I’m documenting my path towards reaching $30,000 in annual passive income by 2025 and a $1 million net worth by 2027.
For detailed numbers, you can check out my net worth tracker. I update it monthly.
We’re on month number 31 of this journey.
Let’s see how the last one went.
Closed on the Houston House
The last month was very eventful.
I ended up closing on a house in Houston. It’s the same one I was under contract for in the last update.
We expect to move into within the next few weeks. We’ve pretty much blown out the spending in order to get the rehab going. We’ll discuss that shortly.
This will be the biggest move we’ve ever done, and it’s my first time moving out of state. I’ve also never coordinated a major rehab from out of state.
It’s been pretty exciting and very stressful.
As a synopsis, I got the house for $285,000 minus a $7,000 closing credit from the seller. That was with a 5% down, conventional mortgage.
The house has four bedrooms and two and a half bathrooms. It’s about a 30 minute drive from downtown Houston and about the same distance from one of Houston’s major airports.
And it’s only a few minutes away from my wife’s job.
We’re looking forward to getting down there soon.
Rehab Underway
The house needs quite a few things, including new AC units and new furnaces.
We’ll replace the windows and flooring.
And we have to paint the whole place.
That includes taking down some truly remarkable wallpaper in a few of the rooms.
The roof is pretty old as well, so I have a feeling that might have to go pretty soon too. Maybe I can get another year or two out of it.
On top of all of that, while my interior guys began their work, they noticed a leak coming from the master bathroom shower.
Apparently, the shower was done very poorly.
We didn’t notice until the water was back on for a couple of weeks, which wound up being after closing.
I was going to be replacing all the fixtures in the bathroom anyway, but I wasn’t planning on demolishing and redoing the shower. That’s another few thousand that we’ll have to put into this project, at the least.
Oh well. I guess I get a new shower out of it now.
At this point, the project is already projected to be about $80,000 in costs.
All of this to say, it was a pretty expensive month last month.
We’ve spent a ton of money towards this property and will continue to spend it next month.
We’ll have to buckle down in the next few months to recoup some of the investments into this property.
On the bright side, we should get quite a bit back in equity, barring a total market collapse.
With that in mind, let’s get into my monthly net worth numbers.
August 2022 Net Worth Numbers
As a reminder, my net worth last month was at $118,648.74.
Assets – August 2022
The big addition here is the Houston house under the real estate category.
We’re approaching $1 million in real estate, which is pretty cool. I have it listed at $305,000 in value to account for some of the rehab we’ve done so far. When it’s all said and done, I think it’ll be worth about $320,000, if not a bit more.
My current primary residence will turn into a rental as soon as we move to Houston. I think all it really needs is some paint. We’ll probably do that within the next month right after we move.
We have a much larger cash pile than before. That’s because I essentially maxed out the HELOC, and I’ve been spending a lot of that on the new property’s rehab.
Let’s just say we can expect to see this cash go away in the next month.
And my stock market holdings actually did pretty well in the past month, all things considered.
This leaves our assets at $1,102,630.48 – which is the first time we’ve crossed over a million dollars!
Liabilities – August 2022
Assets are way up! But pretty much all debts are up this month, too.
I used the M1 Finance margin partially for the rehab, but mostly for the down payment on the property. We put 5% down, and our starting mortgage balance is $270,750.
The HELOC balance has rapidly expanded, and most of those funds have been funneled into my cash pile for the Houston rehab.
I have a significant contractor invoice outstanding. I’ll be paying this within a few days, but many more of these will be rolling in within the next few weeks.
In total, our liabilities this month are $993,251.61.
My Net Worth – August 2022
All in all, that leaves us with $109,378.87 in net worth.
That’s a decrease of $9,269.87 from the previous month.
Our debt ratio at a substantial 90.08%.
And our passive income remains at about $1,100 per month.
What’s Next?
Within the next month, we’ll move into the Houston property, finish up the rehab, and my wife will be starting her new job.
This means it’s really time to buckle down on debt paydown and keeping our cash flow position strong.
Most of the income we receive within the next few months will be going towards our revolving balances in the HELOC and M1 Finance margin loans.
I want to get the margin loans down to zero as soon as possible.
And I would like to get the HELOC down to where we had it prior to this month, at around $50,000, just so that variable rate isn’t such a risk. And we’d have a significant balance that we could draw upon again.
In the meantime, I’m planning on taking a short break from investing in real estate.
I’d like to shift my focus and invest in something with a higher cash flow potential. I’ve been thinking about starting my own business or investing in an existing private business.
I’d want something that could throw off a lot more cash flow than a traditional rental property.
Here’s a video about what I’m thinking on that front:
If I do go the business purchase route, it’ll probably be within the next six months or so.
If I do not go that route, it’ll probably be due to some especially unusual changes in my situation.
In any case, I’ll be sure to keep you updated.
This website, and any communication stemming from it, while hopefully informative, should not be taken as financial or legal advice. Assume all links are affiliate links. I am an Amazon affiliate.