I began tracking my net worth in July 2013. This was a habit I formed two months after graduating from college. Since then, I’ve tracked my net worth at the end of every month. This is something everyone should do. This post will cover the following:

• What is net worth
• How to calculate your net worth
• Why I track my net worth
• Why you should track your net worth
• How to increase your net worth

I used Google sheets when I first started tracking my net worth. This method worked well but took a lot of effort. About a year ago, I switched to Personal Capital and believe they provide the best net worth tracker. Oh, and it’s absolutely free.

Anyway, tracking my net worth for the past five years played a big role in my financial success. This habit showed me if I was saving money or spending more than I made. Tracking net worth is important if you want to build wealth and achieve your financial goals.

Don’t believe me? This habit helped me go from being in debt to a net worth of $650k in 5 years.

In the early days, my net worth didn’t move much on a daily basis. Every two weeks, as my paycheck rolled in, my net worth enjoyed a modest bump. I would squirrel away as much of my paycheck as possible. I started by funding my emergency fund so I could avoid credit card debt in the future. After that, I put as much cash as possible into the stock market via my 401k, Roth IRA and brokerage account.

Today, my net worth fluctuates a couple hundred to a few thousand dollars on a daily basis. The fluctuations are a result of market volatility and compound interest.  But, I wouldn’t know any of this if I didn’t track my net worth.

What is net worth?

So, what is net worth? Why do I track it? And why should you track your net worth as well?

Have you ever heard someone say he is a millionaire? Or heard something like, “she is worth over $10 million”?

Odds are you probably have. These statements are referring to their “net worth”. Everyone has a net worth. Some people have a positive net worth. Others have a negative net worth which means they are in debt.

Simply put, net worth is the value of all the stuff you own (assets) minus all the money you owe (debts or liabilities). The infographic below provides more detail on how to calculate your net worth.

 

Why do I track my net worth?

The old saying “what gets measured gets improved” can be applied to many aspects of life. This saying works for sports, learning a new language or developing a new skill. The phrase also works for financial goals like tracking net worth and building wealth.

So, why do I track my net worth?

Simple.  Net worth is a key metric to building wealth, generating passive income and achieving financial independence. What gets measured gets improved and I want to improve my financial wellbeing.

Becoming wealthy is not an accident. Building wealth takes time, discipline, and some planning. I have financial goals of building passive income from dividends, generating income from my rental properties, and retiring in my thirties. Tracking my net worth has allowed me to work towards these goals.

I’ve been tracking my net worth over time and noticed it increases faster every year. This is because I’m constantly investing and letting compound interest do the rest of the work.

 

 

Why you should track your net worth

Have you ever wondered how to build wealth? Or how wealthy people create wealth? Think of your net worth as a financial scorecard. The higher the score the better you are doing. The lower the score the worst you are doing.

If your net worth is positive and increases odds are you have some good financial habits. There is always room for improvement though. This would translate into a ‘higher score’.

If your net worth is negative or decreases, you might be doing things wrong. Something needs to change if you find yourself in this position. This would translate into a ‘lower score’.

If you don’t track your net worth you probably have no idea where your financial health stands. This definitely needs to change.

Regardless of your financial goals, you should know and track your net worth.

The best place to start is by creating a budget and tracking your net worth. I would recommend a free tool like Personal Capital. Their free net worth app will do all the work for you. The app will let you know how much you spend, if you are growing your net worth, and when you can retire.

Once you figure out your net worth, take a look at the table below to see how you stack up against others:

How to increase your net worth

Your net worth will go up over time if you spend less than you make then save and invest the difference. Repeat this process over and over again. Eventually, you’ll have more money than you’ll ever need. This is my formula for building wealth; its simple and works.

Your net worth will drop if you spend more than you make. This means you will accumulate debt which destroys the ability of wealth creation. Don’t do this.

I would recommend checking out these six simple steps to a six-figure net worth. It’s a great guide if you are new to building wealth.

Do you know your net worth? Is tracking net worth a habit for you? What success have you seen by tracking your spending and net worth? If you aren’t tracking your net worth, what are you waiting for? Try a free tool like Personal Capital and see how you are doing.

August was an average month for my rental property portfolio. There were a couple of small items that I had to address. Otherwise, it was a quiet month. This was much appreciated after the hellacious month last month.

