Robert Kiyosaki is Wrong: My House IS an Asset & Carl’s NOT a Loser

Robert Kiyosaki is a world renowned  real estate investor and best selling author. Some of his most notable works include Rich Dad, Poor Dad and Cash Flow Quadrant.

Many of his teachings are great. In fact, his book  Cash Flow Quadrant was the basis for my post Passive Income: The Holy Grail of Financial Independence and Retiring Early.

However…

Robert Kiyosaki is Wrong

‘Your home is not an asset’ is one of Kiyosaki’s most well known teachings. Well, I am here to tell you that’s wrong. Yes, Robert Kiyosaki is wrong. My house is an asset and your home can be too.

First, let’s discuss why Kiyosaki believes homes are not assets. He defines an asset as anything you acquire that puts money into your pocket.

Basically anything that you buy or own that PAYS you to own it. Dividend stocks, bonds and real estate are examples of assets.

Remember that assets provide money flowing in.

house hacking
Assets put money in your pockets. When you have lots of assets, you are swimming in money.

If something is not an asset then it’s a liability. Robert Kiyosaki defines liabilities as anything you own that takes money out of your pockets.

Think of cars, boats and houses. All of these items require upkeep and maintenance. The upkeep and maintenance requires time and money, which is money leaving your pocket.

Robert Kiyosaki is wrong
A liability takes hard earned money out of your pocket. It’s like throwing money out the window.

Liabilities cause money to flow out of your pocket.

She is right. Avoid liabilities and collect assets. This will help you build wealth.

Now that we clearly defined the terms ‘assets’ and ‘liabilities’ – let’s revisit Robert Kiyosaki’s belief that a home is not an asset.

For most people, their primary home takes money out of their pockets. Homeowners are on the hook for their mortgage every month. If that wasn’t enough, homeowners also pay for insurance.

Repairs and maintenance are unavoidable. Oh, and let us not forget home improvements. Homeowners love, love, LOVE to upgrade their home.

New granite counter tops? Sure.

Renovating the guest bathroom that no one actually uses? You bet.

Lastly, we all have that uncle. You know that greedy uncle…. Uncle Sam. He is the one who always has his hand in your pockets. Homeowners pay real estate taxes as well.

Robert Kiyosaki is wrong
Uncle Sam is greedy and wants your money.

Wow, when you look at a home like this…. Robert Kiyosaki might be on to something. That sounds like cash leaving your pocket every month.

No, let me rephrase that – that sounds like a shit ton of cash leaving your pocket every month.

If you would like to dive further into this debate, I would recommend  the ChooseFI podcast episode 47 – The Cult of Home ownership & Crushing Geoarbitrage – with Millennial Revolution. The episode discusses why homeownership is a BAD investment.

Hint: its because the average person’s home is a liability.

Listen to episode 47 here:

I would also recommend listening to episode 47R which is a detailed ’round-up’ of the episode by the podcast’s hosts. The round-up discusses how homeownership generally sucks as an investment but how real estate investing can be a great wealth creator.

House Hacking: Why My House IS an Asset

Now, let’s discus why Robert Kiyosaki is wrong.

I live in a house hack and have been house hacking for almost four years. Every month, I get PAID to live in my house as my roommates/tenants rents are almost double my mortgage payments. Even after repairs and expenses I am getting paid to live.

Question: Does this sound like an asset or a liability? Is the money flowing in or out of my pocket?

Answer: Asset. The money is flowing in.

Now, you may be asking yourself – What is a House Hack or House Hacking? – simply put:

House hack noun – an owner occupied property that keeps the owner’s cost of living low. This is achieved by renting out extra rooms or apartments. In some cases the owner makes a profit while living at the property.

House hacking verb – the act of living in a house hack to keep one’s cost of living low or getting paid to live while living in said house hack.

When you are house hacking, does your home sound like an asset or liability? It appears Robert Kiyosaki is wrong; my house puts money in my pocket. By his very own definition, my house is an asset.

I have found house hacking as the greatest way to generate wealth and income. In fact, house hacking has allowed me to go from a negative net worth to over $500k in four years.

Benefits of house hacking

Are you still not sold on house hacking? There are tons of benefits to house hacking. Hopefully the list below convinces you to buy a house hack.

Lower cost of living – house hacking you will reduce your cost of living. Housing expenses make up about a third of the average American’s budget. In higher cost of living cities Like San Francisco, New York, or Chicago, housing consumes 50% or more of the average monthly budget.

Why would you want to spend HALF of your money on a place to live?

Most house hacks reduce your cost of living. The best house hacks eliminate your housing expense and actually put money in your pocket every month.

My first property was a house hack. The home had 3 bedrooms and 2 bathrooms. I rented the two extra rooms out to friends. Their rents covered most of the mortgage and I paid a few hundred dollars a month to own a house.

This was a bargain as I was living in an expansive area (DC) where the average one bedroom apartment rents for about $2,000. The house provided a positive cash flow when I moved out and rented all the rooms.

My second property was also a house hack. This was the best kind of house hack. I eliminated my housing expense. The house rents for about double the mortgage. I get paid to live in the house. Life does not get much better than that.

Increased savings rate – living in a house hack will allow you to save more. Increasing your saving means you are able to save more of your paycheck every month (take home pay). The increased savings can (and should) be turned into increased investing. Savings rates are the biggest factor in determining how long you will need to work.

Interested in learning more about savings rate? Checkout:

Joel from FI 180 – How Long Will You Work?

Miss Mazuma’s – Why My Savings Rate is so High

J Savvy’s – Your Saving Rate is More Important Than Your Return Rate

Grant from Millennial Money’s – How I saved $1.25 Million in 5 Years

 

Others pay down your debt – What is better than getting paid to own something? How about buying something with someone else’s money. That’s what happens when you get a loan for a house. You are buying the house with the banks money.

And you know what’s better than that? Having your renters pay back the bank AND pay you every month. House hacking provides you with monthly income and your renters pay down your debt. Over time, your renters will pay down and eventually pay off your mortgage. If that is not winning, I am not sure what is.

Tax benefits – home ownership or owning real estate in general provides several tax benefits. The interest payments for the mortgage provide a dollar for dollar tax deduction. Real estate also allows you to claim depreciation of the building (read another fancy word for a tax break).

Tax benefits should never be the reason you buy an investment. However, they can be a nice bonus to an already kick-ass investment. Consult your tax advisor for more details.

Why are you not house hacking? Are you still not sold yet?

Why you should house hack

House hacking can be achieved by most anyone and I highly recommend everyone consider house hacking.

If you are younger, single or without kids house hacking provides a great way to start creating wealth at an early age. House hacking is especially great for recent college graduates; you are already use to living with roommates. Lets keep the party going!

House hacking is not just for the young, single and childless crowd. Middle age or older people can house hack. The same holds true for married people or parents. However, house hacking may be less appealing when you have a crying baby on your hands.

