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rental updates and musing

January 20th, 2016 at 09:01 am

Hi all

I got renewed but for only 5 months!Crazy. I have a new boss though and they said that is all they thought they could do. I did check and the position is budgetted for the the year. My old boss is trying to get me a 1 year extension which they had told me they would do in the first place. Fingers crossed.

Anyway.. have not done tax info yet but i AM looking at this year NET rental income I get and big change w the new property management company. less costs.. less hassle etc.. and I have one unit not paying (eviction date 2/2 if not out by then). Hoping the upward and stabilizing trend continues

Anyway I am thinking though and the biggest (not worked on yet) barrier to financial freedom for me is my house. I owe $300k . can not get a lower loan (though my rate is ok) but I can not get ANY loan reallly or any good loan for apparently 6 more years (unless rules change which they may) which means if I sell/move I would have to go FHA or something else.

I am NOT thinking of selling but need to get that balance down! I pay $450 over a month but still not really making any huge leaps in paying it down.

House is still nice. still in a good area.. still hoping neighbors move though (on my one side) and I may extend my fence.. I am kicking myself for NOT doing it last year .. instead I used part of their 'rear garage' as wall sortof so I did not have to fence that length..

Stil trying to get to almost $500k savings (only at $200k now) by 6/2018. it will be a stretch unless the market bounces back up and I continue my super high savings rate.

where do you guys suggest I investigage long term care insurance?

11 Responses to “rental updates and musing”

  1. Livingalmostlarge Says:

    Is it worth moving from your house? What do you mean $450 extra principal?

  2. AnotherReader Says:

    Skip the long term care insurance. Lots of companies are getting out of the business, as it is not profitable. What's left is expensive and the benefits are weak. Self insure with your assets instead.

    Your properties continue to cause you problems. Hope this new PM can stabilize them, if not, then I would agree upgrading might be in order.

    I don't understand why you are dissatisfied with your house and your loan. Unless you dropped way down in house cost, the selling and buying costs would eat up a lot of any benefit. I probably would take the $450 a month and put that into paying off the rentals or into some other income producing assets. No point in pouring money into something where you can't eliminate the payment quickly, especially as the interest is deductible.

    Too bad about the 5 months. Perhaps the new boss will be as impressed by your work as your old boss was once s/he sees your work.

  3. Rachael777 Says:

    Some good thoughts. I had wondered if it made sense to put the $400 extra a month towards principal. still thinking on it but may change that strategy. 3 units will be paid off 3/18 at the current payment plan and I do not want to escalate that further..so the only other thing I could do w the extra $400 is increase my savings which may make better sense then to put it towards the primary home. Rentals ARE smoothing down. This last guy we are evicting was put in by the old manager (we already got the judgement) and we are just waiting for him to move out or sheriff to remove him. That is the 2/2 date. Hoping to have new manager fill it then with a good quality long term tenant. Everyone else is payng and seems stable. Someone in the 3 units (a long timer) says they will likely not renew when their lease comes due but we filled the last one over there super quickly so overall smoothing out but still selling that Victorian . In fact I asked the manager to have his guy take some quick photos so I could test the waters. If the 3 units were paid off and I did my normal escrow for taxes, insurance, repairs etc. my average NET (based on 2 months the new PM has had it only) would be $6000 which if paid off would go into my pocket or retirements savings. Reason for the payoff strategy w the main home was I really will not feel financially free w a $300k house debt hanging over me so trying to find some LARGE sums (somehwo) to get that paid off or less tahn $100k

  4. Rachael777 Says:

    Question on LTC insurance. If I self insure w my assets. how much do you think I need. I am 45, Dad is 76 and has alzheimers.. not sure if I will get that or not. .no one in my family has had it before.. or Dad's.. the type he has is not genetically linked...but his care is $7100 a month and then he has $200 meds on top of it.. so rounding up $7300/month (cost now) times 12 months *5 years=$438,00 however statistics show that MOST people only stay in alzheimer specific care for 2 years.. and most only stay in long term care for the less than 3 years.. average stay at Silverado where Dad lives is less than 2 years too. T

  5. Rachael777 Says:

    Update on work contract. My old boss said he did check and my contract is in for the entire year. Once that line item is approved they will see if they can get the renewal changed to go through end of year 2016.. right now it goes through July 7

  6. AnotherReader Says:

    The way things work today may not be how they work in 30 plus years. You will have Social Security income plus your other assets to cover the cost of LTC. Planning for three years at $200k a year would be a reasonable place to start. If you end up in nursing care, you could be kept at the same facility under Medicaid and your Social Security income if your assets were to run out and if the right place was selected. Again those are current practices.

    Good news on the contract renewal.

    Whether the $300k mortgage is something to worry about depends on your income at FI. Not so bad if you can replace a lot of your contract income with net rental income.

  7. Rachael777 Says:

    AR, the research I have done so far on long term care insurance and premium seems to show that the premiums even times several years are much lower than $600k. what makes you think it is better to self insure?

  8. AnotherReader Says:

    Insurance companies don't offer products they won't make money on. Research the policies. The benefits are limited and do not grow with inflation. The better companies have exited the business because there is no way to predict their future liabilities. If you buy it in your early 50's, when it is still affordable, you will pay the premiums for 20 years or longer before you are likely to need the benefits.

    Like your dad, your money and other assets won't mean anything to you if and when you need LTC. Better to invest the money and use it IF you need it then.

  9. Rachael777 Says:

    k. I am going to check into it and get info and verify that anyway. I think America needs a 'job title' or 'role' for a non related family member who takes care of a senior persons affairs, long term care, whatever. Sortof like the role I am doing for Dad and someone else on this board just lost her Mom.. Not everyone has family available to do that and I imagine it is scary to not have that

  10. AnotherReader Says:

    To see how LTC insurance works in practice, look for posts on early-retirement.org and Mr. Money Mustache by a guy posting as Nords (Doug Nordman). Nords is retired military, a USNA grad, and writes primarily for the military audience at the-military-guide.com. His dad is one of the exceptions in dementia - he has been in care for years and will exhaust his LTC benefits soon. His policy was one of the old style policies and was issued by a highly rated company. Nords has a very thorough understanding of how the policies work, and he is not buying LTC insurance for himself.

  11. Livingalmostlarge Says:

    My mom used to be a hospital social worker and said no to buying LTC insurance and told the rest of the family not too. The options are too limited and more importantly too difficult to navigate care when needed. They hate paying out. They pay out say $50/day but the only certain type of facilities. You have to determine level, skilled, bedridden, etc. There are too many factors and too much change in the US to buy it.

    What if we move to single payer? What if medicare expands? What if it decreases? My mom had 30 years of experience heading a social work department at a hospital. Everyone asks her advice and she reviews all policies and usually advises no.

    See if there is someone like her you can talk to in real life and have them sit and review each policy with you and explain all the loopholes. There are TONS.

    I considered it and asked her opinion as did all her siblings. She turned down all policies and her and my dad self-insure because she knows how to work the system. I say that because she did disability for my aunt with Multiple Scleroris. She did disability for a cousin with PTSD. My mom has done this for year and still does continuing education and read constantly the paperwork just in case.

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