I believe it’s important to write down goals and it’s my hope by blogging about these goals, you will hold me accountable and make sure I follow through. Considering we are already half way through 2017 and this is a new blog, I will outline what our financials were as of January 1st, 2017, and where we plan to be when January 1st, 2018 rolls around.
As of January 1st, 2017, our household net worth was just shy of $150k. My goal for 2017 will be to double this to $300k before January 1st 2018. Here’s how we plan to accomplish this.
New Real Estate
- We will invest in 1-4 unit buildings for the time being as we acquire more knowledge in the field. While we won’t turn away a great deal on a 5 plus unit building, our main goal for this year is to concentrate on the 1-4 unit market. If you’re a current or future real estate investor, give Buildium a try for managing all of your properties, it’s intuitive, easy to use, and will help you keep track of all your properties.
- We recently acquired our 4th rental and are in the process of rehabbing it. You can read about it in my how to guide of a basic rehab.
Loan pay down
- Our tenants pay down a portion of our mortgages each and every month. While it won’t be beneficial to our monthly cash flow goals, it will show up in our net worth each month.
- In my experience, single family homes will appreciate faster than multi family homes, but generally come with low net cash flow. While appreciate will be a factor in our net worth, I will do my best not to inflate this and use realistic market values.
- Since my company offers a 401k match, it would be insane not to contribute up to the company match. This will help us achieve our goal of reaching 300k Net-worth.
- In addition to 401k contributions, I invest directly in the stock market. I do this mainly because I enjoy researching companies and like to see if I can’t beat the market, but it also provides a cushion of money we could pull out in a bind without touching our retirement accounts. If you do not currently own stocks, I would encourage you to open a free Robinhood account. Robinhood offers commission free trades, which is critical if you’re just starting out or want to purchase stocks on a monthly basis. A typical broker will charge you roughly $10 per trade, which will kill your profits if you’re just investing $50-100/trade. If you’re just starting out, I would suggest educating yourself and reading as much as possible on the subject. A good place to start is with Benjamin Graham’s book on value investing, you can read my review on it here.
- I recently started tracking where exactly our money goes each month in order to find ways to reduce monthly costs, which will in turn help increase our net-worth. Personal Capital is an exceptional tool for tracking both your budget and net worth, best of all it’s completely free! If you would like to try it out, you can sign up for free here.
- Based on our spending patterns, we can save the most by eating out less and reducing our grocery bill. Currently we spend between $1700-1900/month on food alone. My goal will be to get this under $1000/month leaving us with additional cash to invest elsewhere.
- Our utilities aren’t too bad, but we will go through and replace standard light bulbs with LED lighting, and replace our old thermostats with the Ecobee3.
Cash Flow Goals
Only additional income outside of regular income from my daily job will be considered in our cash flow calculations. Our January 2017 cashflow was $1040/month, most of this coming from rental properties. By January 1st, 2018, we want to see this cashflow double to $2000/month.
New Real Estate
- By adding additional rental units, we can expect to see an increase in monthly cashflow in the range of $150-300 per unit.
- By budgeting and reducing our monthly expenses, we will have additional money to put on the stock market through Robinhood, thus increasing our dividends. Dividends are generally paid out quarterly so this income will be included in the month it’s paid out.
- To reach my cash flow goals, I’ll most likely need to look for additional streams of income. I’ll outline these income streams in future posts.
If you’ve made it this far, I appreciate you taking the time to read my blog. Please let me know your thoughts and suggestions regarding these goals. If you would like to receive future updates in your inbox, please sign up for my newsletter below.