House Hacking Course

We are developing a House Hacking 101 course. The course will educate you on how to buy your own house hack. You will learn how to analyze neighborhoods and properties. We will discuss the various ways to house hack, like a house hacking duplex. By the end of the course you will have all the tools necessary to create your own path to financial independence.

If you are interested in the course, please complete the form below. 

 

If you cannot wait for the course you can also listen to a house hacking podcast interview I had on the FIRE Drill Podcast.

Carl’s NOT a Loser

Oh, and most importantly. Carl from 1500 days is NOT a loser. This is another false teaching of Kiyosaki.

In fact, there is nothing ‘loser’ like about retiring at 43 and enjoying your life. That’s right, he retired earlier this year in his 40s. So, yeah, Robert Kiyosaki is wrong yet again.

Most people would find retiring so early cool. In fact, many would be jealous. Carl is living the dream. Oh, and he also invested in real estate 😉 

Congrats Carl.

The Landlord Report – October 2017

This past month was my most trying month as a landlord. When it rains it pours and it was like a hurricane in October 2017 for my rental property portfolio. Too soon for a hurricane joke?

I had the privilege of dealing with raccoons, never ending plumbing problems, and my first vacancy in years. If that was not enough, I also was blessed with an HVAC furnace needing to be replaced.

Yet, despite all the headaches and ‘nightmares’ – I STILL love being a landlord. This month was not great for my cash flow. In fact, I took my first ever loss. This month’s landlord report demonstrates the importance of keeping a cash reserve, building a real estate team, and that most problems are easily solved with a phone call.

However, there was one bright spot this month. I have a new property under contract and am scheduled to close on rental property #4 in November. Yeah, thats a thing now.

My real estate empire will soon consist of four properties (7 units total). I look forward to sharing a multi-post series on rental property #4.

The upcoming series will share everything from start to finish. Some highlights include analyzing the deal, getting the property under contract, renovations and leasing the units.

Digressing back to the horrible month of October….

The Landlord Report- October 2017

Hello there – welcome to another “Landlord Report”. This monthly report will share my experiences as a landlord. The report will show EVERYTHING related to my rental properties and life as a landlord….

I will discuss the rents that I collected, mortgage payments, and other ‘landlord items’. Other topics may include repairs, finding new tenants and any other items that might randomly pop up. The report will also share how much money I made and the amount of time (hours) I spent. I want to show the world being a landlord is a wonderful thing.

Throughout this process I aim to be as transparent as possible. Being a landlord and owning rental property is a wonderful way to earn (mostly) passive income and allow you to buy back your time faster. Please feel free to contact me with any questions – happy to provide insight.

 

landlord

 

The table below outlines all my income and expenses for the past month month:

The Landlord Report

As you can see, October was a bad horrible month for my rental property portfolio. While it pains me to share this information, I am also glad that I finally have a chance to share some of the less appealing sides of being a landlord with all of you. Being a landlord is not all sunshine and cash flow.

Below you will find a detail account about what happened at each property this month.

Rental Property #1

The Starter Home

Rental Property #1 Summary

Rental property #1 by far caused the most headaches this month. The property enjoyed a visit from a raccoon, experienced plumbing problems and a vacancy.

Rental property #1 was invaded by yet another raccoon. The bastard did a number on the attic as well; he destroyed two HVAC ducts and had fun tossing all the insulation around. This cost a pretty penny. If you are a visual learner, you will enjoy the pictures below.

If that was not enough, he decided to visit the rest of the house. Yes, he found a way to get into the main house from the attic. The furry fella then helped himself to the food on the kitchen counter. After a nice midnight (actually 2:30am) snack, he retreated for a nap in the bathtub.

Thankfully, the tenant was able to shut the bathroom door. By placing a simple call into animal control, the furry critter demon was removed from the house at no charge.

Unfortunately, the raccoon left a trail of destruction at my expense.

The raccoon tore apart two of the HVAC ducts and made a mess of the insulation

Before going further into details about the damage caused by the raccoon, I would like to take a moment to use rental property #1 as a talking point.

This property is half of a duplex, which means I share a roof and walls with the owner next door. Personally, I recommend avoiding situations where you may be sharing a roof with another owner. I also recommend avoiding any property with a Home Owners Association (HOA) or an elevator.

The family that owns the property next door are nice people. In fact, the patriarch was the original owner of their home and he passed away earlier this year.

However, the property is not well maintained. Their yard is always over grown, they neglect to make necessary repairs, and the backyard is untamed.

I kid you not, their backyard looks like a jungle full of vines and weeds. Trees are taking over their property which also provide easy access to the roof for raccoons.

Over the past year, I’ve had to persuade the neighbors to buy a chimney cap to help keep raccoons out. They were very reluctant to do so; mind you this was only ~$100 expense.

Well, the neighbors lack of maintaining their home continued to be my problem. Below is a picture of a hole on their side of the roof.

A hole in the roof that is technically on the neighbor’s side.

Raccoons were able to use this hole and a gap between the gutters to access both attics. Unfortunately, their neglect became my problem Thankfully, the roof is patched and all access points have been sealed.

Oh, I finally got the neighbors to cut down some of their trees as well. This will make it harder for any critters to get on our roof or into the attics.

The contractor recommended the installation of a one way door. While there should not be any way to access the attic anymore, the door will allow for visitors to kindly leave. I am not into the “Hotel California” attic where my visitors can checkout any time but can never leave.

Installed a one way door to let any future visitors out.

This looks much better.

Mountains of fresh insolation.

This round of the ‘Raccoon Saga’ set me back $2,510 – not cheap and plenty of headaches. Thankfully, the time burden was minimal and consisted of a handful of phone calls.

If the ‘Raccoon Saga’ wasn’t enough fun for a month, I still have TWO other headaches to share with you.

The kitchen sink was dripping and the repair was above my plumbing skill set. I used an app called ‘TaskRabbit” to source a handyman for the job. The repair was simple relatively speaking but I am not the best of plumbers.

The repairman agreed to show up the next day and the tenant let him in. The task took the repair man less than a half hour and set me back $83.85. Not bad for five minutes of clicking around on a phone.

Oh, and that vacancy I mentioned earlier…. Yeah, I had my first vacancy for the first time in over two years (possibly longer). I blame the vacancy on seasonality as October is a weird time to move. The vacancy set me back $825 for the month.

I found a great tenant to move in mid-November and his lease will run through the end of June. The shorter term lease was my idea since I want to get the room back on the summer leasing schedule. I will also give the tenant an option to renew for a full year.

The house remains rented on a room by room basis and always has been. This is not ideal, however, this occasionally happens when you move out of a house hack. I look forward to the day of having a traditional lease on the property.

In summary, rental property #1 – lost $3,037.09 and I spent about 2 hours managing the property.

