Rental House #2 Details

Our newest tenant moved in on October 1st, so I figured it would be a good time to stop slacking and post the details. This one has a funny story with it. House #1 we bought on location location location, and house #2 is no different, being an adorable 2/1 that’s walking distance to a cute downtown with shops and lots of activities like a farmers market on the weekend. Turns out I totally have a type. 😂

First off..let’s talk money, because I know y’all are nosey like me..lol. Since we are paying the mortgage on house #1 out of our own money. (we no longer have daycare, so replaced that payment with the mortgage payment) This allowed us to use the rent funds from house #1 to fund the down payment of house #2. Our tenant for house #1 had paid the whole year up front, which was around $10,000, so talk about creative ways to leverage other people’s money. I decided to put that money to work, instead of letting it just sit in our account being lazy. 🤷‍♀️

We found house #2 and put an offer back in June that was like $12k under asking, but a fair offer based on comps in the area. They didn’t accept it, and they ended up having someone else back out due to finances falling through. I found out because I was creeping online looking for the next deal and saw it pop back up on MLS. Funny part, they ended up dropping the price to the same amount we originally offered. So we decreased our offer by a few grand, and the seller accepted it. Should have just accepted our first one. 💁‍♀️

So total purchase price was $86k and we put 15% down, so around $13k to closing and our monthly mortgage payment is $595. We are renting it out for $875, so around $225 cash flow after mortgage and property management. For the property manager, we will pay around $50 a month, and one month rent for the initial showings and tenant screening. We didn’t have much of anything to do or money to spend to get rent ready, besides a whole lot of magic erasering and replacing the nasty toilet. 🤢

The tenant did ask if she could install a garage door opener (with her own money) and we told her no that we would not only cover it, but we would send our guy to do the install. She works crazy shifts and said she would feel safer being able to pull right in late at night. I honestly didn’t even notice it didn’t already have an opener and felt bad. Before she moved in, I did get a bid for converting the one car garage to a bedroom and think I will save up the cash flow to pay for that renovation after this tenant. We may even get crazy and attempt this project on our own. 😉

A few things I learned through this one.

1. Life was really busy when we got this one, so I enjoyed not having a lot of random little details like trim painting or landscaping or really anything to do, but I also feel like I’m ready to roll up the sleeves on the next one. 💪🏼

2. I am excited about the potential to increase the value and rent through adding a bedroom. It would only take about 2 1/2 years to recoup the project expense through increased rent, and that doesn’t even cover the added value that we could then use to BRRRR, just with a few of the r’s switched around in there. 😜

3. I’m so glad to have started the tenant move in baskets. It went over well and sets a good first impression for under $20.

4. I am feeling a little uncertain about the property management portion, and think we have learned a lot since we first started. I know we can handle on our own and my husband thinks opposite. So I’m working on my persuasive speech for self management on the next one (I can’t wait to report back on who wins this one).

5. I am ready for the next deal..since you know my type..who’s got it??

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Lifestyle Choices

This is going to be one of the hardest topics yet to cover at a very high level and also my first mention of FIRE in my writings (financial independence retire early). My goal is just to inform you of two choices and get you rethinking, especially if you feel like you don’t have choices and are stuck in your current financial position. I am by no means claiming to be an expert on the topic or to get into the HOW in this post. I have just dabbled with both lifestyles mentioned and I feel like there are not enough people (especially women) who are thinking about or providing information on the topic..so looks like you are stuck with me. 😜

The above picture is the best way I could summarize the concept of lifestyle creep. For now, as mentioned, this is just to introduce you to the topic, so I have a few stats and thought provoking questions to hopefully do so.

First..the stats tell an alarming story. I recently read in this USA Today article https://amp.usatoday.com/amp/34378157 that the average household is bringing in around $75,000 annually, and of that, they are spending 90% of it, which equates to $67,500 outgoing and only around $7,500 extra annually. (which the article states a lot of this is going towards interest payments on consumer debt). This breaks down to $5,625 in expenses each month and $625 extra. That doesn’t leave much wiggle room and helps paint a picture as to why people aren’t putting anything or very little towards saving, investing, emergency funds and retirement. 😳

Essentially pointing out that people are living a paycheck to paycheck lifestyle. I don’t know that this was a surprise to any of us, but it may be a surprise that people are making the choice everyday with their actions and spending habits to live this way. Disclaimer that there are people living in poverty, so for the sake of my post, I am referring to the middle class mentioned above.

