My House Flooded – (September 2021 Net Worth Update)

This is the 20th update in my net worth series, in which I’m document my path towards reaching two milestones: 

• $30,000 in passive income by 2025
• $1 million in net worth by 2027 (when I turned 30 years old)

You can check out my net worth tracker for the most up-to-date numbers.

A lot happened in this last month. Let’s get right into it:

https://youtu.be/zObutr74f9A

Basement Flood

Within about two weeks of moving into our new property, our basement flooded. It caused thousands of dollars in damage.

For a full breakdown of the entire basement flood saga and the lessons learned, check out this article.

For now, here’s the short version:

We had a very intense storm in Chicago that dropped a few inches of rain within an hour. Our sump pump was able to keep up the water, but a pool of water flooded right outside one of our basement windows.

Soon enough, a bunch of water flooded through that window.

The majority of our basement was covered with what looked like about a quarter inch of water

At first I thought this was just run-off from the storm, which would be considered a “flood” for insurance purposes. I didn’t think I’d have much flooding risk with this property, so I don’t have flood insurance. But we do have standard backup insurance. 

I did some investigating after the flood happened and had our main sewer line scoped. We found two cracks in the sewer line, right where that water pooled.

EDIT: Here’s a photo from a future update of the sewer line after we dug it up. You can see one of the massive holes.

So, all of the water from the sump pump was re-routed to the spot directly outside of the window rather than out to the main city line. 

I’m now arguing with my insurance company that this should be considered “backup” and not “flood” for insurance purpose. I think that we have a pretty good case, seeing as though this wasn’t a result of rain runoff or natural flooding.

In the event that we don’t, we’re looking at a pretty major expense to repair the damage done in our basement. 

Not only do we have to get the sewer line fixed, we also just went through a bunch of remediation which cost about $4,000. But at least the basement is dry now.

Additionally, we will have to put everything back together, which will cost thousands more.

If there’s one lesson to take from my experience: if you’re pretty sure you’re going to buy a property, be sure to get a sewer scope prior to actually buying it.

An expensive lesson for a simple conclusion, that’s for sure.

September 2021 Net Worth Numbers 

The basement incident is probably going to set back my net worth progress by at least a month.

We’re probably looking at around $10,000 to complete the necessary repairs, assuming we end up having to cover everything ourselves.

As a reminder, my net worth last month was at $90,032.84.

Assets – September 2021

We have about $20,000 in cash, but that’s going to be dwindling down pretty soon. 

I already pulled some of my HELOC funds to take care of the remediation work we’ve been doing.

Clearly, I wasn’t expecting to have to shell out thousands of dollars this month, but that’s why it’s important to have liquidity to pull from in any event.

I didn’t have a massive reserve fund coming into this property. I had a few thousand set aside since I was already doing some work on the property – including restraining the hardwood floors on the main and upper floors, which probably added about $5,000 to our property value.

We also put some more work into our former primary residence, and we’ve listed it to rent. That work likely added a few thousand dollars to the property value.

When we do rent that property out, we should earn about $600 in extra cash flow after factoring in all expenses and reserve savings.

All told, this leaves our assets at $711,547.50. 

Liabilities – September 2021 

Like I mentioned above, we did pull a little more from our HELOC to handle the water remediation. It’s nice to have that liquidity ready to go.

That said, I intend to pay the HELOC and margin loans down as quickly as possible. I’m focusing on the margin first. Both loans are revolving so I could re-leverage them if I want to.

Additionally, I had a bill come in for my Chicago realtor dues, which are due at the end of the month.

My property taxes are coming due for my former primary residence in Chicago, as well.

So our liabilities this month are $619,903.23.

My Net Worth – September 2021 

In total, that leaves us with $91,644.27 in net worth.

That’s an increase of $1,612.13.

Our debt ratio is now 87.12%. 

And our passive income remains at about $350 per month (though I expect this to increase next month once our previous home is rented).

What’s Next?

We managed to barely increase our net worth this month despite the setbacks!

But I’m definitely going to be spending quite a bit of money within the next month.

That might be my insurance provider’s money, it might be my money. But we’re looking at several thousands of dollars in repairs either way.

Thankfully everything at our former primary residence is ready to go – we should have someone in there relatively soon.

Repairing this property is not the only major expense I’m expecting in the next month. I’m planning on taking a trip with my dad as a belated birthday present I got him back in April.

I’m expecting to pay a good bit of money on that, but I think it’ll be well worth it. Though travel restrictions are concerning right now, so we’ll see. We would’ve done this trip back in June, but travel restrictions and reactions to the pandemic have thrown a wrench in events and travel. It’s been delayed to September – but we’ll see what happens. 

In any case, I’ll be sure to keep you updated.