The Landlord Report – August of 2018

Hello there – welcome to another “Landlord Report”. This monthly report shares 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’. I may include repairs, how I avoid vacancies, how I screen new tenants or any other items that pop up. This report will share how I made or lost. I will also share what kind of time commitment was required for being a landlord. I want to show the world being a landlord is a wonderful thing.

Throughout this process, I will 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.

I hope you follow along with this monthly series. The Landlord Report can serve as a guide to owning rental property. Please feel free to contact me with any questions – happy to provide insight.

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

As you can see, August was a decent month and I turned a modest profit. Rental property #1 had a perfect month. There were a couple of minor items at the other rental properties that I will dive into greater detail. No crazy fire drills or budget-busting repairs. Being a landlord is not all sunshine and cash flow. But! I still love being a landlord.

Below you will find a detailed account of what happened at each property this month.

Rental Property #1

The Starter Home

Things were absolutely boring and easy with rental property #1. I never heard a peep out of the tenants and there were no repair or maintenance items this month.

The tenants paid their rent in full and on time. I collected the $2,325 at the end of a bike ride. One of my favorite trails runs right by the house. I like to stack my bike rides with rent collection. that ended two blocks from rental property #1. This took an extra 15 minutes of my time.

Rental Property #1 Summary

In summary, rental property #1 – earned $356.76* earned and I spent about 10 minutes managing the property. 

My mortgage debt dropped by $735.89 from my monthly mortgage payments. When considering the principal reduction, I came out ahead by $1,092.65.

*Remember – this is an accidental rental that I plan to live in during FIRE.

Rental Property #2

The Fixer-Upper

Rental property #2 enjoyed a quiet month as well. I had one minor expense this month. The front yard needed some love. The bushes were a bit overgrown and the grass needed a trim. This task needed to be done but it wasn’t worth my time. Being busy, lazy, and having no desire to do yard work, I called my landscaper.

My landscaper agreed to come a couple days after I called him. He knocked this task out for me at a reasonable and fair price.

Yard maintenance:

Total cost: $90.00

Total time: 10 minutes

The tenants paid their rent of $4,050 in full and on time. Rent collection required me walking downstairs to get my morning cup of coffee. Does life get any easier than that?

Rental Property #2 Summary

In summary, rental property #2 – earned $1,324.89**. I spent about 20 minutes managing rental property #2 this month.

My mortgage debt decreased $743.10. When factoring paying down my debt, rental property #2 made me $2,067.99. Not bad for about a couple of minutes of work. Oh, and I got a free place to live.

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

Rental Property #3

My Duplex

Rental property #3 required a bit of attention in August. Nothing crazy but it also wasn’t a ‘hands-off’ kind of month. The grass was cut this month. This expense will likely disappear in September or October depending on the weather.

Lawn Cut:

Total cost: $40.00

Total time: 15 minutes

One evening, the upstairs tenant called to let me know their garbage disposal was not working. I tried troubleshooting this matter with them over the phone. First, I asked if the disposal would make any noise when they flipped the switch. It did not.

Second, I asked if the fuse had been switched in the electric panel. It has not. Third, I asked for her to push the reset button under the disposal. She did this and the disposal now made a light humming. This told me everything I needed to know. Something had jammed the disposal.

So, I went over to the apartment the following morning on my way to work. Using my garbage disposal wrench (see pic below), this problem was solved in a couple of minutes.

This tool is easy to use and solves most disposal issues. You simply put the wrench down the sink and twist the blades manually. This will grind through any materials blocking the garbage disposal’s blades. For you DIYers at home – make sure the switch is ‘OFF’ before doing this.

A small metal cap was blocking the blades. I think it belonged to one of the little girl’s toys. Over the years, I’ve seen coins, bottle caps and several other things jam a disposal. This is a common repair but an easy fix.

Garbage disposal repair:

Total cost: $0.00

Total time: 35 minutes

As my readers may know, this property has encountered termites in the past. I am pumped to say there were NO termites to report. However, I also did pay for my annual termite policy to keep the property under contract. This is an expense I am happy to pay and it only took a 5-minute phone call with my pest guy to keep the warranty current.

Termite Warranty:

Total cost: $150.00

Total time: 5 minutes

Otherwise, it was a quiet month at rental property #3. Utilities for the property:

Gas Bill: $34.91

Water Bill: $157.05

Electric for unit 2: $122.15

In summary, rental property #3 – earned $1,311.81 and I spent about 55 minutes of my time managing this property.