My mortgage debt dropped by $699.26 from my monthly mortgage payment. When considering principal reduction, I lost $2,337.83.

Rental Property #2

The Fixer-Upper

Rental property #2 caused fewer headaches than rental property #1 this month.

The kitchen faucet had a minor plumbing issue. The cartridge that regulates the flow of water broke.

This was a simple repair that I did myself. The round trip to Home Depot took a half hour and the replacement part cost $28.98. The actual repair also took about a half hour.

In all, the repair costs less than $30 and about an hour of my time. A plumber would likely have costs $75-$100 just for labor.

My business license for rental property #2 expires in November. So, I spent about five minutes online and $198 to renew the license. I will not have to worry about this for another two years.

The tenants paid their rent of $4,000 in full and on time. Rent collection required me walking downstairs to get my morning cup of coffee.

Rental Property #2 Summary

In summary, rental property #2 – earned $1,364.45**. I spent about an hour and half managing rental property #2 this month.

My mortgage debt decreased $718.78. When factoring paying down my debt, rental property #2 made me $2,083.23.

Not bad for less than two hours worth of work. This is what a normal month typically looks like as a landlord. The dollar per hour cannot be beat.

**I also live in the house and get paid to live here. Pretty sweet right? House Hacking is awesome.

Rental Property #3

The fun times continued with rental property #3 this month. The furnace for one of the units decided to die in October.

When I bought the property, I knew both units’ HVAC systems were old and only a matter of time before a replacement would be necessary. As such, I made sure to cash readily available to pay for the replacements.

When my tenant called me, I was not surprised to hear her heat was not working. Thankfully, this phone call was in October and not in the middle of a January blizzard.

This problem is expensive but easily solved. I called my go to HVAC guy and he was able to install a new furnace the next day. The parts and labor costs about $2,500….. ouch.

On a normal month, I would not sweat a one time expense of $2,500 as much. However, given the craziness of October, this expense combined with the other expenses in my rental portfolio hurt.

The property also experienced leaky garbage disposal and backed up kitchen sink while I was at FinCon. A quick phone call to my handyman fixed both of these problems.

In summary, rental property #3 – lost $1,021.07 and I spent about twenty minutes of my time managing this property.

Rental Property #3’s mortgage debt also decreased $403.66. When factoring paying down my debt, I lost $617.41

Portfolio Summary

In summary, I spent about 4 hours of my time maintaining my portfolio of rental properties.

Rental property #1 was a complete nightmare this month.

Rental property #2 was very manageable.

Rental property #3 took little time to manage but replacing a furnace is not cheap.

Overall, this was a brutal month my rental portfolio. You need to be willing to take a few bumps and bruises as a landlord. I still believe being a landlord is great but its not all sunshine and cash flow.

In October, my rental properties provided me with a negative cash flow of $2,693.71

My mortgage debt decreased $1,821.70 last month which further increased my net worth.

Factoring in repayment of debt and cash flow, my rental properties lost me $872.01.

 

The Two Day Week: 6 Saturdays and a Sunday

6 Saturdays and A Sunday

The average week consists of 7 days. Everyone has a Monday, Tuesday, Wednesday, Thursday, Friday, Saturday, and Sunday. And most people are living for the weekend. Or rather, working for their weekends. Sound familiar? Fairly common, right?

Well, this concept does not apply to me. Or at least when I reach financial independence my weeks will not consist of 7 days. Instead, my lifestyle will reflect a week consisting of 6 Saturdays and a Sunday.

But what does this mean?  And what happened to Monday thru Friday?

6 Saturdays and A Sunday

Two types of Saturdays

Have you ever noticed there are two types of Saturdays? Some weekends you may enjoy a leisurely Saturday full of fun and relaxation. While other weekends may require a productive Saturday.

The leisurely Saturday is preferred. It’s the type of day where you may sleep in an extra hour, go to the gym, and meet up with friends for a day full of adventure. Perhaps you may venture out on a road trip or a day hike at a local park. Or maybe you opt to visit the local museum or check out that new brewery everyone is talking about. Inclement weather may even call for a healthy dose of Netflix & Chill.

Or maybe you are more familiar with the other type of Saturday – the quasi-productive Saturday. This type of day may be filled with running errands and catching up on tasks you neglected during the work week.

You might be running all over town to pick up dry cleaning, grocery shopping, and doing laundry. Perhaps your workload requires you to work weekends.

The big takeaway is that Saturdays are either flexible days filled with enjoyment or days partially filled with productivity completing necessary tasks. Who wouldn’t want 6 Saturdays and a Sunday every week?

The normal person’s calendar looks like this:

By achieving financial independence and retiring early, your calendar is rearranged and looks like this:

6 Saturdays and a Sunday
6 Saturdays and a Sunday

Which calendar do you want to live by? Don’t lie to yourself. The correct answer is 6 Saturdays and a Sunday.

Sundays

Sundays are typically a day of rest spent and a time spent with family and friends. Sunday is also for football and sometimes referred to as the Lord’s Day. Given the sanctity of Sunday, this day will always remain on my calendar.

Nothing like an exciting touchdown!

6 saturdays and a sunday

But then the coach throws the red flag…. And the following play is under review. After a few nail biting play….. You hear, “After further review, the ruling on the field stands.”

The crowd goes nuts!!!! Who could give up Sunday?

Saying good bye to the ‘rest of the week’

Monday

Well, first off…. Have you ever met anyone who likes Mondays? No? Me either. Don’t lie to yourself, you know you hate Mondays.

In fact, the fear and dread of Monday sinks in Sunday evenings and kills the buzz of a great weekend. Or for my millennial readers, once Game of Thrones ends.

You are greeted on Monday mornings by that damn alarm clock that goes off way too early and is way too loud. There is not enough coffee in the world to get you going on Mondays. Coworkers apathetically ask you about your weekend when all you want to do is hide in your cubical and wish you had another day off.

Who enjoys that? Who would ever miss that? Not me.

Tuesday

Well, Tuesdays fall into ‘just another day’ category. The second day of the work week is bland. As you recover from the Monday Blues you may find your productivity increases and accomplish some of those items on the never ending to-do list.

The lady above has a never ending to-do list. Who wants that? The to-do list below sound a lot better if you ask me, but I will let you decide for yourself.

Wednesday

Ah, then there is Wednesdays. Your co-workers are high fiving and cheering that we are half way through the week.

Then there is that guy. You know THAT guy in the office that is always going around pleading for you to guess what day it is? Mike, Mike, Mike! Guess! What Day! It is?!?! HUMP DAAAAYYYYYY!

My name is not Mike, fucker. And yes, I know what day it is. The day after Tuesday is ALWAYS Wednesday.

Sadly, this guy is stuck on the hamster wheel and is doomed working late into his life. It’s sad to think about how many hump days he must endure.

