June Passive Income Update: Rainy Season, Hiking, and Inspections

Welcome to my monthly passive income update! For those new to the blog – I own 3 properties, an apartment, a townhome, and an apartment building with five 3-bedroom units.  The apartment is now owned completely in cash, while the townhome and 5-plex have mortgages which I’m trying to knock down as quickly as possible!  Now let’s get to the good stuff!

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June was another busy month (is it just me or is this year really flying by??) although I definitely made sure to fit some fun activities into the mix.  June is typically rainy season here in Tokyo but we were actually lucky enough to have somewhat decent weather throughout the month. 

Despite the hot weather, I spent my weekends getting some great hikes in and even got to the beach for a quick day trip.  For the most part we had blue skies the entire time and definitely made the best of the “rainy season” this year.

Beautiful little entryway on a hike in Kamakura, about 1.5 hours southwest of Tokyo

The beach was absolutely deserted, and when we asked some of our Japanese friends about it, they claimed that most locals prefer to wait until after “Ocean Day” in mid July before going to the beach.  I guess being a foreigner does have its perks!

Private beach anyone?

My expenses were fairly low for the month, although I did spend $50 on a golf lesson to sharpen up my game before hitting the course with some friends in early July.  My car and rent are typically the brunt of my expenses, but I do a pretty good job at keeping my discretionary spending on the lower end (of course always leaving some room to treat myself!)

Spent a great afternoon out of the office soaking in the sunshine and reading

Now onto the passive income!

Net Income for June 2017: $-90

Including Principal: $2,248

The specifics: 

Apartment: $1,200

Townhome: $1,995

5-Plex: $5,760 (caretaker is getting a $100 rent reduction)

Total Revenue: $8,955

Expenses by Property:

Apartment: $488

$0 maintenance, $434 association fees, $54 management fees

Townhome: $414

$0 maintenance, $335 association fees, $79 management fees

5-Plex: $3,538

$1,474 inspection repairs, $160 electric, $170 gas, $1339 water/gas, $395 management

Mortgages (including tax):

Townhome: $1,750

5-Plex: $2,833

Total Expenses: $6,793

Another fairly frustrating month from a cash flow perspective, but luckily I am diversified enough that my townhome and apartment were able to cover some of the issues in the 5-plex.  I was hit with a tough building inspector who left us with about $1.5k of repairs, but the real issue was a tenant who had failed to inform us of a leaky toilet valve and had broken off a piece in the shower, both of which left me with a water/trash bill of nearly $1400 which is easily $800-1000 too high for the building.  The electric and gas bills were adequately budgeted for prior to purchase of the building, but it’s really been the water bills which have been killing me lately.  We think we’ve solved the problem so hopefully next month will be a different story and we’ll be back in the $600 range.

Given my other two property utility bills are paid for by the renters, I’m realizing how much easier it is to let them deal with these sort of usage issues on their own.  I’m fairly certain that this particular renter would have brought this issue up much quicker had they been paying their own water bill…

Despite it being a rough month – I’m still chugging along as expected, and will likely end the year at around $36-40k including principal paydown.  My personal goal is closer to $100k per year, but even at $50k a year I am fairly comfortable covering my current expenses.  I will be raising the current rent on the 5-plex by about $65 in July which will help as well, but I’m definitely looking forward to having a smoother July (fingers crossed)!

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To read more about my story and more about the properties, check out my original passive income post or read more about me here!

 

 

April/May Update: Concerts, Beaches and Graffiti

Welcome to my monthly passive income update! For those new to the blog – I own 3 properties, an apartment, a townhome, and an apartment building with five 3-bedroom units.  The apartment is now owned completely in cash, while the townhome and 5-plex have mortgages which I’m trying to knock down as quickly as possible!  Now let’s get to the good stuff!

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It’s been a whirlwind couple of months which is why I’m including my passive income for both April and May together in one post.  While it was definitely busy with work – I had some pretty awesome times as well.

April finally saw the cold weather break, which meant some beautiful days outside exploring the city.  While Tokyo is usually pretty temperate throughout the year, the cold weather definitely gets old and I always welcome the warm spring days.

We also got the opportunity to see Coldplay live! This was one of my bigger expenses for the month at nearly $150 for a ticket, but considering I’d never been to a big concert and have been a huge fan of their music since high school, I decided to splurge a little and go for it.  The concert was amazing and was well worth the money in the end.

May ended up being an even more amazing month, because I was able to book a last minute trip to Hawaii at a great price.  My old colleague had offered up his house in Hawaii to me if I ever wanted a break from the real world, and finally decided to take him up on it.  His house was attached to a great resort on the Big Island, and thanks to his generosity the whole trip ended up being an absolute steal (even after buying him a great bottle of wine as a thank you!)