Rental Property #3’s mortgage debt also decreased $418.09. When factoring in paying down my debt I made $1,729.90.

Rental Property #4

Rental Property #4 was manageable this month. Heck, compared to last month, this was a cake walk. This was the first full month for my two new tenants. As expected, there were a couple of minor items to take care of now that people live at the property. The tenant that moved out also left the place a mess.

Oh, and there was a parking fiasco. The neighbors have been using the parking spaces at the property for a while. I don’t blame them since the place has been vacant for years. Heck, I even talked with the neighbors and said they could use the spots until my tenants moved in. Well, they didn’t seem to care that I have tenants now.

I let the neighbors know two weeks ahead of time that I had tenants moving in. My tenants even met the neighbors. Yet, they still kept parking in our spaces despite civil attempts to resolve the matter. So, I went to Home Depot and bought some No Parking signs. I also wrote official warnings stating our expectations. They were parking on private property and this was their last and final warning. Future violations would result in tickets and being towed at their expense. No issues since.

I also swapped the locks out on one of the units.

Parking Sign and locks:

Total cost: $80.68

Total time: 1 hour 30 minutes

Random items to make new units ready:

Total cost: $42.83

Total time: 5 minutes

So the old tenant left the place a bit messy. There were a couple of boxes left behind (mostly trash). He left a ton of food and other kitchen items on the counters and in the cabinets. The refrigerator full of food as well. He also failed to clean the apartment prior to moving out. His lease clearly states the requirements. He failed to live up to his rental agreement. I had the apartment cleaned at his expense (thanks security deposit).

Cleaning Apartment #1:

Total cost: $250.00

Total time: 30 minutes

Utilities for the month

Water Bill: $118.78

Electric for units while vacant and common area: $107.33 (I will only pay for the common area once all the units are leased)

In summary, rental property #4 – made $39.59 and I spent about 2 hours and 5 minutes of my time managing this property. The property will be more profitable once it’s fully leased.

Rental Property #4’s mortgage debt also decreased $438.64. When factoring in paying down my debt I made $478.23.

Portfolio Summary

In summary, I spent about 3 hours and 30 minutes of my time maintaining my rental property portfolio.

In August, my rental properties made $3,033.05. I made $866.58/hour being a landlord. This month’s time commitment was very average. I also expect the expenses at rental property #4 will drop once everything is settled.

My mortgage debt decreased $2,335.72 in August. Gotta love having tenants pay off over $2k of my debt every month.

Factoring in repayment of debt and cash flow, my rental properties made $5,368.77. So, I made$1,533.93/hour. Being a landlord and owning a rental property portfolio is a great way to build wealth. What is your excuse for not owning a rental property?

Last summer, I shared a post about the first four years of my journey towards financial independence. If you are new to my site or would like a refresher, I went from being in debt to a net worth over $500k in 4 years. Well, another year is in the books and its time to provide an update on my Journey to financial independence.

Year 5 – The Journey Continues

The past year was jam-packed. Some highlights include a new job, scaling up some 14ers (tall mountains in Colorado), going to my first FinCon, attending CampFI, quitting my side hustle as a property manager, being on a half dozen podcasts, and buying another rental property. Oh, and I saw Hamilton… Twice.

It was also a  great year for building wealth. My net worth skyrocketed by $116,722.79  between June 2017 and June 2018. After five years of hustling and offensively building wealth, my net worth stands at a respectable $625,246.83.

The S&P 500 was up over 10% during that time which helped my net worth considerably. The graph below tracks my net worth from the beginning of my journey (June 2013). I started manually tracking my net worth after graduating college in a spreadsheet. Over the past year, I’ve switched to Personal Capital, which an awesome free tool.

Compound interest is real and wonderful. I’m starting to notice it daily. My stock portfolio sometimes goes up or down more in a single day than I make per paycheck. In the past two months, my net worth increased an additional $25k which put me over $650k. This lead to MSN featuring my story – Man goes from negative net worth to $650,000 in 5 years.

That’s right, in just over five years I went from being in debt to having over $650,000. I am now 28 years old. Looking back, I don’t think the ’23 years old me’ would ever dream I would be where I am today.

I owe my success to working hard, having a clear focus, and taking action. There was definitely a bit of luck involved as well. However, I adopted an abundance mindset and didn’t let limiting beliefs stand in my way.

