Home > 3 units close 11/1 and net worth update`

3 units close 11/1 and net worth update`

October 22nd, 2013 at 05:25 pm

Hi all. I feel so much better reading these blogs and hearing from REAL people with real ideas, answer and situations. Need to blog/read regularly.

Ok here. is mine.

Attorney called.. 3 units close 11/1. Scary. These I am taking on a 7 year term and will try to pay off in 5 (*will need a $69k 10/2018 payment to do so)... otherwise will keep on the 7 year term,

Whole plan calls to sacrifice now.. have income later.. (goal is to create $8k monthly rental income by the end of 2018) so these will NOT add any income now. My plan is scary to me but I have worked with people and made it as safe as I can.. These are the last homes I will take on an extremely short amortization. Anything else will produce cash flow now.. but will let these settle for a while and get under control before taking anything else on. I am retaining the existing property manager so any hiccups should be 'less'.

Did my networth and here it is... I used to have $125k in a 401k so feeling a little bad but feels GREAT to start and do it right/safer this time. I want to build up my cash so my networth is more cash or accounts vs real estate and will gradually trend towards that.

Value in 6 homes $52,802.51
Value in 3 units $5,000.00
Savings $83,160.15
Emergency Savings $4,000.00 (added $2k more!)
401k-3% $135.31 (started as of 10/15)
401k-my own
Net worth $145,097.97

9 Responses to “3 units close 11/1 and net worth update`”

  1. baselle Says:

    Any thoughts on looking for some sort landlord/real estate management software on top of any organization that the property managers provide? Even an excel spreadsheet could help.

    I have a PhD so I'm not afraid of math, but the thought of juggling that many cash streams (both rents in and mortgage/upkeep out) would give me the willies.

  2. SecretarySaving Says:

    Adding your debt now (again) and its $478,009.30 and your net worth $145,097.97. I don't understand why you are purchasing property that you cannot afford. What happens "if" the bank calls those notes like it did to Dave Ramsey? I thought you were trying to get out of debt.

  3. Rachael777 Says:

    Responding to above.

    Baselle--Agree managing the streams are a challenge. I actually have a spreadsheet and check list every month I go through and send to the property feel it is pretty well in hand. Units have their own separate utilities so I have few 'bills' outside of the mortgage. I get one consolidated check for the '6 homes'So far has gone well. Just need to lessen stress in my life overall.

    Secretary-- thanks for your feedback and agree I have a lot of debt right now .. and my plan is riskier than many of yours out there. I have no pension however and am just restarting the 401k. I am wanting to 'feel secure' in 5 years which means not having to worry about bills and work becomes more of a choice etc. The fastest and really only realistic way to do that I have found is to create monthly income and save. I would have to have several hundred thousand dollars saved to 'throw off' the kind of income I will get with these homes. I have built in as many safe guards as I can with the help of my accountant friend but at the start of the 5 years (6/2013) things are going to be riskier, scarier and less stable. I believe in my plan and hope it works. If it does not I will be still be saving cash in the meantime. Scary but I believe in the plan.

    thanks for the feedback. Helps me think through things and keeps me on my toes.

  4. TashaC. Says:

    What happened to your $200k 401k? I thought you keep a 401k in the evewnt of bankruptcy. Did it get liquidated to pay debts?

  5. Rachael777 Says:

    Actually clarifying (and will fix my post) I had $25k in a taxable account and $125k in a 401k. In 2008, the stock market and real estate market tanked. Some of my value went away with that. I also was married and my husband did some thiings that caused the homes that I had to be attached in law suits ( they later went 'upside down' and I decided to let them go one by one) and also to remain vacant for 2 years as he became somewhat of a pariah in the town. He also lost his job and never went back to work .. still has not. I also made an ill advised decision (probably due to stress) to loan a friend $30k which I did not get back. So lots of stress.. looong tumble down.. and now on my way back up as fast as I can. I used the 401k/ and taxable to live off for a few years, pay bills, pay for the homes etc.. loooong way down... I returned to work a little over a year ago.. and am now racing to catch up and get my life back! I am encouraged by my progress so far but am trying to manage stress. I had a stroke in there too.. believed to be due to stress (no after effects!) Smile

  6. momcents Says:

    I've always decreased the amount of the assets by debt. You have quite a bit listed, so I'm wondering what the actual net worth is?

  7. Rachael777 Says:

    I believe my actual networth is as stated. The value in the homes (and as of next month the 3 units) is what they would sell for at firesale for sure prices. so in other words when I say I have '$50k' in the homes. It means if I were to turn around and sell them right now I would comfortably net $50k with all fees etc. The figures presented are the net figures.

    Again understanding my method of 'getting there' may not be like a lot of folks here but I have a short time frame and am wanting to have enough monthly income in 5 years to leave my high paying job if I want (or stay) but basically to feel comfortable and 'secure'. I am also working on paying the debt down as fast as possible.

    Homes are on a 5 year term. 3 units 7 year (or 5 year) with the properties payiing for much of that themselves. So scary. especially upfront .. risky.. more so upfront as I get started.. but definately rewarding on the other end. I still save all I can every month.

    Watch with me and you can see my progress. I believe in this.

  8. momcents Says:

    Thanks for the clarification. I'm a more traditional thinker, and in going back it appears that your saving goals will including paying off the balances at the end of the short-terms? I saw your debts listed on the side included the balance mortgages of almost 1/2 mil and just wondered how those factored in. What are the monthly payments you are making toward the mortgages?

    I think I understand the overall big picture goal/plan and am just wondering the short-term specifics. I am sure that it can be done. Smile

  9. Rachael777 Says:

    Momcents.. I will explain briefly here and then do a post..

    6 homes (bought as a package) are on a 5 year term (fully paid off in 5 years). The payment is over $3500 towards the loan (with extra for taxes). The 6 homes fund 'most' of this not all. I have a budget projected at worst case $1000 overage a month. I have been running less than that and this is year 1.. so still getting them 'under control'. I expect it to smooth out further and us to raise rents. Rate on this is 3.15%

    3 units are on a 7 year term. I will be paying almost $2000 in loan payments (w more for taxes). This is again mostly paid for by the 3 units (there are TWO 3 units). I have a projected worst case overage of $500. I expect less than that and expect to be able to raise rents easier on these (seller already raised someone $35 this month)..and rents are low. I am aiming for a 5 year goal so to pay these off in 5 years I need to come up with $60k 10/2018. I plan to do so. Rate on this is 4.75%

    So among both I have a possible negative cash flow of $1500 which is worst case and should decrease every year and already at least on the 6 homes appears to be running less. I have income to cover this.

    I will write a post on the details of the deal etc..

    Thanks for the interest,.

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