My December 2016 Monthly Update – I Did It!
The walk to my car after work on December 15th was the best walk I ever took.
As I left my job for the final time, with all my family pictures and personal items in tow, I couldn't help but think that I am very blessed.
December 15th was my last day working a job EVER!
That was the first day of the rest of my life. Now I can do whatever I want, whenever I want, and never answer to a boss again!
You know, on that beautiful rainy walk to my car, I couldn't help but think how all this was possible. Looking back over the past 9.5 years of my life building my passive income businesses, it was all worth it.
All the sacrifices, hard times, ups-and-downs of the passive income business life was absolutely worth it.
I am proof that this passive income thing really works! I am only 37 years old and I will NEVER work a job again!
As I chronicle my journey to quit my job, I post my monthly update of what happened in the month. As each month goes by, the monthly updates get more and more exciting!
The month of December was super exciting as it is the last month of doing any actual work in my job and many great things happened in my businesses.
- I bought a property in Arizona
- I sold a property with a rent-to-own contract
- 2 Akron properties under contract
- Commercial loan financing was funded and finalized
- Newest book hit Amazon Best Seller
- Spending my final 4 weeks of vacation time at my job
The Event for Quitting My Job Finally Arrived and I am Free to Never Work a Job Again!
When most people retire from their job, they focus on a certain date for when they can quit. This is because they are counting the amount of days they have been working in the company and how that helps them to retire with more money because of the time they spent working.
I have been waiting for an event instead of specific date. Because my retirement is based on my businesses and not on my job, I needed a specific event to happen in my business for me to quit my job.
From October, I had been refinancing 4 properties in Ohio so I can pull out all the cash invested to purchase more properties. At the end of December, the loan finally was approved and I signed the documents in December but received the wire on January 3rd 2017.
Now that the process of refinancing my properties is over with, I am free to quit my job. If I did quit my job before I refinanced the properties I would run the risk of not being able to finish the refinance because banks look at your job as a way to repay the loan they gave you.
Update on the Passive Income Businesses that Helped Me to Quit My Job
My passive income business is comprised of two sections:
- Investing money in rental properties and real estate
- Content creation through blogs, book writing, podcasts, and online courses
Investing in Rental Properties and Real Estate
Turns out the tenant in the property I purchased in AZ was mad that the previous owner sold the property without them knowing it.
The reason why is that they were horrible tenants and walked all over the previous owners. The owners were an older couple that was tired of having bad tenants in their one rental property. I was glad to purchase the property from them and take over their headache. Well, the previous owner was paying the utilities, water, electrical for the tenant.
This is something you should NEVER do!!!
Imagine the electric bill for the summer where it is 117 deg! One month was over $500 just for the electrical! So, the tenant realized their meal ticket was over and now there was a new Sheriff in town.
I had my property manager implement proper business practices and inform the tenant they needed to sign a new lease with me as the new owner. I lowered the rent by $150 but told them they needed to pay the utilities and electrical themselves.
Once they new the gig was up, the tenant threatened to move out if I don’t do what they want. They wanted to keep the lease as is and for me to pay the utilities. I don't think so.
If they were threatening to move out, I made sure they would. I gave the tenant a 30 day notice to vacate the property!
Since they were on a month to month lease, all I needed to do was tell them they had 30 days to get out of the property and they are required to leave or we will evict them.
I wanted them to be gone for many reasons:
- They were horrible tenants
- I did not want them in the property any more
- They would be a problem if I gave into them
- They needed to be taught a lesson
- I am now going to move into that house from CA!
That’s right, I am moving my family to Arizona from CA!
I’ll explain more in next month’s update.
In Ohio, I have three cities I invest in. Youngstown, Akron, and Cleveland. Each areas of have their pro’s and con’s but are great investments. In December, there have been evictions, repairs, rent payments, etc.
The most notable thing this month is my selling a property that was missing a furnace and hot water heater to a rent-to-own buyer.
This was a major change in my Ohio business model because I have always had these homes as rentals and never sell them.
For this particular property in E. Lucius, someone stole the hot water heater and furnace. I decided to list the property for sale on Craigslist.org and found someone who would pay me a down payment plus a monthly rent for 5 years in exchange for the property.
