My Portfolio

2019 is the 6th year on my road to 50 doors! 

Over the course of 2018, I finally got crystal clear about my immediate goals and execution strategy:

  • Invest in Assets, which put money in my pocket

  • Eliminate Liabilities, which take money away 

  • Until the positive cash flow from the assets covers my family's day to day needs aka we are Financially Free

I now have a definite desired completion date in mind for this goal: September 2022.

Once the goal is achieved, the plan is to go away on a sailing trip during 2022/2023 school year.

Timing will be perfect. My two oldest sons will be in university by then. Our little guy will still be in middle school. We'll do some sailing and sight-seeing and come back for his first year of high school in 2024.

The major tweak to my original view of 50 Doors aka Financial Freedom goal is the fact that chipping away unnecessary liabilities is as important as getting cash positive assets.

Financial freedom becomes a LOT more achievable when regular expenses are under very tight control. 

Status as of the End of 2018

KEY POSITIVES

  • Our portfolio now has 16 assets. It grew from 7 to 16 assets within 13 months.

  • Most of the assets are residential real estate properties. Some of the properties have two or three units aka doors.

    The total door count is 18! YAY!

    Only 32 more doors to complete the original big plan 

  • I'm thrilled that we have Zero vacancy at the moment! This took a lot of work.

  • I am very proud to have 18 amazing tenant families as our customers. I'm grateful that they chose one of our properties to be their home and am doing my best to make sure they stay happy! 

  • My husband and I learned a few new ways to achieve great returns. In addition to real estate, we invested in private exempt market holdings, participated in a movie production, and continued with dividend-paying stocks.

  • Positive cash flow from twelve successful assets added up to $27,994.

  • Our gross annual income grew by 29%

  • However.... 

 

KEY NEGATIVES

  • Negative cash flow (aka losses) from four problem assets totaled $24,107
  • These losses wiped out most of my positive cash flow
  • Overall, my grand total for the year is .... (drum roll) ... $3,887
  • This is a HUGE drop from $22,100 cash flow in 2017.

 

LESSONS LEARNED

  • Vacancy is deadly.
    All four properties with negative cash flow were vacant MUCH longer than they should've been. I was too slow fixing the vacancy issue and I paid for it, literally. 

  • I am responsible for my decisions as well as lack thereof.
    This year I hired a property manager and it was obvious that they were struggling and not performing. I trusted them too much and for too long. I should have taken responsibility over the situation sooner. I knew there was a problem and waited too long to fix it. 

  • Losses add up quickly.
    Over the past few years I saw that little positive streams of income accumulate to considerable amounts. I realized that if I continue adding assets with small positive cash flow to my portfolio, I will inevitably become financially free.

    This year I learned that if 25% of my assets under-perform, I break even. If performance is worse, I'd probably be broke. Therefore, non-performing assets jeopardize my financial freedom prospects. Losses add up quickly. All issues, which diminish returns, must be resolved as promptly as possible, no exceptions.

  • Time for a New Financing Strategy
    Over the past few years, I repeatedly used the same financing strategy: I would get a property with expensive private money and very skinny positive cash flow, renovate it, put a tenant in, then re-finance it with lower interest rate and achieve good cash flow. In 2018, this strategy failed. I was not able to replace expensive money with cheaper money. I did not qualify for the re-finance I needed to improve cash flow. Next year, I will have to re-vamp my financing strategy.

 

Objectives for 2019

  1. Eliminate a big chunk of my most costly liability, Bad Debt. This will increase my overall cash flow. With less debt, I'll attract other people's money on better terms.

  1. Acquire assets that put money in my pocket at a reasonable pace without getting new bad debt. This will increase positive cash flow as well.

  2. Sell non-performing assets in Spring 2019 to improve cash flow.

  3. Acquire liquid assets. You can't buy groceries on real estate equity. Liquid assets will be my rainy day fund to protect me from a fire sale in case of an emergency.

  4. Plan ahead for the sailing trip! Budget, research, and make sure my husband gets his sailing license :)

Numbers

2014 2015 2016 2017 2018
Asset #1 -1,330 -2,139 2,615 7,446 3,380
Asset #2 1,647 9,099 7,339 5,745 2,097
Asset #3 -339 2,799 -907 7,179
Asset #4 3,202 1,754 5,359
Asset #5 -3,759 1,107 162
Asset #6 2,336 3,878 5,598
Asset #7 75 -15
Asset #8 -1,319 355
Asset #9 0 -1,772
Asset#10 0 -2,769
Asset #11 500 -13,153
Asset #12 1,014 1,459 2,914 3,884 2,955
Asset #13 0
Asset #14 924
Asset #15 0
Asset #16 -6,413
Asset # 17 0
Total 1,331 8,080 17,445 22,164 3,887
Goal 120,000 120,000 120,000 120,000 120,000

Check back soon for detailed updated case studies! 

Link to My Portfolio 2018 is here.