By focusing on the ‘big three’ (housing, transportation, and food), I’ve kept my cost of living in check. House hacking by far has had the biggest impact on my ability to save, invest, and build wealth. I also drove my car until she was 20 years old and traveled over 200,000 miles.

Also see: 8 ways to crush it after graduation, in your 20s & beyond

How I increased my net worth over the past year

Digging a bit deeper into the numbers…

My mortgage debt dropped by a little over $25,000 in the past year. The best part about this? My tenants are the actually paying for my mortgages. Well, except for rental property #4. This property sat vacant during the renovation process and zoning battle with the city. Moving forward, tenants will be paying off all of my mortgages.

But that still leaves about $91,700 to account for.

I also maxed out my 401k ($18,500) and contributed the maximum amount to my Roth IRA ($5,500) as well. Which leaves about $67,700 discuss.

Well, I also bought my 4th rental property at the end of 2017. I assume the property’s value increased by $20k even though I spent more than that on the renovation. Recent sales comps suggest my assumption is conservative.

Most of the remaining increase came from the stock market going up. I also buy a low-cost index fund every week. Savings, my employer’s contribution to my 401k, and dividend income dividend income make up the rest.

Also see: 6 steps to saving a 6-figure net worth

Other life changes

My life has changed a lot over the past year. Some changes are financially related while others are more lifestyle and personal.

Dumped my side hustle

Last August, I gave up my side hustle as a third party property manager. This was a lucrative gig and a great learning experience.  I am grateful for this experience and have no regrets about my time spent hustling.

However, this part-time side hustle evolved into something that looked more like a full-time job. The company almost tripled in three years. As a result, I was the main point of contact for a few hundred people. My email box was being flooded at all hours of the day and night. There was constantly something requiring my attention which resulted in little to no downtime in my life.

I was burning the candle on both ends as people often say. Between a day job, the side gig, and growing my own rental property portfolio, 100 hour+ weeks became the norm. This was not healthy or sustainable for a long period of time.

Somewhere between age 26 and 27, I realized my energy level was dropping. Gone were the days of being an energetic 23 year old with an endless supply of energy.

All the hustling had caught up with me. I was constantly tired, stressed and quite frankly, burnt out.

Burn out is a major problem in western society. In fact, I think most people are burnt out and don’t realize it. I know this was the case for me. My burn out was pointed out by several family, friends, and co-workers. I eventually noticed this problem as well.

Society has never been more demanding. Technology keeps us ‘plugged in’ at all hours of the day. It’s almost impossible to ‘unplug’ these days. Do yourself a favor and ‘unplug’ from all technology for at least one hour a day.

Burnout is something my buddy Grant and I have discussed on several occasions. He shares a great post about how he recovered from burnout. Check it out if you are dealing with burn out.

I have a new (old) job

In February, I started a new job. Actually, I went back to my first employer. I left this company on good terms back in 2014.

Since then, I’ve stayed in touch with a couple of my former coworkers. One of them reached out to me at the end of 2017 and mentioned they may have a job opening. I was on a short list of people they were interested in hiring.

At the time, I was not actively looking for a new job. This was probably the only unsolicited offer I would have entertained; I was content where I was.

However, I always enjoyed the caliber of people at my first job.  Leaving the company last time was not easy for me, however, there was no opportunity for me to advance my career previously.

So, I accepted their offer and rejoined my old team. The work has been challenging and I’ve enjoyed a nice bump in compensation. The only downside is that my commute is horrible.

I bought rental property #4

I bought a new property. That brings me up to four properties and seven doors. I closed on my fourth property (a triplex) back in November. Since then, there has been a lot of headaches. Sure, the renovation process went smoothly.

But, the city has been a nightmare to deal with. There was a lot of red tape and an unnecessary zoning battle that I fought and won. Long story short, the city had no records of my property and claimed the property was not compliant with the zoning ordinances. They were wrong.

As I mentioned, I won but I also lost. While I fought the zoning battle the property sat vacant. I needed to clear the matter before I could legally move people into the other units. Sure, I could have operated illegally but I’m not willing to take that kind of risk. So, I bit the bullet and carried the place with no rental income for almost 10 months.

