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BIG milestone - my rental income has exceeded my expenses

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  • lootpacman
    replied
    Originally posted by riverwed070707 View Post
    I closed on a duplex this week, bringing me up to 7 doors in my portfolio. I've been having a rough week at work and so for giggles I decided to crunch the numbers and see how close I was to reaching FIRE or FU money. I'm nowhere near where'd I'd like to be before I throw in the towel for good as there's some variables here that could jeopardize my security but it felt like a milestone to be celebrated that I could leave my job and live off rentals without having to dip into savings or go pick up a day shift at a coffee shop if I just wanted health coverage I have about 6 months of personal expenses in the bank + additional I could pull from other sources, but I think I'm going to take on a little personal challenge to cut my spending for the next 2-3 months and really pad my savings. If my new role at work doesn't work out, I feel like maybe a little sabbatical would be warranted after dedicating 14 years to the same company.

    Here's how the numbers broke down.

    Monthly expenses: $3,000, less $700 bf pays for his portion of the expenses for a total output of $2,300
    Monthly rental income: $2,730
    Difference: $430

    Variables:
    BF and I have been together 4 years and it feels like we'll be living together for the foreseeable future, but obvi that's not a guaranteed offset to my expenses
    My expenses number is based on what I would have to pay to cover my monthly obligations + essentials like food. It does not account for savings, travel, entertainment, etc.
    My monthly rental income is based on rents-mortgage-water-property taxes-insurance and does not account for maintenance savings, vacancy, etc which I typically factor into my rental budgets

    :: off to go dream about the least responsibility, most fun job I can imagine::
    Congrats! This is inspiring!

    Leave a comment:


  • LivingAlmostLarge
    replied
    Congrats! Good luck! Sounds amazing.

    Leave a comment:


  • TexasHusker
    replied
    Originally posted by riverwed070707 View Post

    Holy cow! Did you do any work to it or just resold for $100k gain a month and a half later?
    I did a cash out refi on my 4 plex to fund the down payment on my new duplex, meanwhile taking the rate from 4.5% to 3%... my mortgage is only $200 more per month after pulling $60k out of it. Now all my rates are so low, I don't know that I'll touch them again! Need to find a new strategy for the next one.
    Yes, rising interest rates will eventually cause a change in strategy. But home price appreciation should come to a stop, too, so it will probably all even out.

    Leave a comment:


  • TexasHusker
    replied
    Originally posted by riverwed070707 View Post

    Holy cow! Did you do any work to it or just resold for $100k gain a month and a half later?
    I did a cash out refi on my 4 plex to fund the down payment on my new duplex, meanwhile taking the rate from 4.5% to 3%... my mortgage is only $200 more per month after pulling $60k out of it. Now all my rates are so low, I don't know that I'll touch them again! Need to find a new strategy for the next one.
    Well, I hooked up internet and bought 4 smart TVs at Walmart. That was about it.

    Leave a comment:


  • riverwed070707
    replied
    Originally posted by TexasHusker View Post
    Great job. I have been doing cash-out refinances in vacation rentals so that I can finance more. I feel like if I have 50% equity in a property, that money is dead and isn’t working any more, so I extract it.

    I have been making cash offers for properties so that I am at the front of the line, close within two weeks, then get a mortgage.

    On January 30, I closed on a $230K cash purchase. I was going to finance it, but I tested the waters on reselling it and it fetched $342K mid March. I close on that sale next week.

    meanwhile, bought another for $230K and close on that one a day later.
    Holy cow! Did you do any work to it or just resold for $100k gain a month and a half later?
    I did a cash out refi on my 4 plex to fund the down payment on my new duplex, meanwhile taking the rate from 4.5% to 3%... my mortgage is only $200 more per month after pulling $60k out of it. Now all my rates are so low, I don't know that I'll touch them again! Need to find a new strategy for the next one.

    Leave a comment:


  • riverwed070707
    replied
    Originally posted by kork13 View Post
    That's fantastic, congrats!! How close are you to paying off some of the mortgages? That's when rentals REALLY start to be fun (IMO), because you start to have a huge net income. Getting to that point with our (single only, for now) rental property + primary home I think was the point that I really started to feel totally in control of our future with nothing but options ahead of me. Plus, now that we're there, we can turn the fire hose on saving up to buy another (cash) rental property, which should be able to happen in about 4-5 years...then it just snowballs from there.

    I'm really excited for you -- you're in a great spot, and as time goes on, the view will only get rosier.
    It was originally part of my plan that the mortgages would be paid by the time DD graduates (6 years) but rates are SOO low right now that I ended up reworking my strategy to refi them all and pick up a few more doors instead - the returns just don't compare on dumping cash flow into a house with a 2.5% mortgage vs picking up another property with a 10-12% return. That said, I do have most of my properties on 15 year mortgages rather than 30 year which some people would argue means I'm stifling my cash flow. I'm comfortable with it.

    Leave a comment:


  • riverwed070707
    replied
    Originally posted by srblanco7 View Post
    Congratulations on amassing quite a nice real estate portfolio! I'm interested as to your approach to selecting properties & determining appropriate pricing as well as to how you found your most recent property in what most are terming a heated market.
    Acquiring this last one was not a quick or easy process. I am looking at inventory every week, I know my market really well including what sells, what it sells for and what will sit for a long time. I'd been looking for a couple years for a good deal. While prices are up, it made it easy to spot the deal when I found it. It had some foundation issues, which scare off many investors but from my perspective, is completely fixable and a good way to snag a deal.