Now on to the questions. Feel free to answer in comments if you want to share, or just answer to yourself or as an internal conversation or with your significant other. Keep it real because denial is a great way to protect yourself from the truth right now, but long term in fact it just ends up hurting you more.

1) Are you living paycheck to paycheck like the scenario mentioned above?

2) Have you noticed that no matter what you do, you just can’t get ahead?

3) Do you receive regular raises or have you changed jobs to make additional money over the course of your career, yet you aren’t seeing a difference in your monthly budget after expenses because they always seem to match what’s coming in?

4) Do you ever pay attention to how much you spend on conveniences like pre-made food, someone to mow your lawn, someone to clean that big house, someone to wash that new car, someone to groom your dog, someone to do your hair/nails/makeup, etc because you are too busy working to do these things?

5) Have you ever wondered why things are like this for you and probably a lot of people you know, yet it’s still a taboo topic to discuss money, so everyone just keeps working harder and staying in the vicious cycle mentioned above?

6) What will happen if you change nothing and keep following this path?

Please reference the above picture as you are going through these questions to see if lifestyle creep has found a way to creep into your life. Remember..be honest.

Next, know that there is another option. As mentioned above, lifestyle creep is a choice and I’ve said this so many times on purpose. So many think they have no choice unless they make more money and this is far from the truth.

Lifestyle creep is a path that many in our society have walked and not challenged until recent years. Here are some questions to ask yourself and see if you’re one of those ready to challenge the traditional path and choose a different way.

1) What upsets you the most about always being broke and living paycheck to paycheck?

2) How has constantly feeling stressed from working so much and not having any money to show for it affected you?

3) What are your values and what are you spending your money on? Do they line up?

4) What are your passions and what do you dream about doing?

5) What could change if you have an open mind and put in the work, I mean really put in the work, to change your current financial path and mindset? Think of one quick and easy way you can change today.

6) What will happen if you start to live a lifestyle designed by you instead of others?

As mentioned, a lot of people have started looking at the above stats and questions, and are starting to make the decision to customize their lifestyle based on their own unique values, not what society tells them to value. Spoiler alert..it’s not through making more money as mentioned above..it has never been about that. It’s about a lifestyle of being content with only those things that bring you value. Luckily, it usually don’t cost anything at all, just the basics needed like food, shelter, experiences and none of the extra crap. 😊

Don’t get this lifestyle design twisted with a life of going without, because it’s actually the opposite of that. You have room for so much more when you let go of stupid shit.

Well..shocker..I have lots more to say but I’ve said enough for one day. What are your thoughts or questions on the two different paths mentioned above?

Flirting with Fear

I remember in high school and college becoming physically sick about public speaking. To the point where I would accept lower grades just to get back to my comfort zone..which was not being in front of people. I went for perfection in the areas that I knew, and didn’t feel comfortable trying anything different.

I promised myself I would NEVER get in front of crowds after graduating. I would occasionally have to speak to small groups early in my career, and every time it would cause me to lose sleep and have an upset stomach.

I got to a point in my career about five years ago, where there were new promotions I could go after, but part of that would require me to get in front of mid-sized groups. I almost stayed where I was, because it was comfortable and easy and I almost gave up on ever getting over my fear. But instead, I went for it, scared as hell of failure, very anxious and certain I wouldn’t be “perfect” at it.

It was outside of my comfort zone, but I continued to practice, visibly shaking the first few times I had to present, lost a lot of sleep, practiced some more, but watched as the groups slowly started growing in size, so did my confidence and I found that it’s something I actually enjoy.

I have also found some deep breathing and yoga routines that help get me in the right mindset if I am feeling nervous or anxious. I currently present frequently to small to mid-sized groups, and it gets easier every time I do it.

Today, 5 years after making a professional and personal development goal of getting more comfortable with one of my biggest fears, something happened. I had my largest stage and largest audience to date. And I wasn’t nervous or anxious at all, but rather felt EXCITED and GRATEFUL for the opportunity. I didn’t even use the notes that I made for myself.

Making a long story longer. 🤷‍♀️

I definitely think this book had some impact on my mindset shift and highly recommend reading this, along with listening to Reshma Saujani’s TedTalk. Be brave, not perfect!!

What fear do you have that you’ve been able to overcome or that’s still holding you back today?