Long term, the property will be great. I have two tenants living in the place now and expect a third tenant in the near future. I think I bought into the neighborhood at the right time. Starbucks recently announced they will be opening a new location a block from the property. Sounds promising for the long-term trends of the neighborhood.

Less driven by money

Over the past year, I have discovered I am less driven or motivated by money. I am not financially independent; this still a goal I am pursuing.

However, I have come to the realization money does not buy happiness. This is something I’ve known for a long time; I’ve never banked on FI or FIRE bringing me happiness. I guess you could say that I have confirmed what I already knew.

Today, I am less likely to take on a new project or side gig for an extra buck.

More driven by purpose and fulfillment. 

These days, I value my time and happiness above all else. Monetary gain provides less fulfillment. I’m still fiscally responsible, frugal and don’t spend frivolously.

I also still work for a paycheck. Though, honestly, I wish my time and energy was spent on other activities. The idea of leaving the office behind is enticing. I look forward to a corporate detox one day. I plan to start my detox by hiking the entire Appalachian Trail (Georgia to Maine). I also would like to do some extensive travel abroad and take some downtime to enjoy with family and friends.

Helping people and giving back to society has been on my mind a lot more. Last year, I spent a decent bit of time fundraising for Hurricane Harvey relief efforts. Also, I’ve had a burning desire to start a non-profit for a few years now that focuses on feeding the homeless. I would love to have more time to volunteer and help improve my community, however, I am simply tapped out.

Often, I find myself dwelling on purpose, fulfillment, legacy, and the meaning of my life. I firmly believe we are all on this planet for a reason and to do great things in life. I also believe we are also responsible for figuring out our purpose. This is something I have committed a great amount of thought to and may write more on in the future.

The greatest form of wealth is health

Lastly, I have spent more time focusing on my health. The highest form of wealth is health. What good is it have all the riches in the world (or even a nice nest egg), if you do not have your health to enjoy your wealth?

During my intense hustle over the past five years, I let my health go; this is something I regret. My eating habits went downhill and I stopped working out. This caused me to gain 20-25 pounds.

I’ve slowly chipped away at the unwanted weight, but it’s not easy. In general, I am trying to eat better and eat less. I am walking more and rediscovered my passion for biking. Moving forward, I plan to take better care of myself. Health is the ultimate wealth.

What has changed in your life over the past year? Are you moving forward towards your goals? Or rather, are you sitting idle? Worse yet, are you going in reverse? Have you made positive changes in your physical and financial health? Are you living a life of passion and fulfiment? Or is life just passing you by?

July was marked by headaches and getting hit with a backlog of invoices from my contractor. Plenty of time was spent getting tenants moved into rental property #4 as well. Oh, and you gotta love when an HVAC system dies in the middle of a heatwave during the 4th of July.

This month might have been the worst month financially for me as a landlord. However, the numbers are skewed since my contractor was slow with his billing.

The Landlord Report- July of 2018

Hello there – welcome to another “Landlord Report”. This monthly report shares 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’. I may include repairs, how I avoid vacancies, how I screen new tenants or any other items that pop up. This report will also share how much money I made or lost. I will also share what kind of time commitment was required for being a landlord. I want to show the world being a landlord is a wonderful thing.

Throughout this process, I will 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.

I hope you follow along with this monthly series. The Landlord Report can serve as a guide to owning rental property. Please feel free to contact me with any questions – happy to provide insight.

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

As you can see, July was a horrendous month for my rental property portfolio. Rental Property #2 was a shining star in an otherwise gloomy month. This month captures a few months worth of repairs. As I have shared over the past two reports, my contractor was slow with his billing. As a result, this report shows some expenses for May, June, and July.

Realistically, the actual expenses from this month weren’t as bad as it seems. However, I still had to pay for all of these expenses this month. Will dive into greater detail below.

Being a landlord is not all sunshine and cash flow. But! I still love being a landlord. This month hurt.

Below you will find a detailed account of what happened at each property this month.

Rental Property #1

The Starter Home

Rental Property #1 Summary

The washing machine at rental property #1 was acting up again. I call my go-to appliance repair guy with hopes of him fixing the machine. As usual, he picked up my phone call but I didn’t get the good news that I am used to. He was leaving the following morning to visit his family in Europe for two weeks. He was happy to fix the machine when he got back, however, I have tenants and they need access to a washer.

