My October 2015 Monthly Report

Welcome to my October Monthly Report for 2015!

I created these reports to keep track of my progress with passive income as well as to show you how to quit your job with passive income.  Since 2006, I have been working hard to build my passive income up with rental properties and businesses in order to quit my job and be financially free.  Out of all the ideas out there to earn passive income, I have found that rental properties are the best way to earn money without doing any work.

October is probably one of my more favorite months of the year because it’s right in the middle of prime hunting season here in California. Sad thing is that I did not get as much hunting in as I wanted to because I am fully focused on building my passive income up even more than it is now. The reason is because when I quit my job in 2016, I want to have another $2000 in passive income each month from my businesses.

With more income, I will be able to buy more properties that bring me more passive income. I spent a lot of time in October focusing on my goals and not hunting like I wanted to because I am looking forward to next year when I can spend the entire October month hunting. I will be able to do this because I will not have a job and my passive income will come in if I work or not.

From a goals standpoint, I have not achieved any new goals this month but I am continually moving forward on each one. Last month, I had a great month of completing my goals with two goals completed in the same month. That was a rather exciting month and now I need to focus on achieving the other goals that I have yet to accomplish.

Let’s take a look at the goals I’ve created for myself and where I am with them.

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Goal Updates

Finished Goals:
1. Remodel my personal home DONE
2. Refinance my personal home to have cash to purchase more rental properties DONE (Cashed Out $47,000 Tax Free!)

Goals In Progress:
1. Buy one single family home in Arizona as a rental property (an additional $250 per month of passive income) IN PROGRESS
2. Buy a four-Plex as a rental property (an additional $700-$800 per month of passive income) IN PROGRESS
3. Buy a 15-18 unit apartment complex with other investors (an additional $800-$1000 a month in passive income as my share of the profits) IN PROGRESS (Made offers but were to late. Still looking for deals)
4. Save up $30,000-$40,000 as an emergency fund IN PROGRESS ($11,500 saved)
5. Save up 600 hours of vacation/sick time to use when I quit. 375 HOURS SAVED (See how to effectively use your hours to maximize the amount of money you can receive)

The single family properties on the Multiple Listing Service (MLS) in Phoenix seem to all be very nice and well kept up properties. They have very little to no work needed on them to get them rented and I would not be able to increase the value of the home is very much with rehab.

These types of properties are nice if you can get them for good price but the current market is turning out to be a strong seller’s market. This means that sellers are able to get higher prices than normal for the properties because there are more people buying then selling.  Basic supply and demand.  If the demand is high, the price is high. If the supply is high then the price is low.  Right now, there is high demand so the sellers are getting a premium price for their properties.

As an investor, we need to find a property that costs less than it’s worth by a good margin so we have room to make money. Now I personally do not invest for appreciation in the property but solely invest for cash flow. The value of the home goes up and down depending on the market but your cash flow will stay much more constant comparatively. Also you live off the cash flow each month so you rely on it every month as a source of income, not on the appreciation of the property.

I am currently looking for good deals to move on and won’t move unless I find one that fits my criteria. I have made offers on properties trying to find good deals but none have come through. I have made offers on three different properties that have an asking price of $180,000 for the purchase price of $120,000. For me this is how I find out if I can get a good deal or not. If the seller is willing to make a deal, they will counter my offer and we can start negotiations.

If they do not want to counter then I know they are not interested in dealing and want to wait out the market and see if they can get any better offers. In the past I purchased a property for half the listing price but had to wait four months before the bank called me back and gave me what I offered.  The comparable sales on www.Zillow.com show that the property is worth about $172,000 so the owner is asking much more for the property.

So I will keep looking and analyzing deals and putting offers until I get a good deal on whatever property am looking for.

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Important Things in October

Another major thing that happened in October is that my property manager informed me that he will retire in 3 to 4 months. I wrote an extensive post on this topic for you to see the process in finding a new property manager.

 

In a nutshell, I am working towards finding a new property manager and have a detailed plan of how to do it. The property manager is the backbone of your business and without a good one you will be up all night worrying about your properties and spending lots of money.

What I'm doing differently

I have now started to actively find wholesalers to find me properties because the MLS market is so rough right now for investors. I want to find a property that is worth $200,000 and purchase it $140,000 and put $10,000 into it to fix it up and rent out.

The way the MLS is, properties are being listed for 5% over of the appraised value and are actually being sold for that amount. I am not at all against purchasing a property for what it’s worth as long as the cash flow is there and pencils out to my expectations.

A good rule of thumb to quickly see if a property is worth investing in or not is if the rent amount is 10% of the purchase price. So if you find a property that is selling for $180,000, you want the rent for the property to be $1800 a month. Now if the property will only rent for $1250, you want to try your best to get the property for $125,000 or somewhere in that area.

By now I am putting in offers at 100 times the rent amount as a starting point. If the property were rent for $1200, I put in an offer for $120,000. If the seller is motivated to sell they will counter with a lower price. If they are not they won’t and I move onto the next property.

I know you might be thinking, that I am extremely low-balling the seller on his price. That’s fine if anybody feels that way, but this is a business for me and I know how I can make money doing this business. I heard it said that if you are not embarrassed by your offer, your offering too much. I like this train of thought and go by it. Ideally, I would be able to get the seller to come down from the original asking price of $180,000 to a final agreed price of $150,000. At that price I will be making money in all of the five ways you can earn money in rental properties.

Update on Rental Properties

I sold one of my under performing duplexes for a 50% increase in profit. I purchased this property in 2010 for $12,000 cash and sold it for $18,500. This is after having five years of cash flow from the property. The rents basically paid back my initial purchase price so I got all that money back that I first put into it in 2010. Selling the property for $18,500, after closing costs I pocketed $17,625.40

Purchased Another Property

I also purchased another property for $9000 cash that rents for $400 per month. After expenses I will pocket about $350 a month and will have my money back in a little over two years. Once my cash investment is paid off, the rest of it is pure profit.

Update on Online Business

In October, I published my e-book on Amazon for sale. I wrote the book as a way to teach people how to quit their job with rental properties and draw attention to the website. Since publishing my book on Amazon, I’ve made almost $100 from sales. Not much but it’s a start. I wrote the book and now kick back and let the passive income come in. It is $100 more than I had last month.

My intention for the website is to not make any money for a good long time while I build up strong content and value to all the readers. I plan on giving away loads of more free content in order for people to see the value of investment properties and how you can quit your job with passive income. Someday in the future, I may offer some premium services along with the awesome free content. For now, I am getting the word out to as many people as I can that there is another way to earn income.

 

Thank you very much!

Thank you guys very much for being a part of the master passive income community! My desire is to help you quit your job and live the life that you want to live. Life is short, and I want to help you to have the ability to live it to the fullest.

Please leave a comment below and let me know how you are doing in your investing. I love hearing how other investors are making their passive income and would like to hear your story.

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