November 2013 Net Worth Update

Rental Property #4 closed in mid-November, so I was finally able to clear this off the books! This depleted a good chunk of my cash, and I’m now working diligently on building back up some reserves prior to closing Rental Property #5. Rental Property #1 continues to rise sharply in value ($30,000 gain this month), which is kind of surprising since the Fall season usually marks a slow down in local real estate activity (price movement). Rental Property #2 is holding steady in value.

Also, Mint is currently having issues connecting with my brokerage account, hence the yellow exclamation mark you see below:

November_2013_Net_Worth

Net Worth

According to Mint, my net worth is currently $542,725.46. This represents an increase of 2.98% from last month ($527,010.49). I’m still using Zillow’s Zestimate to determine the value of my properties.

Cash

I currently have about $15,000 in cash sitting in my primary checking account. All of the funds are there to close on Rental Property #5, and I still need more to create the illusion of a cash buffer (to appease the underwriter). Last month, I needed funds to close on Rental Property #4. This month, we are focusing on Rental Property #5.

Although it might not look like I have much cash in savings right now, that’s actually because I’m a few months ahead in my loan repayments. To rapidly build up cash for closing, I’m going to skip loan payments in December and January for all of my rentals. Paying well in advance (three or four months), is my preferred method, as opposed to parking extra funds inside an emergency fund. I prefer to pay off the mortgages in advance since I do worry about Vanilla Reloads getting shut down for good one of these days. Finally, when closing gets closer, I will liquidate what’s left of the index fund and transfer the funds over to my checking account.

Loans

I owe the following loans:

Rental Property #1: $228,823.14
Rental Property #2: $229,005.88
Rental Property #3: $117,182.90

Total: $575,011.92

Investments

I currently own no individual stocks. My only investments are in 401k, Roth IRA and a safe haven index fund:

401k: $101,214.98
Roth IRA: $51,032.15
Index Fund: $25,141.99

Total: $177,389.14

I sold $5000 from the index fund to buy more Vanilla Cards while I was in Chicago earlier this month. These funds were used to make mortgage and property tax payments for the properties. Again, the remaining funds will be liquidated when I start closing on Rental Property #5.

Properties

According to Zillow, here are the values of each property:

Rental Property #1: $436,874.00
Rental Property #2: $370,756.00
Rental Property #3: $155,703.00
Rental Property #4: $75,149.00

Debt: $45,000
Rental Property #4: $68,000.00

Total: $925,482.00

This section is starting to get a bit screwed up. The debt ($45,000 line of credit needed to close Rental Property #5) and Rental Property #4 loan really belong in the ‘Loans’ section, not the ‘Properties’ section. However, I haven’t figured out a way to add manual debt (that’s not supported in Mint) into the ‘Loans’ section. It seems if you want to add your own debt, Mint will just automatically move it into the ‘Properties’ section, no matter what you select using their menu system. I’ve read some posts from other users complaining about this issue, but it doesn’t seem like Mint has a resolution at this time…

For now, my two additional loans will show up in the ‘Properties’ section of the Net Worth report until Mint gets this issue fixed. Sorry for the confusion everyone.

Summary

The total value of all assets now checks in at $1,230,829.85, an increase of 7.21% from last month ($1,148,039.00). I also owe $688,104.39. Am I worried that the debt is ballooning every month (last month’s debt was “only” $621,028.51)? Not really, because I truly believe that, “what you owe today is what you’ll be worth tomorrow.”

Again, I’m the type of investor who plans on making it rich through the use of leverage. My goal is to get to $1,000,000 in debt before all is said and done. As long as the cash flow is going up at a rapid rate, you won’t hear me complaining.

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Fast Weekly
Guest

Good morning FI. Cash flow is the KEY, and you’re going for it all out! I really hope it works out for you. I’m not a big leverage guy, but I’m enjoying your journey. Keep up the updates.

Out of curiosity. Do you have any interest in selling some of these rapidly appreciating properties in California, and buying additional properties in the midwest? It appears that your midwest properties have a higher cashflow.
-Bryan

Cash Cow Couple
Guest

Very interesting. I enjoy reading your path and your use of leverage to continue building out rentals and increasing cash flow. I’m sorry if I am behind, but how many rentals are you looking to capture?

writing2reality
Guest

I am actually surprised at times how limiting Mint can be. To be honest I stopped using it a couple years ago after getting frustrating with how cumbersome it was to use.

Anyways, great month, as expected, given the close on property four. I find your method of prepaying the mortgages pretty interesting as it gives you some extra float should you need it for a month or two to build your reserves. With no mortgages to pay your cash flow for a couple months would be absolutely tremendous.

Either way, I’m looking forward to seeing you track towards that million in debt and what other assets you pick up on the march in that direction.

All About Interest
Guest

You mentioned skipping mortgage payments. I was a little confused by you saying you are prepaying months ahead? So you are making future principal + interest payments up front? Why not put the money directly to principal instead? I know you will still have a payment each month but you’d be lowering the amount of interest you are paying much faster if your intent is to pay these loans off early. I may have missed your reasoning for this so was just curious.

moneycone
Guest

I have the exact questions as the previous poster (All about interest)…why prepay into interest when you can prepay principal?

JC @ Passive-Income-Pursuit
Guest

I’m curious to see your answer to Fast Weekly’s question about selling the CA properties for more midwest to improve cash flow. Of course if the values continue to increase like this you could miss out on years worth of cash flow from additional properties. I need to check again to see if there’s Vanilla reloads available near where I’m working. I’m pretty sure I’ve seen them but I know the Walmart’s here all have the Bluebird ATM so it’s easy enough to add it to the Bluebird account. Guess I really need to get moving on the Bigger Pockets forum to learn more about RE investing. This year’s going by way too fast. Keep up the good work! Looking forward to 2014, as I’m sure you are as well.

theFIREstarter
Guest

Those are some crazy numbers!

“Massive props to ya”, as I believe the kids might say nowadays.

Leigh
Guest

Love it! $16k net worth increase in one month is pretty awesome 🙂 I love those months!

Ugh I tried using Mint for a while, but it just frustrated me to no end. So I’ve stuck with my homegrown software+Excel combo that works for me. Not sure how well it would work with a second person…

I still can’t believe how “cheap” Rental Property #4 was! That entire property cost you less than my 20% down payment on my condo.

The First Million is the Hardest
Guest

Nice progress! You’re really knocking out these closings on rental properties now, keep up the good work.

Retire Before Dad
Guest

Those are some cheap properties. I don’t really have any connections to the mid-west so I would be hesitant to buy a rental that is not local. But my local market is very expensive, so I am looking at cheaper condos.

This is the first I’ve heard of Bigger Pockets. Need to check that out.

I’ve been using Mint for almost 2 years now. I like the way it budgets, but the investments just don’t update the way I was hoping. I’m think about taking out all of my investment information and only using it for budgeting. Not perfect, but a pretty cool tool. They also do not partner with my 401k company which is annoying.
-RBD

Financial Samurai
Guest

Nice bump!

I really think Zillow is broken, at least for the SF Bay area. The price rises it has is redonkulous!

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