Our days were basically spent hanging out by the pool, walking along the beach, hiking, and hitting the gym most days.  It was a pretty big adjustment coming back to the real world to say the least…

I definitely could’ve gotten used to these sunsets every night

Pololu Valley hike – absolutely breathtaking views

After all of that it’s time to dig into the good stuff!

April was a relatively easy month with not a whole lot to write about…with May being about as big of a headache as any homeowner ever would like to deal with.

Net Income for April 2017: $2,262

Including Principal: $4,380

The specifics: 

Apartment: $1,200

Townhome: $1,995

5-Plex: $5,860

Total Revenue: $9,055

Expenses by Property:

Apartment: $488

$0 maintenance, $434 association fees, $54 management fees

Townhome: $414

$0 maintenance, $335 association fees, $79 management fees

5-Plex: $1,308

$0 maintenance, $239 electric, $674 water, $395 management

Mortgages (including tax):

Townhome: $1,750

5-Plex: $2,833

Total Expenses: $6,793

Now onto May….

My 5-Plex got hit with two or three pretty painful issues in May – first off we got a letter from the city stating that we were being fined for graffiti on our fence.  Obviously living in Tokyo I’m nowhere near being able to check on these things, and my property manager is generally at the property at least once a week.  He hadn’t noticed the graffiti, but it turned out it was on the side of the fence facing another property, and given the fence is mine, I got hit with a $275 fee to scrape it off of the fence.  If that wasn’t bad enough, the gas bills has been sent to the old owners for the past 5 months, and luckily the gas company was able to track us down, unluckily that was a $2200 expense.  And finally the nail in the coffin was a city inspection which left us with a few small issues to fix.  All in all I’m hoping there aren’t many more months like this, but as any real estate investor will tell you, if you can’t take the bad months then you’re not cut out for it at all.

Net Income for May 2017: $60

Including Principal: $2,200

The specifics: 

Apartment: $1,200

Townhome: $1,995

5-Plex: $5,860 + $291 (laundry room)

Total Revenue: $9,346

Expenses by Property:

Apartment: $488

$0 maintenance, $434 association fees, $54 management fees

Townhome: $414

$0 maintenance, $335 association fees, $79 management fees

5-Plex: $3,801

$275 graffiti wall repair, $200 general maintenance, $208 electric, $886 water, $2,232 gas

Mortgages (including tax):

Townhome: $1,750

5-Plex: $2,833

Total Expenses: $9,286

To read more about my story and more about the properties, check out my original passive income post or read more about me here!

 

 

 

 

March 2017 Passive Income Update

Welcome to my monthly passive income update! For those new to the blog – I own 3 properties, an apartment, a townhome, and an apartment building with five 3-bedroom units.  The apartment is now owned completely in cash, while the townhome and 5-plex have mortgages which I’m trying to knock down as quickly as possible!  Now let’s get to the good stuff!

Net Income for March 2017: $2,140

Including Principal: $4,265

The specifics: 

Apartment: $1,200

Townhome: $1,995

5-Plex: $5,860

Total Revenue: $9,055

Expenses by Property:

Apartment: $510

$22 maintenance, $434 association fees, $54 management fees

Townhome: $481

$67 maintenance, $335 association fees, $79 management fees

5-Plex: $1,341

$0 maintenance, $310 electric, $636 water (crazy!), $395 management

Mortgages (including tax):

Townhome: $1,750

5-Plex: $2,833

Total Expenses: $6,915

I’m about halfway towards my goal of having enough passive income to cover my expenses, and at this point there’s very little work to do on my portfolio.  I pay a pretty hefty management fee every month, but given I live 6,000 miles away from any of my properties it’s well worth the money.  At some point if I were to move back to the US, I would consider managing the townhome and apartment myself given how low-maintenance they are, but for the time-being I’m happy with the current set up.

My 5-Plex mortgage is a commercial mortgage given conventional mortgages are only provided up to 4 units, which means that I had to get a 20yr mortgage with a 5 year balloon at 4.25%.  Typically most commercial property buyers would sell the property before the balloon is up, and hope to realize a return, but given I’m looking to hold this for the next 10 years or so, I’m alright paying it down aggressively so that the balloon is fairly manageable in 4.5 years.

The mortgage on my townhome is a 15 year mortgage at 2.75% which I refinanced just before Trump was elected, so I’m pretty comfortable keeping that as is for the foreseeable future.  As astute viewers will note, I am at a slight CF negative on the property including the mortgage, but including the principal paydown I’m still making $689 a month (slightly more on months without any repairs).

Now that I’ve refinanced the townhome mortgage and have the 5-plex, I look forward to my mortgages coming due every month.  It’s great seeing the loan tick down, knowing that I’m that much closer to financial independence.  I won’t get there tomorrow, but I sleep easy at night knowing that I’ve put everything in place so that I will get there someday (soon).  Here’s to another good month!