    As far as tactical evaluation and pricing... generally I start with the 1% rule. If the property brings in 1% of the purchase price in monthly rents, its worth taking a closer look at. Beyond that, its just a numbers game. I look at cap rate, cash on cash return, and equity potential. I prefer properties that need some work so I can build equity quickly and keep my mortgage payments low. As for what to pay, I look at the ARV or what comps are selling for without issues, and work backward based on the money I think I'm going to need to put in. I ended up getting this place for $152k and estimated I was going to need to spend $25k to level the floors and do some minor indoor updates. I feel like I could have gotten him down more but honestly I was afraid it was going to get multiple offers. I took his "as is" clause but still had my own foundation contractor come in to confirm I could fix it with the budget I had estimated.

    In the end, I ended up with a $430 mortgage (+taxes, insurance, water) on a house that brings in $1775/mo in its current condition and will probably be closer to $2000 after renovations of the lower unit. I'm pretty happy with the find but it took A LOT of patience.

    Leave a comment:


  • bjl584
    replied
    Nice work. That's a good feeling to have to be able to walk away from your job and still thrive

    Leave a comment:


  • TexasHusker
    replied
    Great job. I have been doing cash-out refinances in vacation rentals so that I can finance more. I feel like if I have 50% equity in a property, that money is dead and isn’t working any more, so I extract it.

    I have been making cash offers for properties so that I am at the front of the line, close within two weeks, then get a mortgage.

    On January 30, I closed on a $230K cash purchase. I was going to finance it, but I tested the waters on reselling it and it fetched $342K mid March. I close on that sale next week.

    meanwhile, bought another for $230K and close on that one a day later.

    Leave a comment:


  • kork13
    replied
    That's fantastic, congrats!! How close are you to paying off some of the mortgages? That's when rentals REALLY start to be fun (IMO), because you start to have a huge net income. Getting to that point with our (single only, for now) rental property + primary home I think was the point that I really started to feel totally in control of our future with nothing but options ahead of me. Plus, now that we're there, we can turn the fire hose on saving up to buy another (cash) rental property, which should be able to happen in about 4-5 years...then it just snowballs from there.

    I'm really excited for you -- you're in a great spot, and as time goes on, the view will only get rosier.

    Leave a comment:


  • srblanco7
    replied
    Originally posted by riverwed070707 View Post
    I closed on a duplex this week, bringing me up to 7 doors in my portfolio. I've been having a rough week at work and so for giggles I decided to crunch the numbers and see how close I was to reaching FIRE or FU money. I'm nowhere near where'd I'd like to be before I throw in the towel for good as there's some variables here that could jeopardize my security but it felt like a milestone to be celebrated that I could leave my job and live off rentals without having to dip into savings or go pick up a day shift at a coffee shop if I just wanted health coverage I have about 6 months of personal expenses in the bank + additional I could pull from other sources, but I think I'm going to take on a little personal challenge to cut my spending for the next 2-3 months and really pad my savings. If my new role at work doesn't work out, I feel like maybe a little sabbatical would be warranted after dedicating 14 years to the same company.

    Here's how the numbers broke down.

    Monthly expenses: $3,000, less $700 bf pays for his portion of the expenses for a total output of $2,300
    Monthly rental income: $2,730
    Difference: $430

    Variables:
    BF and I have been together 4 years and it feels like we'll be living together for the foreseeable future, but obvi that's not a guaranteed offset to my expenses
    My expenses number is based on what I would have to pay to cover my monthly obligations + essentials like food. It does not account for savings, travel, entertainment, etc.
    My monthly rental income is based on rents-mortgage-water-property taxes-insurance and does not account for maintenance savings, vacancy, etc which I typically factor into my rental budgets

    :: off to go dream about the least responsibility, most fun job I can imagine::
    Congratulations on amassing quite a nice real estate portfolio! I'm interested as to your approach to selecting properties & determining appropriate pricing as well as to how you found your most recent property in what most are terming a heated market.

    Leave a comment:


  • BIG milestone - my rental income has exceeded my expenses

    I closed on a duplex this week, bringing me up to 7 doors in my portfolio. I've been having a rough week at work and so for giggles I decided to crunch the numbers and see how close I was to reaching FIRE or FU money. I'm nowhere near where'd I'd like to be before I throw in the towel for good as there's some variables here that could jeopardize my security but it felt like a milestone to be celebrated that I could leave my job and live off rentals without having to dip into savings or go pick up a day shift at a coffee shop if I just wanted health coverage I have about 6 months of personal expenses in the bank + additional I could pull from other sources, but I think I'm going to take on a little personal challenge to cut my spending for the next 2-3 months and really pad my savings. If my new role at work doesn't work out, I feel like maybe a little sabbatical would be warranted after dedicating 14 years to the same company.

    Here's how the numbers broke down.

    Monthly expenses: $3,000, less $700 bf pays for his portion of the expenses for a total output of $2,300
    Monthly rental income: $2,730
    Difference: $430

    Variables:
    BF and I have been together 4 years and it feels like we'll be living together for the foreseeable future, but obvi that's not a guaranteed offset to my expenses
    My expenses number is based on what I would have to pay to cover my monthly obligations + essentials like food. It does not account for savings, travel, entertainment, etc.
    My monthly rental income is based on rents-mortgage-water-property taxes-insurance and does not account for maintenance savings, vacancy, etc which I typically factor into my rental budgets

    :: off to go dream about the least responsibility, most fun job I can imagine::
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