Admittedly, I’ve never been too worried about monitoring financial progress each year. I’ve kept a pretty good budget and I do periodically calculate my net worth, but I’ve done so without a vision for where I wanted to go. Recently I’ve started to think more about being systematic in monitoring my goals and my finances with more regularity.
This past April while on vacation, I sat on my front patio looking over a beautiful Spanish landscape while listening to a podcast about goal setting and something clicked. I realized that I wanted to go all-in on my real estate goals. I made an effort to share my goals with others, I created this blog and I made the decision to try to increase my portfolio in a big way.
Up to that point, I’d been a bit reserved in talking about what kind of investing my wife and I were doing. In fact, on our first purchase, the only two people we told were my in-laws (since they were going to help us manage things as we embarked on our first rehab from afar). We were a bit nervous about what people might think. Also, if I lost my shirt, I figured I’d rather suffer in silence rather than have the world bare witness if the project didn’t turn out the way I hoped it would. It wasn’t until we had the property rented out and refinanced that we began to tell a few close friends about our purchase. So shifting to a mind frame where I proudly share with people that I am a real estate investor took a significant shift in my mentality.
The positive results of deciding to take our investments more seriously have been noticeable. After making this decision in April 2018, we purchased two rental units, are days out from the closing date of another successful flip, found a lender who can fund nearly full purchase price for rehabs and rentals on short notice, set up our LLC and more. We also have 4 units under contract to purchase for an amazing price, 3 of which are already rented. Once this property is spruced up a bit, we should meet the 2% rule (the elusive goal of having 2% of the purchase price coming in each month in gross rental income), something I’ve not accomplished with any properties to date.
So what does this all mean and what does the new year have in store?
If the 4 unit purchase goes through successfully, that means that within 3-4 months we will be up to 7 occupied rental units. While our unit in Portland loses 210 dollars each month, the 6 in Roswell should bring in around 1400-1600 dollars a month in net profit. This is exciting as it finally represents a potentially significant addition to our income.
My goals for 2018 include:
- Complete my first mailing campaign (sending letters to homeowners whose homes meet our investment criteria with the hope of finding off-market deals)
- Stabilize all of our rental units in Roswell
- Significantly increase the amount of money we are putting into our retirement each month (more to come on this in a future blog post)
- Formalize my bookkeeping as our investment portfolio grows in size and complexity
- Finally, the biggest goal of the year will be to embark on a large-scale renovation of our property in Portland where we will be finishing a basement, rebuilding two flights of stairs, gutting the attic, replacing the kitchen and more All things considered, the project will add 750 square feet, 2 bedrooms and a bathroom, leaving us with a 2500 square foot, 5 bed, 3 bathroom house. At that point we can raise our rent for the primary dwelling significantly and use the basement for a short term rental (which we could also call home in the summers). When finished, we should be able to retrieve the money spent on this project through a refinance, meaning that we’ll get a new and improved house for free essentially). This will likely take 12 months or so and won’t begin for months, but the planning process is underway. It’s going to be exciting!
The next year looks to be a busy one and I hope to continue evolving in my real estate investments. What are your goals for the new year? Please comment below.