Here is the breakdown:
For Sale Price:
Cash Price: $9,500
I had been trying to sell the property at $9,500 for a month and had not found any buyers.
Rent to Own Price Details:
Non-Refundable Down Payment: $1500
Monthly Rent: $363
Security Deposit: $363
Terms: 5 years
Tenant fixes the furnace, hot water heater, and maintains every aspect of the house
Total Payments Plus Down Payment: $23,280
Now, with the rent-to-own, the total price is $13,780 MORE than my cash asking price!
The down side to this type of transaction is that I will not own the property after the 5 years. The up side of this transaction are:
- Down payment is non-refundable
- Tenant has the opportunity to own a home when they normally couldn’t
- Steady income from the rents received
- If the tenant does not fulfill the 5 year obligation, all I need to do is evict them as a normal tenant.
- The tenant is responsible for the entire property. All maintenance, rehab, etc.
- The tenant get’s their own insurance over the property. I have my own just in case.
- Did I say steady income each month? J
- I have basically become the bank, making money just like a bank.
- Receiving over 2x the price I was asking
In a future post, I will explain this process in detail. Until then, send me an email if you have any questions on this process and how to accomplish this. firstname.lastname@example.org
Update on the Akron Properties
The winter is the best time to buy properties. The inventory is high and the buyers are low. This means sellers are much more willing to be flexible on their price.
So, I put offers in on two properties and got my offer price for both! This makes me think I should have offered less but oh well. Now these properties are under contract and I will close on them in January
Purchase Price: $22,500
Currently Rented: $650
Since it is already rented, I will close on the property on January 6th. This is so that I can have the current owner collect the rents AND then pay me the prorated rent for the amount of time I own the property.
$650 rent for 31 days in January = $20.96 per day
Prorated from 6th of January = 25 days of rent at $20.96
25 days * $20.96 = $524.19 in credit back to me from the rent.
So, the amount of money out of my pocket is $22,500 – $524.19 = $21,976
I made $524 just by buying the property from the first day!
Purchase Price: $28,000
Market Rent: $750-$800
This property is a very good property and will rent well. I usually don’t buy properties this expensive in this area of the country but it is such a good property and will get a lot of rent.
It is currently under contract and I will close on the property Jan 31st.
The Houston property finally got rented for $1700 a month. This was a much less than my first renter which was at $2100. Crazy how the market goes up and down. Truthfully, I believe the property should be rented around $1900 a month but oh well.
Since the tenant only stayed in the property for 3 months, I did not have to pay another fee to get the property leased again.
When I find a property manager, I ask lots of questions and one is the leasing fee guarantee. This is basically where the PM agrees that if a tenant they placed and are paid for breaks the lease before the guarantee period, they will release the property for free.
I always require this in all my PM’s. If they do not offer this, I do not go with them.
Even with this property rent being dropped by $400 from the first tenant, I am still making $300 a month profit after all expenses. This is because I bought the property right. If you do that, you won’t lose money even if things don’t go the way you want them to.
Here is the breakdown:
Property Management: $99
Total profit: $305 each month!
After the first year is up, I will increase the rent by $50 for the next two years to get the rent up to $1800.
I recently wrote and published a book on “How to Quit Your Job with Passive Income“. In it, I explain how ANYONE can quit their job as long as they have the mindset, plan, and determination to reach the goal of quitting their job.
The book has only been for sale for 2 weeks and it is already a BESTSELLER!
Not only that, it is in the “Hot New Releases” and is doing amazing!
Currently all three of my books are selling well and I am making an extra $1000 a month in passive income from the. The best part is that I am helping many others do exactly what I have done.
Daily, I get emails from people asking for help and direction in their passive income businesses. I absolutely love helping people.
In life, it is better to give than receive and I am giving as much as possible.
I am only 37 years old and I never have to work a job again!
The feeling of leaving a job decades before you are supposed to is an AMAZING feeling. One that I hope you have the chance to experience. With passive income and hard work, you can.
Work hard on your passive income businesses and you can experience your first day of the rest of your life!
Leave me a comment below about how you are doing with your passive income.
I love hearing your stories.
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