2013 was a year of hard work and hard play (typical engineering mantra). In addition to my regular day job, I spent approximately 600 hours working on UFUO#2 and only a few hours working on my personal residence. In addition, I started this blog (a little bit of work), we took a trip to one of the most beautiful places on earth, St. John, USVI, spent two weeks in Maine, and spent another long weekend in Maine and New Hampshire. We ran in two half marathons (destroyed my knee in the 2nd half marathon and am still recovering from that), went on numerous hikes with the dogs, learned how to make bread (dough hook on a stand mixer is KEY), STILL haven’t figured out how to make my own wine, and lastly had a mustache for a weekend.
I was able to purchase two duplexes in 2013, adding to my passive income from real estate, although the 600 hours invested in the one duplex didn’t seem ‘passive’ at times! Because of the rehab on the duplex, my cash reserves were virtually tapped out, and still I was trying to purchase rental properties locally. I figured that as I added properties, cash flow would slowly improve, which would add to the cash reserves.
I have determined that that premise isn’t wrong, I just need to stretch out my purchases. Like bread dough, I need to let my personal dough rise.
At the end of 2013, I had two offers out to sellers: one was for a property to flip and another was for a fully rented duplex. You can read all about my offer on the duplex in my “Unique Financing” post. It was a cool deal, but ultimately a few issues came to the surface and I felt it was best to let that deal sail away.
The other property is a single family home in need of a moderate amount of rehab. For this property, I have partnered with some family friends. They put up the cash and I manage the rehab. For me, this is an awesome deal. The loan is interest only with the principle being paid back when the property is sold (interest is due monthly; I’ll be posting a detailed write up shortly).
In 2014, I plan to devote significant portions of my take home cash, both passive cash flow as well as ‘earned’ income to the purchase of more assets for additional passive income. Rather than increase the amount of time it takes me to manage my properties, I plan to work with a turnkey investment firm to locate properties currently under management with low barrier to entry (low down payments) and high cash flow potential.
2013 by the numbers:
Passive Income from REI: $710/month
“Fee” for Self-Managed Properties: $270/month
Dividend Income: $7/month (1.5 coffees)
Total Passive Income: $987/month