Today marks the eighth month of my net worth series, where I’m documenting my progress in trying to reach the following goals:
- $1 million net worth by the time I’m 30 years old.
- $30,000 in annual passive income by the time I’m 27 years old.
Right now, I am 23 years old.
If you are new to this series and would like to start from the beginning, you can view my updates chronologically starting here.
Rental Property Update
Today also marks the end of my first month being an out-of-state landlord.
On July 31st, I bought my first rental property in Indianapolis. It was an off-market deal; here’s my full deal breakdown if you’re interested.
The tenant I inherited with that property had not paid rent in the previous month with the other landlord. To mitigate some of my risk, I negotiated a refundable credit with the seller equal to one month’s rent. If the tenant paid August rent, I’d return the credit to the seller. If not, I’d keep the credit.
Well, the tenant did not pay August rent. So the credit is no longer refundable and I get to keep it.
However, the tenant does expect to receive a housing credit in the near future. Regardless, the property management team and I have a decision to make.
Before we get into that, I want to explain a little more about my management structure.
My Strategy for Out-of-State Real Estate Investing
Since Indianapolis is about three and a half hours from where I live in Chicago, I have a property management team in Indianapolis who takes care of day-to-day issues.
I am paying my property manager 10% of each month’s rent roll. Additionally, the property manager gets fees for re-leasing or leasing the property to someone new.
As far as management goes, I don’t really have to do much. I check in with the property management team however often I need to, whether it be weekly or monthly.
The team has been very responsive through any issues, and we’ve been communicating about maintenance tasks we need to get to.
Another note; my property management team has their own maintenance team to handle issues that may arise on the property. However, the biggest job we’re working on is fixing the HVAC, which we’ll be hiring a third-party contractor for.
In short, everything is running pretty smoothly, minus to obvious rent payment issue. I’m relieved that my management team is responsive, and it’s liberating to know I have a team on the ground taking care of the property for me.
That being said, I’ll definitely keep you posted on what we end up doing about the tenant.
I want to avoid eviction, as it’s an unfortunate process. I would prefer to find an amicable solution, especially considering the tenant has not been combative. Time will tell very soon.
The One Property Retirement
Another big thing happened this month – I am now a published author!
The One Property Retirement is about a simple strategy for building your retirement nest egg in real estate.
It explores the numbers behind buy-and-hold real estate and strategies for buying a property.
It’s ideal for beginners who have never bought real estate, or for anyone looking to expand their perspective on real estate and how powerful it can be for a long term investment strategy, especially when it comes to supplementing or even replacing your retirement plan.
I’d very much appreciate it if you gave it a look!
Anyways, let’s get into this month’s numbers.
September 2020 Net Worth Numbers
To recap, last month my net worth was $78,545.50.
That was a hefty increase from the previous month since I bought my rental property under market value, meaning I got some equity right off the bat.
Seeing as though I didn’t land any other deals in the last few weeks, let’s see if anything else has changed:
Assets – September 2020
Currently, I have about $30,000 in cash that was not used in the real estate deal I closed on. That will probably be going towards another deal in the near future.
As the market continues to do well, my stock portfolio has increased in value.
Though I’ve only been adding new money to gold and gold mining stocks.
I want to hedge against inflation and I think gold will preserve my purchasing power in an inflationary environment. Additionally, if there are future investment opportunities, I have those gold holdings to sell so I don’t have to miss out.
Though it still makes up a pretty small portion of the portfolio.
Otherwise, nothing else has really changed – our assets total up to $367,699.58 this month.
Liabilities – September 2020
I have paid down a little bit of our student loans and our HELOC.
I have about $18,000 I could pull from HELOC if I wanted cash very quickly – that has a 2.25% interest rate, so it is very cheap debt for the time being. But it is variable rate, so I have to be careful.
Additionally, I could also pull about $20,000 via M1 Finance margin at 2% interest. That would also be variable rate and would put me at risk for a margin call. So I’d have to be even more careful if I used that.
I don’t think we’re going to throw any extra payments at our student loans for a while, as I’d rather have inflation eat away at that fixed rate. However, if we get a large windfall, I will definitely throw more money at the student loans.
Since EmilyAnn and I are working part-time while we finish school, we’re not making a ton of income outside of our investments. That limits our ability to aggressively pay down debt in the meantime.
All things considered, we’re left with $312,125.36 in liabilities.
My Net Worth – September 2020
In total, our net worth is at $85,574.22 – an all time high for this series.
We’ve gained $7,028.72 in net worth over the last month.
Our debt ratio has decreased slightly to 78.48%.
And our passive income remains at about $350 per month.
What’s Next?
Going forward, we’re still going to try to be opportunistic with new investments.
I’m still looking at real estate deals every single day.
Most new cash is going towards gold and gold stocks, as I’m trying to hedge against inflation and preserve at least some purchasing power.
The real strategy here is to stay liquid. We want to avoid over-leveraging ourselves, because then we’d be unable to act on new opportunities. We want to keep the ability to pull out new debt if we see a great opportunity.
Additionally, we have cash and plenty of things we can liquidate in case we want to buy something.
It will be much easier to raise more cash once we finish school. I’ll be finishing in December of this year while EmilyAnn still has a couple of years to go.
I’ll be taking the February 2021 bar in Illinois. I’m looking forward to being able to start my career as an attorney and increase my income soon.
In the meantime, however, I will keep focusing on other ways to make money and improve our situation.
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.