I was now faced with a challenging decision. Do I search for a new repair guy for this job? Possibly, but it may take a day or two to find someone. Do I bite the bullet and replace the machine? Possibly, but that is expensive. Though, the machine is at least 10 years old and has required maintenance three times in the past year.

For better or worse, I bought a new washing machine. The washer was nearing the end of its life and I did not want to keep repairing the machine every few months. This option should save me time for this ‘repair’ and in the future. The new machine should last 7-10 years and not require maintenance for at least 5 years.

A quick trip to Home Depot and about $600 later, I thought this problem was resolved. The machine was scheduled to be delivered a couple days later while I was in Colorado climbing up some 14ers. Unfortunately, the delivery company Home Depot uses is ran by a bunch of knuckleheads.

The knuckleheads who work for the delivery company are supposed to call 30 minutes prior to arriving at the property. Instead, these clowns called me after being at the property for 15 minutes. I request that they please wait for 5-10 minutes as one of my employees was down the street.

My guy quickly jetted off to the property to handle the delivery, but his efforts were wasted. The delivery guys were already gone. My blood pressure shot through the roof at the lack of professionalism by this delivery company.

To top it off, their customer service was beyond rude and unhelpful. The machine would not be delivered for another 4 days. Meanwhile, my tenants were without a washer for about a week. I told the tenants I would pay for dry cleaning or laundromat expenses. However, they kindly declined.

4 days later, the knuckleheads at the delivery company arrived with the new washing machine. They installed the machine and hauled away the old machine. A huge sigh of relief… This saga was finally behind me and I could move on to bigger and better things…

Except, I got a phone call later that evening from one of the tenants. He told me the new washer was flooding the house. Anger and rage consumed me.

To be clear, I was not mad at the tenant. This was merely a frustration of how long a simple task like replacing a washing machine should be. Rather, my anger was geared towards the delivery company.

You see, the knuckleheads did not install the machine properly. The drain line was not connected to the drain pipe. The lazy delivery guys simply put the drain line behind the drywall.

So, when the washer went to drain the water from the machine, all the water drained behind the drywall. The water had nowhere to go. So, the water pooled up and came out from under the baseboards. This resulted in the utility room flooding. This was a mess I cleaned up. I also properly connected the drain line.

I would like to give a big round of applause and thank you to the vendor Home Depot uses for deliveries.

This process should not have taken much time. The delivery service overcomplicated what should have been a simple process.

New Washing Machine:

Total cost: $601.14

Total time: 6 hours 30 minutes

On the bright side, the tenants paid their rent in full and on time. I collected the $2,325 at the end of a bike ride that ended two blocks from rental property #1. This took an extra 15 minutes of my time.

Rental Property #1 Summary

In summary, rental property #1 – lost $244.38* and I spent about 6 hours and 45 minutes managing the property. 

My mortgage debt dropped by $716.60 from my monthly mortgage payments. When considering the principal reduction, I came out ahead by $472.22.

*Remember – this is an accidental rental that I plan to live in during FIRE.

Rental Property #2

The Fixer-Upper

Rental property #2 enjoyed a quiet month. The tenants paid their rent of $4,050 in full and on time. Rent collection required me walking downstairs to get my morning cup of coffee. Does life get any easier than that?

Rental Property #2 was great to have this month – especially given all the expenses at my other properties.

Rental Property #2 Summary

In summary, rental property #2 – earned $1,414.89**. I spent about 20 minutes managing rental property #2 this month.

My mortgage debt decreased $740.63. When factoring paying down my debt, rental property #2 made me $2,155.52. Not bad for about a couple of minutes of work. Oh, and I got a free place to live.

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

Rental Property #3

My Duplex

July was actually a quiet month Rental property #3. However, I finally received the bill for the pipe that was replaced a back in May.

The grass was not cut this month. There were heavy rains for a week straight at the end of the month. This threw off the normal schedule lawn service for rental property #3. I guess you can call this saving $40.00?

Progress was also made on installing the second gas meter. The new meter rack was installed; this rack and hold two meters. I still only have one meter at the property, however, this process should be wrapped up in the near future.

Pipe Replacement:

Total cost: $773.32

Total time: 1 hours 15 minutes

Utilities for the property

Gas Bill: $44.97

Water Bill: $248.47

Electric for unit 2: $76.20

In summary, rental property #3 – earned $672.96 and I spent about 1 hour and 15 minutes of my time managing this property.