Yet he gloats about the luxurious weekend getaway he took with his slam piece. Oh and he almost forgot to mention, he is house shopping for a home three times larger than he could possibly need. He will never know what 6 Saturdays and a Sunday feels like.

Yeah… Not going to miss ‘hump days’ in the office. In fact, I may never know its Wednesday again. The day will feel more like a Saturday; there there will be no awkward water cooler talks or cubicles in sight. That sounds real good.

Still not on board with 6 Saturdays and a Sunday every week yet?

Thursday

Thursday shows up just as the week becomes almost unbearable. Your workload is daunting and your boss is a prick.

So, why not hop on LinkedIn for a moment? Wow, that recruiter just creeped on my profile. Maybe I should message her about one of those openings she just mentioned.

But then you realize that grass may not be greener on the other side.

All of your co-workers and you agree that y’all are way overworked and under appreciated. Someone yells out that it is ‘Thirsty Thursday’ and that the office should go to happy hour.

Paying for over priced drinks to numb the pain sounds great. Everyone discusses the upcoming plans for the weekends and rant about office drama. Things seem like they might be better next week – especially after a two days vacation you a promised that your boss calls the weekend.

Friday

Friday. Everyone is amped up about Friday. The mood in the office is lighter and more relaxed. People take longer lunches, show up late and leave early. You may have that guy or girl in the office that brings in bagels or doughnuts to celebrate the end of the week too.

For many, pay day falls every other Friday. Your co-workers also mention that its payday. If you are on the financial independence path, you probably lost track of when payday is since you actually have your shit together.

As the day progresses, people start saying things like, “Only 4 more hours.” Then you run into them again two hours later at the water cooler to hear them say, “only two more hours.”

I will mildly miss Fridays. Getting paid is awesome. Sacrificing 40 to 60 hours a week? No thanks. Collecting a paycheck is not worthing giving up years of my life. I’d rather buy back my time and prefer passive income.

Do you want to be stuck on the hamster wheel? Or would you rather have 6 Saturdays and a Sunday every week? If you are willing to make a few lifestyle changes, increase your saving and investing habits, you too can escape the rat race. Or are you turned off at the prospect of having 6 Saturdays and Sunday every week?

Did You Know You Can Refinance Almost Anything?!?

Hey everyone! I hope the fall season is treating you well and you have not overdosed on pumpkin flavored options flooding the market. Today we have a special guest today, Patty Moore from @WorkMomLife.

Patty and I had an interesting conversation a while back. In real estate, we talk about refinancing to lower monthly payments through lower interest rates and resetting the amortization schedule. We also use refinancing to pull cash out of a property.

Patty brought up a great point during our discussion. Homes are not the only thing that you can refinance. Her refinancing tips may save you hundreds or thousands of dollars on interest payments, lower your monthly debt obligations, and improve your chances to qualify for a real estate loan.

Without further ado, take it a away Patty…..

Did You Know You Can Refinance Almost Anything?!?

By Patty Moore, a blogger working to grow inside and out. Patty blogs about her career, family, and finances. Follower her on Twitter @WorkMomLife.

With the recent increases in the Federal Reserve’s short-term rate and the Treasury 10-year note, all eyes are on mortgage rates to determine if this might be the last, best time to refinance. Generally, it’s always a good time to refinance if you can lower your interest costs. That not only includes mortgages, it includes just about any type of debt that be made less expensive through refinancing, such as student loan debt, credit card debt and auto loan debt. The good news is, despite earlier predictions that the Fed rate increase would drive interest rates higher, they have actually remained fairly steady and some loan rates have actually come back down. So, there is still an opportunity to lower your interest costs on whatever type of loan you might have.

Student Loan Refinancing

There is no debt more stifling than student loan debt, which, at average of more than $30,000 per borrower, is a significant burden for more than 40 million Americans. The average monthly student loan payment for borrowers aged 20 to 30 years is $351, which is enough to keep many of them from being able to afford the common trappings of post-graduate life, such as homeownership. Most are forced into postponing saving for retirement, which will become a threat to their future financial security. That is all the more reason to consider refinancing your student loan.

Student loan refinancing is available through private lenders who will consolidate any number of your federal and private student loans into one new loan with a loan term of five to 20 years. Many lenders only offer variable loan rates, which may be risky unless you are able to pay your loan off within a few years. Although the rate can start out lower than a fixed rate, if interest rates increase, as they are expected to, your monthly payment will increase. An increasing number of newer lenders, especially the online lenders, do offer fixed rates, which can still reduce your monthly payments and interest costs.

For the most credit worthy borrowers, student loan refinancing rates can be found in the low three percent range, which could lower your monthly payments and dramatically reduce your total interest costs. As of October 1, 2017, SoFi, one of the fastest growing private student loan lenders, is offering a rate of 3.35 percent for a five year loan. Its best rate for a 10-year loan is 4.375 percent, which would generate a monthly payment of $206, just $16 higher than the $190 payment on the four federal loans. That would result in total interest cost savings of more than $3,700. As with most of the more competitive lenders, there are no charges for an application, origination or prepayment fees.

Credit Card Refinancing

Your credit cards will be much more sensitive to any increase in interest rates. If you are paying rates that are around the national average of 15.59 percent, you might consider refinancing that debt with less expensive debt that can be found with a personal loan. Right now, several online lenders are offering fixed rate, unsecured personal loans with rates as low as 5.99 percent. Of course, you would need to have stellar credit to capture a rate that low.

Consumers with excellent credit (720 and above) frequently see rates between 6% and 10% which is significantly lower than credit card rates and competitive with other methods of financing. But even if you are able to qualify based on better than average credit, you could reduce your credit card rate by two to three points, which would result in significant interest cost savings over the term of the loan.

The advantage of using a personal loan to refinance credit card debt is that everything is fixed – the interest rate, the payment and the loan term – so you can actually target a debt payoff date. The key is to focus on debt payoff and avoid adding any credit card debt during the loan term; otherwise you will only compound your debt problem.

Auto Loan Refinancing

Chances are, since you financed your last car purchase, auto loan rates have increased, not decreased. So, why would it make sense to refinance your auto loan? It wouldn’t unless you were able to lower your interest costs. But, there could be a number of reasons why you could score a lower rate today than the day you purchased your car:

You improved your credit score. If you bought your car when your credit score was lower than it is today, you could probably qualify for a lower rate.

You took out a long-term loan. If you opted for a loan of more than 60 months as a way to keep your monthly payments loan, you might be able to lower your rate substantially, be refinancing into a shorter term loan. Auto lenders reserve their lowest rates for loans with the shortest terms.

You settled for a dealer-sourced auto loan. If you financed your car through a dealer without shopping around, you might be able to find a lender offering more competitive rates. Online auto lenders have become extremely competitive and, if you have good to excellent credit, chances are you can still find a rate that is lower than your dealer’s rate.

