Each month I give an update on the passive income ideas I use to quit my job. The month of August was a good month for my rentals but was pretty rough personally.
There has been so much going well for my passive income business and August was a great month. My properties are cash flowing well, no other properties were set on fire, and my books are selling well.
My Wake-Up Call to Quit My Job ASAP
My step father passed away on August 21st. He was only 57 years old when he passed. With the passing of my dad, this was a major wake up call for me. It is a wake up call that life is short. Maybe even shorter than you might think. As I look at my life, I start to think about how much time I have left to live here on this earth.
Now that both of my parents have passed away (both at age 57) I am wondering when it will be my time to go. Only God knows that but right now, I can see that I must quit my job sooner, rather than later. I believe it is tragic for anyone to work their entire life and never be able to experience what it is like to not have a job.
A life where your job keeps you from doing the things you want to do and dependent on someone else for money in order to provide for your family.
When I Will Quit My Job
People have asked me when is the date for my quitting my job.
The truth is that it is an event, not a date that I am waiting for. The way I buy properties is using the B.R.R.R.R. model of real estate investing. I buy a property for cash (because I have the cash through saving and financing my other properties) then refinance and pull all the money out plus additional cash out of the equity in the properties.
The truth is, it is much easier to buy properties cash. I know not everyone can do that. I was not able to do it when I got started. Now though, after 9 years of being in the business, I am able to spend $150,000 cash on a property and then pull out the money for another one.
So, the event for me is when I finish the refinance of my 4 new properties I just purchased. The loan will be a bundled loan of all 4, pulling the equity out of the property.
Passive Income Business Update – Rentals
August was much better for my rentals than July. If you remember, one of my properties had an arsonist set the third floor on fire.
If I didn’t do anything with the property, the local government would demolish the structure without my approval. After that I would be sent the bill for the demolition which would be $3,500 – $5,500!
In order to save myself lots of money, I decided to donate it to the local county Land Bank. Since it would cost more than I paid for the property to fix it up, it would be wise to just donate it.
The process was very easy. I contacted them through an email address they had on the website inquiring of the donation of my property. The director checked the zoning and the regulations and approved the donation.
The only thing I had to pay was the taxes for the time that I owned the property. After the transfer, they will be the legal owner of the land and I have no more control over the property. Good thing there will be a nice tax write-off for this donation.
Making The Properties Fully Rented for When I Quit My Job
I knew I was going to quit my job this year. Since February, I have been working hard and spending lots of money getting my properties in tip-top shape to keep renters. As I have stated before, my previous property manager did not keep the properties in the best condition, which is why I had lots of turnover in tenants.
July seemed to be one of the last heavy months of rehab for my properties. Now that my properties are fixed up, they are consistently rented with good quality tenants.
When I quit, my desire is to keep the rental income as consistent with as few expenses/evictions as possible.
My Houston Tenants I Just Evicted Filed A Lawsuit!
My gut was telling me that the tenants who moved into my property would be a problem. I should have listened because I was right! Not only did they take 3 months to move in, cost me lots of money in repairs, needed to be evicted 2 months after they moved in, now they have filed a lawsuit against my property manager!
So, there is a saying in the rental business. “It is not if you get sued, it is only a matter of when.”
Obviously this is true. For some reason, they tenant didn’t put my name on the lawsuit. The only entity named is the property management company so I am in the clear. They filed the claim in small claims court for the sum of $10,000.
Here is the potential reason why I was not named on the suit. The tenant had my information so I would talk to her on the phone regarding the property. She would go on and on about how bad the property manager was and all the things she wanted changed in the house.
Things like a new AC unit even though the current one was fully functioning and a technician said the unit was in good condition. In all those conversations, I made her feel that I was on her side.
In truth, the only side I am on is my own. Not the property manager and definitely not the tenant. This is the key. Even though I was not on her side, I made feel like I was. I treated her with respect, listened to her complaints, and empathized with her and never lied to her.
In the end, I believe she saw me as an ally instead of an enemy.
We will see what comes of the lawsuit.
Refinancing My 4 Properties To Have More Money To Buy More Properties
In August, I was just about ready to refinance my properties. Then my step-father passed away. That put everything on hold until I could sort everything out with his passing. I know the process will take a couple months so I plan to start the process in September.
My property manager pointed me into the direction of a commercial lender for US Bank. From what I can see, this is going to be a great program. Here is a list of the benefits:
- Bundled loan of multiple properties but each property has it’s own note. Instead of putting all the properties under one note, this is beneficial in case I want to sell them individually in the future.
- The cost of the loan is a fraction from what another commercial lender wants to charge. The other lender wanted 4 points for the fee of the loan. That is 4% of the loan amount being paid to him. For a loan amount of $150,000, 4% is $6,000! Crazy expensive. US bank will only charge a fee of $150!
- I can put as many or as few properties into the loan as I want. Right now, I am only putting 4 properties into the loan. The other 16 that I own without a mortgage will stay without a mortgage so I can have constant income coming in when I quit my job.
- I am working directly with the bank and not through a broker.
- The interest rate is 3.5%. The other broker was going to charge me 7% for the loan. That is twice the amount of interest than from US Bank.
With all of these benefits, I must say that I will go with the US Bank. The only small negative is the loans are 5 year loans with a 30 year amortization. After the 5 years, the loan will get locked in for another 5 years at the current rate.
Passive Income Business Update – Book Writing
For the month of August, I had many sales for both and am happy to report that I made $453.23 in August.
Now I know that I am not hitting the Steven King book sales and money but this is $453.23 more dollars that I did not have. This is the most passive money I have ever made.
The time it takes to write a book is long and the process is involved. But once it is written, companies work hard to make sales for you. I do not have to do anything to make these sales and earn this money. This is truly passive since the books just sell themselves.
I have plans to write 10 more books in the next 2 years. Imagine if I had 10 books making $500 a month? That would be $5,000 a month!
I can do a lot of things with $5000 more a month.
How are you doing with your passive income? Are you any closer to quitting your job?
Leave me a comment below.