids’ accounts. This month, we had $1,900.

All of our housing expenses were about the same. This coming month has a trip planned, a day to hang drywall in the basement, and me working at the race track nearly every weekend.

August Financial Update

This has been a crazy month. We went to St. Louis and New York, we tiled the basement bathroom that we’re building, I refinished a desk that I purchased 6 years ago, and we had several activities to occupy our time. Being that we’ve been so busy, we haven’t set any new goals and are still talking through what we think the next few years look like. We are still managing sleep disruptions with our nearly 3 year old, and that takes a lot of time from my day and night. Anyway, here’s how things shook out over the last month – very high credit card bills to cover many large expenses.

just for fun – my before and after of the refinished desk that I bought for $15
  • Utilities: $240. This includes internet, water, sewer, trash, electric, and investment property sewer charges that are billed to the owner and not the tenant. I find it interesting that it’s not routine to have irrigation in Central KY, and that’s led to surprisingly low water bills. Our water, sewer, and trash is all together each month, and it’s only $53 in the middle of the summer!
  • Groceries: $390. On top of that, I had a charge for a 4 month supply of the vitamins that I take, which I pay for up front because I don’t want to pay a surcharge to pay monthly (if I can afford to pay $300 now, I’d rather pay that then end up paying $340 for the same product at the end of 4 months).
  • Gas: $230
  • Restaurants: $215
  • Entertainment/Travel: I broke down the St. Louis trip costs in my previous post. We booked our flights to NY through the Chase portal using points. It was the equivalent of $833 for 3 round trip flights (our daughter as a lap child). We paid for parking at the airport ($36), and that was it. On top of those costs, we had several sports fees and activities that we paid for. I didn’t add up the details, but I estimate that those cost us about $300 this past month.
  • I paid $3,800 worth of medical bills (high deductible plan… we got there).
  • We spent about $175 on tile supplies for the bathroom, which includes returning about $40 worth of materials.
  • Rental work cost us a good bit this month.
    • Our plumber made his rounds to 3 of our houses on one day to address items that I found during the walk throughs in July; this cost us $730.
    • Somehow (very unlike us), we had an outstanding pest control bill from December. When I called to schedule another appointment, they requested payment (rightfully so!). We spent $290 on pest control then.
    • We purchased a hot water heater and a refrigerator for a rental property after our property manager did her walk through. We also purchased a fan and had that installed (we would have done it, but we don’t live there anymore), but we split that cost with our partner. These cost us $2,317.
    • As usual, two houses were late on rent. One paid on Friday and actually included the late fee (10% of rent). Another gave us a letter about a car accident she was in and said she wouldn’t have rent until she received the settlement money from that. It’s the 16th and we still don’t have rent. The positive here is that we have several other properties worth of income that cover the expenses on this house (mortgage), so we’re not floating the mortgage with our own money for this one house.

Here’s a tidbit of my spending. I don’t have Amazon Prime. Rarely do I need something in 2 days or less than $25 that I would need to pay for this service. I search Amazon for things that I eventually want, put it in my cart, and then when I need to hit the $25 free shipping threshold, I add the items to the cart to check out. This is how I handle Christmas shopping basically. I have thoughts on what to get for people, keep it in my “save for later” section, and then order it when I place an order. I actually have several Christmas gifts already purchased.

NET WORTH

Since I’m not able to find the time to coordinate updating all our accounts with Mr. ODA, this is just a rough update of our financials. Our net worth has increased about $58k. I’ve paid down the very high balance on our Citi card already this month, so this snapshot in time isn’t showing that I’ve already made $5k worth of payments towards that. About half of that increase is attributed to an increase in property values. The rest is attributed to the usual mortgage payments and investment balances increasing.