The most competitive auto lenders offer auto loan refinancing at the same rates as new car financing. There may be some restrictions on the age of the car, but if it is less than four years old, it should be able to qualify for late model or new car rates.

Lowering your auto loan rate a few points isn’t likely to reduce your monthly payment a whole lot, but it can save you quite a bit in interest costs over the term of the loan. For example, if you have four years remaining on a five year loan for $25,000 with a 7.75 percent interest rate, you could lower your monthly payment by $28 and save nearly $1,400 in interest costs by refinancing into a 4.75 percent loan.

The Landlord Report – September 2017

Hello there – welcome to another “Landlord Report”. This monthly report will share my experiences as a landlord. The report will show EVERYTHING related to my rental properties and life as a landlord.

I will discuss the rents that I collected, mortgage payments, and other ‘landlord items’. Other topics may include repairs, finding new tenants and any other items that might randomly pop up. The report will also share how much money I made and the amount of time (hours) it took. I want to show the world being a landlord is a wonderful thing.

Throughout this process I aim to be as transparent as possible. Being a landlord and owning rental property is a wonderful way to earn (mostly) passive income and allow you to buy back your time faster. Please feel free to contact me with any questions – happy to provide insight.

The Landlord Report – September 2017

landlord

This month had two minor items to mention.

The first was a small repair or rather an odd occurrence at rental property #3.

The second, was a house keeping item at rental property #1.

September in general was an uneventful month and only a few hundred dollars shy of a marked another perfect month (a month with no expenses or repairs) for my rental portfolio.

Full disclosure – October (next month) will be juicy. A sneak peak – vacancies, leaky faucets and raccoon invasions!

Digressing back to September…

The table below outlines all my income and expenses for the past month month:

As you can see, September was another great month for my rental property portfolio. Rental property #2 had a perfect month. Being a landlord is great. Rental property #1 and rental property #3 had minor expenses (see below for details).

Rental Property #1

The Starter Home

Rental Property #1 Summary

In summary, rental property #1 – earned $81.76 and I spent 15 minutes of my time collecting the rent. This is $300 less than the previous month since I had to pay $300 for some significant landscaping.

The current tenants have not been the most active in maintaining the back yard. Weeds, trees and other vegetation were starting to take over the backyard. 

The backyard actually looked more like a jungle. Unfortunately, I did not take a picture before the guys cleaned the place up. Total time spent for the backyard took about 15 minutes worth of phone calls.

My mortgage debt dropped by $734.79 from my monthly mortgage payment. When considering principal reduction, I came out ahead $816.55; not bad for 30 minutes of time.

Rental Property #2

The Fixer-Upper

The tenants paid their rent of $4,000 in full and on time. Rent collection required me walking downstairs to get my morning cup of coffee. There were no repairs or expenses this month, which is AWESOME! And something that happens more frequently than you may think. Damn, it feels good to be a landlord.

Rental Property #2 Summary

In summary, rental property #2 – earned $1,591.43**. I spent maybe 10 minutes of my time depositing the checks with my smart phone. As a result, I earned $1,591.43 for 10 minutes of effort!!! September 2017 was a great awesome PERFECT month for rental property #2. Does this income beat your day job?

My mortgage debt decreased $716.29. When factoring paying down my debt, rental property #2 made me $2,307.72.

**I also live in the house and get paid to live here. Pretty sweet right? House Hacking is awesome.

Rental Property #3

This was the third full month for rental property #3. The utilities were $280.21 this month, which was about the same as last month. This includes water and gas for the entire building along with electricity for one of the units.

One of the tenants accidentally locked themselves’ out of the kids bedroom. This resulted in about an hour of my time and $8.97 for a new doorknob.

Also, I had to drill through the existing lock, stop by Home Depot and install a new doorknob. Fun fact, I installed a doorknob that does not lock. This will not be an issue moving forward.

In summary, rental property #3 – earned $1,526.74 and I spent only an hour of my time managing this property.

Rental Property #3’s mortgage debt also decreased $402.23. When factoring paying down my debt, I earned $1,928.97

Portfolio Summary

In summary, I spent about 2 hours of my time maintaining my portfolio of rental properties.

The landscaping expense at rental property #1 was mildly annoying but manageable and worth the expense.

The minor repair expense at rental property #3 was less than $10.

Overall, I was very happy with my rental portfolio

In September, my rental properties provided me with $3,199.93 in cash flow. There is nothing like (mostly) passive income.

My mortgage debt decreased $1,853.31 last month which further increased my net worth.

Factoring in repayment of debt and cash flow, my rental properties earned me $5,053.24.

What else can you do for 2 hours and make this kind of income? Being a landlord and owning rental properties sounds pretty good, right?

Q3-2017 Dividend – The Dividend Report

As many of my readers may know, I love dividend stocks and believe dividends provide a great source of passive income. Moving forward, I will be providing quarterly updates regarding my dividend income. Utilizing ‘The Dividend Report’ section of my blog, I will share my progress towards my dividend goals. I will also share dividend growth stock ideas and thoughts. Additionally, I will share the rational behind any future purchases or sales. Dividends are truly a wonderful thing.

The Dividend Report

The current goal is to average $1,500/month in dividend checks. I would like dividends to provide between 25-33% of my monthly retirement income. However, this goal may be revised upwards over time.

Q3-2017 Dividend Income

When creating this quarter’s dividend report, I was slightly discouraged by the results. Why? Well my dividend income quarter over quarter actually decreased. However, this quarter’s dividend progress (or lack their of) is misleading and I look forward to sharing Q4-2017 data in January.

My Q3-2017 dividend income was $537.76. Last quarter (Q2-2017), my dividend income was $686.46. This equates to a $148.70 or -21.6% decrease from the previous quarter. The decrease is solely due to a few of my larger 401K holdings not providing a distribution during Q3-2017. I know this is a bit odd but some of the funds also do not provide a Q1 dividend. Ultimately, it all balances out as the funds provide two dividends in Q4 (October and December).

Last year’s Q3 dividend income was $521.31. This equates to a $16.45 or 3.15% increase from the same quarter last year. However, this figure is a bit misleading. Why? Well this time last year I was still at my old job which had four regular quarterly dividends.

In past four quarters, my total dividend income was $3,066.74 (~$16 increase annually). I am proud to report that my dividend income is continuing to trend upwards. This growth is fueled by my individual stocks increasing their dividends and continuing to invest (mostly via index funds).

Even more so, I am excited to see my dividend income for Q4-2017 as I will have two distributions from many of my funds. I am expecting that my 2017 annual dividend income will increase nicely compared to 2016.