Rental Property #3’s mortgage debt also decreased $415.81. When factoring in paying down my debt I made $1,088.77.

Rental Property #4

Wow, so managing rental property #4 this month was like experiencing an earthquake followed by a series of aftershocks. There was one item after another this month. This is not the norm for being a landlord, but occasionally you will have hectic months. I anticipate things will die down as we enter fall.

First, there were several repairs and maintenance items this month. The property is generally in good condition but there is always a learning curve when you have a new property. You will learn a lot about a new property during your first year of renters.

Starting with last month’s tub fiasco,  I finally received the bill from my contractor. Parts and labor for replacing the tub were not cheap. However, this was an emergency repair and something I won’t need to deal with for over a decade. My contractor took care of this problem less than 24-hours after I called him.

New bathroom tub:

Total cost: $1,521.17

Total time: 0 minutes (time was recorded last month)

The 4th of July is supposed to be a time of celebration and relaxation. Well, my tenant called me the evening before the holiday the let me know his AC was not working. I stopped by to check things out.

The tenant turned the AC down to 58 degrees which froze the system. As a result, we turned the system off to let it thaw out. I was not able to get my HVAC guy out to the property until July 5th. Let’s be honest, no one is working on the 4th of July.

Well, I met my HVAC guy first thing in the morning. We went on the roof to look at the condenser; he told me it was dead. A new system would cost less than replacing the condenser. The existing system was ancient, parts are scarce and expensive.

I knew the existing system was old and nearing the end of its life when I bought the place. So, I willingly, though painfully, opted to install a brand new system (furnace, condenser etc). This was an expense I was saving for but was hoping for a few months of rent before replacing the system.

This upfront investment will save me future headaches. With routine care and maintenance, the new system should last for a decade or longer. I am happy with my purchase and like taking care of my properties. Even better, my HVAC guy had the system installed the same day. However, the expense could not have come at a worse time.

New HVAC system for unit 1:

Total cost: $3,400.00

Total time: 2 hours 30 minutes

Having people live at the property puts stress on the building. This is not a bad thing. In fact, this is a good thing for a new property. You can run all sorts of tests during a home inspection, but there is nothing like having someone actually live at the property.

As I mentioned last month, I rented one of the units to a college student for the summer; he was in the city for an internship and moved out at the end of this month. I also had tenants move into units #2 and #3 part way through July. So, the building was 100% occupied for part of the month.

Being fully occupied is great from an economic standpoint and for testing the property. Turns out the main sewer line was partially blocked. We stressed the plumbing during the home inspection, but nothing beats having people actually live at the property.

This backup caused minimal water to backflow into unit #1’s bathroom. So, I gave my plumber a call and was able to snake the line. Apparently, some sort of wipe or paper towel was blocking the main line. This was causing the backup. In the future, if I buy more properties, I may add snaking the main line to my standard operating procedures before renters move in.

Main Line Cleaning:

Total cost: $350.00

Total time: 2 hours

I also bought box fans and a dehumidifier to help with the minimal flooding that occurred.

Box fan and dehumidifier

Total cost: $221.44

Total time: 1 hour

I also had a much of small costs and finishing touches before tenants moved in. This includes items like making copies of keys, buying air filters, last minute touch-ups and cleaning supplies.

Total cost: $247.96

Total time: 4 hours 30 minutes

Water Bill: $66.16

Electric for units while vacant and common area: $77.00 (I will only pay for the common area once all the units are leased)

In summary, rental property #4 – lost $5,650.52 and I spent about 10 hours of my time managing this property.

Rental Property #4’s mortgage debt also decreased $437.13. When factoring in paying down my debt I lost $5,213.39.

Portfolio Summary

In summary, I spent about 18 hours of my time maintaining my rental property portfolio.

In July, my rental properties lost $3,807.55. I lost $211.50/hour being a landlord. This month required much more time than usual. The unusual amount of repairs combined with moving in new tenants to rental property #4 are the main reason for the increased time commitment. Most months will require way less time as being a landlord is usually pretty passive.

My mortgage debt decreased $2,310.17 in July which made my loss more bearable.

Factoring in repayment of debt and cash flow, my rental properties lost $1,496.88. So, I lost $83.16/hour. Despite the painful month, being a landlord and owning a rental property portfolio is a great way to build wealth. What is your excuse for not owning a rental property?