My average monthly dividend income is now $255.56 ($3,066.74 / 12 months = $255.56), which is 17.04% of my current goal of $1,500/month. I am only am now almost 0.1% closer to my goal; Previously I was at 16.94% of my goal. This is a bit misleading as I switched jobs in the third quarter of last year. Next quarter will show a more meaningful measurement

The graph below outlines my quarterly dividend income dating back to Q1-2013:

The table below outlines my quarterly dividend income dating back to Q1-2013:

 

New Purchases

No individual stock purchases in Q3-2017. Currently, I do not see many (any?) undervalued dividend growth stocks. The market is STILL at all-time highs and I cannot justify buying an individual stock at these levels. I am patiently waiting for a pullback to present a buying opportunity. It’s tough to make sense os current valuations. Maybe I am crazy and missing the boat (on individual stocks). At least I am buying index funds as I am automating my way to financial independence.

What is a House Hack or House Hacking?

House hacking’s popularity has increased over the past few years. Bloggers and podcasts alike are discussing the topic. Twitter is tweeting about house hacking. Heck, house hacking allowed me to go from a negative net worth to over $500,000 in 4 years. But….

What is a House Hack or House Hacking?

Simple.

House hack noun – an owner occupied property that keeps the owner’s cost of living low. This is achieved by renting out extra rooms or apartments. In some cases the owner makes a profit while living at the property.

House hacking verb – the act of living in a house hack to keep one’s cost of living low or getting paid to live while living in said house hack.

Example:

Bob: Dude, Joe just bought a duplex and will use it as a house hack.

Jessica: Yeah, Joe will rent out one unit while living in the other. I heard his tenant’s rent is $300/month more than the mortgage.

Bob: House hacking sounds amazing; I bet Joe will be financially independent in no time.

A house hack or house hacking sounds pretty good right about now, right?

Ways to House Hack

Single family homes and multi-unit buildings with four or fewer units are two common property types used for house hacking. Why? Because the financing options are attractive and it’s easier to qualify for a loan. We will get more into the financing options later.

house hacking

Single Family Homes

Single family homes provide a great way to house hack, especially for younger people that are single. The single family house hack is not rocket science. In fact, it’s very simple.

The following steps will help you house hack with a single family home:

  1. Buy a home with multiple bedrooms. The more rooms the better. Seriously, find a property with three, four or five bedrooms. Or, find a property that you can add a room or two to.
  2. Advertise the extra room(s) for rent. I recommend using resources like Craigslist, Zillow or Apartments dot-com; these sites provide free listings. Paying for marketing is silly in the age of technology. I market my properties this way and have enjoyed great success finding roommates and tenants.
  3. Host an open house to meet prospective roommates/tenants.
  4. Have interested renters fill out a rental application.
  5. Screen your applicant(s). This includes landlord references, credit checks and employment verification. Hint: this should all be in your application.
  6. Select your tenant(s), collect the security deposit, first month’s rent and sign the lease. Make sure you have a real estate attorney review or prepare your lease. Attorneys are an important member of your real estate team.
  7. Move in and have a beer.
  8. Sit back and get paid to live.

Sound simple enough? Thought so. House hacking is not rocket science.

Multi-unit Buildings

Multi-units buildings with four or fewer units provide another great way to house hack. Duplexes (2 units), triplexes (3 units) and quads (4 units) can be financed with low down payments or conventional financing. FHA will provide a loan with as little as 3.5% down on owner occupied properties that have four or fewer units.

Also, anyone at any point in life can utilize this house hacking method. Some people may be turned off by the single family house hack if they are married or have a family.

Steps to multi-unit house hacking:

  1. Buy a property with two, three or four units.
  2. If the property is not fully rented when you buy the place, advertise the vacant unit(s) on Zillow, Craigslist or any other free marketing site.
  3. Show the vacant unit to potential renters.
  4. Have interested renters fill out an application.
  5. Screen your applicants. This includes landlord references, credit checks and employment verification. Hint: this should all be in your application.
  6. Select your tenant(s), collect the security deposit, first month’s rent and sign the lease. Make sure you have a real estate attorney review or prepare your lease.
  7. Tenants move in.
  8. Sit back and get paid to live.

The multi-unit house hack offers a few advantages over the single family house hack.

First, house hacking with multiple units allows you to not live with your tenants.

Second, the income from the other units counts towards your income to qualify for the loan.

Third, multi-unit house hacking generally provides better cash flows.

Also, multi-unit buildings reduce vacancy risk. Assuming you move out of your house hack (single family home or multi-unit), there will inevitably be a vacancy one day. With a single family home, its binary – you either have a renter or you do not.

A four unit building allows you to weather vacancies much easier. If you have four tenants and one leaves, you are still collecting rent on 75% of the building.

How I have House Hacked

My first property was also my first attempt at house hacking. The house was a 3 bedroom/2 bathroom duplex of which I owned only one side of the duplex. I bought this property less than a year after graduating college and rented the two extra rooms.

This property served as a great house hack by keeping my cost of living extremely low. Equally as important, I did this in the Washington, D.C. area which is a high cost of living (HCOL) city. House hacking is possible almost anywhere if you are willing to search for opportunities.

Currently, I live in my 2nd (of 3) property which was a fixer-upper. The house was built in 1910 and had 3 bedrooms/1.5 bathrooms. After a complete gut renovation, the house has 5 bedrooms and 2.5 bathrooms. I currently get paid to live at this house. This is my best house hack so far.

I also had the honor of appearing on The FIRE Drill Podcast where I shared my experiences house hacking and path to FIRE. The FIRE Drill podcast is awesome and I highly recommend checking it out.

You can also listen to the house hacking podcast here:

Examples of House Hacking

There are several great stories about people using house hacking to build wealth, keep their cost of living low and achieving financial independence. You can find a house hack most anywhere. Below you will find four great examples of house hackers house hacking around the country.

Gwen from Fiery Millennials

Gwen from Fiery Millennials was kind enough to guest post about her first house hack earlier this year. She was only 26 when she bought her triplex.

Gwen and her triplex

Gwen also shares more about buying her first house hack with a VA loan.

Her triplex is a great example of house hacking in the midwest. I recommend following her journey; she writes about  what it’s like to be a live-in landlord, renovating her property, dealing with contractors and even EVICTING tenants.

Coach Carson

Coach Carson bought his first house hack with private financing. The property was a quad (4 units) and a fixer-upper. He fixed the property up, lived in one unit, and rented the other three. Nothing like getting paid to live somewhere.

Coach Carson’s house hack before renovations

Coach Carson’s quad was in a college town in South Carolina. In addition to house hacking, he has successfully invested in real estate for more than a decade and owns dozens, yes, DOZENS of properties. His blog is definitely worth reading. I also recommend checking out his online real estate courses.

Coach Carson’s house hack after renovation
Erik from The Mastermind Within

Erik bought a a single family home which he uses as a house hack. He rents the extra rooms to friends and former roommates from when he was a renter. Erik provides a great example of single family house hacking and an example of house hacking in the North (Minnesota – not the midwest, right?)

Bonus, Erik shares REAL NUMBERS for his house hack. He is in his mid 20s and house hacking increased his net worth by more than $100,000 in two years; very impressive guy.

Scott Trench from BiggerPockets

Scott Trench from BiggerPockets has a great story about house hacking in expensive markets. He lives in Denver, which is provides many potential challenges.

Denver is a higher cost of living city, the local real estate market is on fire, and the market is not friendly for first time home buyers. Despite these obstacles, Scott was able to find a great house hack close to Downtown Denver. He proves that house hacking is possible in most any city.

Buying a House Hack with Little Money

Real estate is a wonderful thing. In some instances it can be a great investment that provides passive income. Unfortunately, real estate also requires at least some money.

Why? Well, in order to purchase real estate you must have money for a downpayment. The days of $0 downpayment loans are essentially gone unless you are a veteran or active military. BUT! You do not need to be Warren Buffet to buy real estate either. There are plenty of options that require less than a 20% downpayment.

FHA Loans

FHA loans require a 3.5% downpayment and provide a great way for young investors or those with little cash to buy a home. This type of loan is a great way to break into house hacking.

The loan requires the home to be the buyer’s primary residence and can be used to by a single family home or apartment building with four or fewer units.

FHA loans are easier to qualify for since the underwriting metrics allow for a debt to income ratio (DTI) up to 50%. Most ‘conventional loans’ will not allow a borrower’s DTI to exceed 41-43%.

FHA loans offers a lower interest rate compared to conventional loans but the lower interest rate is negated as borrower’s are required to pay PMI (private mortgage insurance).

Given that FHA loans are subsidized by the government, some fixer-upper properties may not qualify. FHA loans require that the home be in decent shape.

I used an FHA loan for my first house hack. About a year later, I refinanced to lower my monthly payment and get rid of my PMI.

As of June 2017, the median home price in the United States was $258,300. A house hack that costs the median price would require a $9,040.50 downpayment. With some planning, frugality and side hustling, many can save this amount in a year (or less).

Bonus fact – if you buy a two, three or four unit property with an FHA loan, you can count 75% of the market rate rents on the other units towards your income to qualify for the loan.

203k FHA Loans

Similar to the traditional FHA loan, 203k FHA loans are subsidized by the government and require a 3.5% downpayment. Borrowers also enjoy the easier underwriting metrics which make it easier to qualify for the loan. The 203k FHA loan can be used for either type of house hack (single family or multi-unit) and also has PMI.

So what is different about this loan? The property can be in any condition. In fact, this type of loan is great for ugly homes that are falling apart.

Guy, what are you talking about?

Well, the 203k FHA loan allows you to buy a home in any condition. Why? Because this loan product also lends you additional money to fix up the house.

Want a new kitchen or bathroom? Boom, roll the work into your loan.

Want to buy the ugliest house in a gentrifying neighborhood and completely renovate it? Boom – this is the loan for you. In fact, I used a 203k FHA loan for rental property #2.  This property needed a complete renovation and I replaced almost EVERYTHING.

So, what’s the catch? The closing process takes longer. The government requires a certified 203k FHA inspector to inspect the property and monitor draw request. The loan also requires a licensed contractor and scope of work prior to closing.

The permitting process requires a modest amount of time and energy. Rehab/construction funds will only be released after the inspector and contractor sign off on the work. The loan also requires that all work must be completed within six months.

If you are willing to put in the effort time and energy, 203k FHA loans provide a great way to build sweat equity and buy a house hack with a small downpayment.

VA loans

Veterans and active members of the military have access to VA loans. This loan product is a great benefit for members of the military. VA loans do not require a downpayment and typically provide the lowest possible interest rate.

Similar to the FHA loan products, VA loans require the property to be in good condition. Most fixer-uppers will not qualify for a VA loan. Also, the closings process for VA loans does not move quickly.

VA loans provide a great way for members of the military to break into house hacking since no downpayment is required.

Benefits of House Hacking

The average American spends roughly a third (32.9%) of their income on housing. In larger cities like San Francisco, New York City and Miami renters often spent more than 50% of their income for housing.

House hacking allows individuals to reduce their housing expenses dramatically. Some house hacks will require an owner to pay only 10% of their income to housing, which frees up an extra 20% of income for saving and investing.

The best house hacks eliminate housing expenses for house hackers. By house hacking, some individuals are able to free up to 33% of their income that would otherwise be consumed by renting.

Successful house hacks give house hackers the ability to easily increase their savings rates. The higher savings rates and increased investing shortens the time to financial independence.

To Sum it All Up

In summary, and to simplify the benefits of house hacking, you save a shit ton of money. In some instances you even make money.

More money saved means more money available for investing. More funds available for investing means acceleration towards financial independence….

Financial Independence allows us to buy back our time. More time = more cowbell

What are your thoughts on house hacking? Do you own a house hack? After reading this post, do you have plans to house hack? Or, do you think house hacking is crazy and reserved for us weirdos?

We are currently working on a house hacking guest post series and would love to hear your story about house hacking or a house hack you purchased. Please comment below. Oh and we are not sorry if you were offended by our demands of more cow bell.

Update: The Giving Challenge

A few weeks ago, I challenged my readers and the personal finance/FIRE blogging community to assist with the Hurricane Harvey recovery efforts through The Giving Challenge.

What Was the Giving Challenge?

I wanted our generally privilege community to stop focusing on high savings rates, real estate investing and passive income for a moment. Instead, I wanted our community to focus on giving back and helping those in need.

Asking people to donate is simply not enough. So, I offered major incentives to entice people to donate. How?

First off, I offered to match up donations dollar for dollar up to $1,000/day for five days. If we did not reach $1,000 at the end of each day the challenge would be over.

Second, in addition to matching donations, my employer would also match any donation I made. Now every donation people submitted would be matched 2:1.

A small $5 donation would turn into $15 of aid for the victims of Hurricane Harvey. In some instances the donations we received were also matched by donors’ employers. This means a in some instances a donation of $5 turned into $20.

Sounds a lot like compound interest, right?

How did it go?

Donations were slow at first. Disappointment sank in with the lack of interest or people not sharing their donations during the first few hours of the Giving Challenge.

However, the word slowly started to spread and donations picked up over time. After five hours, The Giving Challenge raised over $600 and we hit the first $1,000 mark in less than 12 hours.

This was a good sign. Reaching $1,000 also meant that the challenge would make it to at least day 2.

People began sharing the Giving Challenge with others and the donations started to flood in. Some individuals were very generous and gave large sums of money. While others sent in a note saying that they could only spare $5 or $10 but still wanted to help those in need. Both types of donations were equally important.

The challenge was very successful. Thanks to the generous donations, we were able to max out all 5 days. These acts of kindness gave me more faith in our society. While the news displays nothing but chaos, it’s refreshing to see selfless and caring acts from dozens of donors.

In summary, we received $5,056.92 in donations. Of those donations, other employers matched $232.00. I matched the $5,000.00 as agreed and my employer matched my donation with $5,000.00.

Thanks to everyones efforts and caring donations, we raised $15,288.92 for the recovery efforts in Houston and the other areas impacted by Hurricane Harvey.

P.S. – here is proof of my donation:

Keeping the Party Going

As you may know, I have worked on several houses both for myself and with Habitat for Humanity. Several homes in the Gulf Coast region are going to need extensive repairs. This will require significant amounts of time and money.

With that said, I would love to set up a volunteer trip and help restore a few homes. If anyone is interested in taking a week off to volunteer with such work, please let me know. It would be awesome to get one or multiple groups together.

Landlord Report – August 2017

Hello there – welcome to another “Landlord Report”. This monthly report will share my experiences as a landlord. The report will show EVERYTHING related to my rental properties and life as a landlord.

I will discuss the rents that I collected, mortgage payments, and other ‘landlord items’. Other topics may include repairs, finding new tenants and any other items that might randomly pop up. The report will also share how much money I made and the amount of time (hours) it took. I want to show the world being a landlord is a wonderful thing.

Throughout this process I aim to be as transparent as possible. Being a landlord and owning rental property is a wonderful way to earn (mostly) passive income and allow you to buy back your time faster. Please feel free to contact me with any questions – happy to provide insight.

The Landlord Report – August 2017

landlord

This month was rather uneventful. August marked another perfect month (a month with no expenses or repairs) for my rental portfolio.

The table below outlines all my income and expenses for the past month month:

guy on fire

As you can see, August was a great month for my rental property portfolio. Rental property #1 and rental property #2 had perfect months. Rental property #3 also had a perfect month; the expense item is my share of the utilities for the property.

Rental Property #1

The Starter Home

Rental Property #1 Summary

In summary, rental property #1 – earned $381.76 and I spent 5 minutes of my time collecting the rent. How? Well, I had dinner at a restaurant down the street and stopped by on my way home. My mortgage debt dropped by $701.94 from my monthly mortgage payment. When considering principal reduction, I came out ahead $1,083.70; not bad for 5 minutes of time.

Rental Property #2

The Fixer-Upper

The tenants paid their rent of $4,000 in full and on time. Rent collection required me walking downstairs to get my morning cup of coffee. There were no repairs or expenses this month, which is AWESOME! And something that happens more frequently than you might think. Next month will require a bit of yard work; thankfully the weather will be mild.

Rental Property #2 Summary

In summary, rental property #2 – earned $1,591.43**. I spent maybe 10 minutes of my time depositing the checks with my smart phone. As a result, I earned $1,591.43 for 10 minutes of effort!!! July 2017 was a great awesome PERFECT month for rental property #2. Does this income beat your day job?

My mortgage debt decreased $714.11. When factoring paying down my debt, rental property #2 made me $2,305.54.

**I also live in the house and get paid to live here. Pretty sweet right? House Hacking is awesome.

Rental Property #3

This was the second full month for rental property #3. The utilities were much higher this month and I am hoping it was an anomaly.

One of the units utilities are included in their rent and I pay the water bill for the entire building. This expense costs me $270.85.

In summary, rental property #3 – earned $1,554.07 and I spent only an hour of my time managing this property.

Rental Property #3’s mortgage debt also decreased $401.51. When factoring paying down my debt, I earned $1,946.58

Portfolio Summary

In summary, I spent less than 20 minutes of my time maintaining my portfolio of rental properties. Rental property #3 utility bills will be interesting to observe. I decided to have one unit with utilities included. The other tenant pays for their utilities (except water). This experiment may be a bit costly but we shall see.

In August, my rental properties provided me with $3,518.26 in cash flow. There is nothing like (mostly) passive income.  My mortgage debt decreased $1,817.56 last month which further increased my net worth. Factoring in repayment of debt and cash flow, my rental properties earned me $5,335.82. What else can you spend 20 minutes and make this kind of income? Being a landlord sounds pretty good, right?

The Giving Challenge: Making Your Donation Go Further

I would like to take a moment and step off my soapbox where I normally shout about dividends, passive income and why being a landlord is awesome.

Rather, I would like to use this post and platform to raise awareness and discuss a humanitarian issue. No, I am not about to go on a political rant. I can promise you that I never will either.

As I am sure you are aware of by now, the Gulf Coast region of Texas is in a state of emergency. Hurricane Harvey dumped record amounts of rainfall on the gulf coast, left a path of destruction with hurricane strength wind, and flooded one of the most populated cities in America.

It’s still too early to know the true damage caused by this powerful storm, however it’s safe to say that thousands upon thousands of men, women and children are in need of aid. Countless people are without food, shelter, water or dry and clean clothes. People’s entire lives have been washed away by this storm.

The victims of Hurricane Harvey need our help.

The Giving Challenge

All too often in the personal finance, financial independence, and investing blogosphere we get lost talking about money and reaching our goals. What we do not discuss often enough is our privilege and giving back to society. I am not going to rant on about how great we have it; you should already know that by now.

This is a public challenge to all of you (bloggers and readers alike) to donate to Hurricane Harvey relief efforts. Moreover, I am going to incentivize all of you to donate with this giving challenge.

But what do I mean by this?

I am going to match all of your donations dollar for dollar up to $1,000 for the next 24 hours. If we reach this lofty goal, I will extend the challenge for another day and another $1,000. Given that I am not Warren Buffet or Mark Cuban this challenge will be capped at $5,000 (of 5 days of giving).

BONUS – my employer will match my contribution dollar for dollar. SO your contribution will actually be matched $2 for $1. If your employer matches donations (many of them do) your contributions will be matched $3 to $1.

What you need to do

Ok, so now that I have convinced you to donate (if you are not convinced, go turn on the news for 5 minutes then come back) you are probably asking yourself what you need to have your donation matched?

 

  1. Select a creditable charity or nonprofit.

The Consumer Reports recommend the following: https://www.consumerreports.org/charitable-donations/best-ways-to-help-victims-of-hurricane-harvey/

NPR’s advice for donating: http://www.npr.org/sections/thetwo-way/2017/08/28/546745827/looking-to-help-those-affected-by-harvey-here-s-a-list

  1. Check to see if your employer will match your donation (many will; this will further increase our giving power)
  2. Donate to the charity.
  3. Email me (guyonfire.us@gmail.com) proof of your donation and that it has taken place after posting this article. Please let me know if you would like to remain anonymous; I plan to give a big shout out to all those who donate.
  4. Share this post with as many people possible

 

Let’s get out there and help those in need! Together we can all achieve more. Every bit helps. Your $5 donation can turn into $15-20.