September Performance Update (Day 2464): Hello New House, Goodbye Old Car

My main goal* was to build an investment and cash portfolio of $1,120,000* in 1500 days**, starting from 1/1/2013 and ending in February of 2017. I made my goal in 2016, my 1500 Days are over, and I’ve left my job. In the interest of openness, I’ll continue to share my numbers.

September was a very, very busy month:

We sold the Acura NSX: We were bored with the car, but also wanted to cash out to raise money to buy another home. We sold it for the exact same amount that we bought it for, $45,000. Read the full story here.

We bought another home: We had been casually looking for a long time and finally found the right deal. The purchase price was $365,000. Here is how we paid for it:

• $199,000: HELOC from our first home.
• $45,000: NSX sale.
• $35,000: Cash that we had laying around.
• $86,000: Stock sales.

We’ll pay off half of the HELOC in January when we can sell stocks and avoid capital gains.

We’ll be fixing up this home over the next 2.5 years, maybe longer if I get lazy. If home-flipping/remodeling is your thing, check out my YouTube channel where I’ll be documenting the flip: https://www.youtube.com/1500days

For now, we’re keeping our first home. We’ll rent it to friends in the short-term and experiment with Airbnb after that. If renting the property doesn’t work out, we’ll sell it.

With all of that in mind, here is how we’re going to account for our homes in these Performance Updates:

• Home #1 ($260,000): I value my primary home at $550,000. Subtract the $200,000 we borrowed from the HELOC and the $90,000 we still owe on our mortgage and we’r left with $260,000.
• Home #2 ($365,000): I think that this home is worth a lot more than the $365,000 that we paid for it. We saw 3 models of this home sell in 2019 ($420,000, $500,000, and $600,000) but I’m going to wait until 2020 to reset the price. This will give me time to watch the market and come up with a more accurate valuation.

Current Financial Picture

Home Equity: $625,000

• Home #1: $260,000
• Home #2: $365,000

Real estate that isn’t houses in Longmont: $842,500

• Trailer park: $170,000
• Coworking space: $127,500
• Syndication deals: $375,000
• Private loans: $105,000 (we have two, one at $40,000 and another at $65,000)
• Mortgage notes: $65,000

Stock market (index funds and individual stocks): $773,507

Cash: $19,723

Two more things:

• In my sidebar, I’ve always separated out my home from the rest of our investments. Now that I have two, I’m accounting for my rental home as an investment.
• In past performance reports, I gave our two old cars, dinosaurs, and all of my possessions a value of $20,000. Our cars are old and for the sake of simplicity, I’m not going to include the value of personal property in my net worth anymore.

September Spending: $4,097.90

After our mortgage of $1,238.49, here were our three biggest expenses:

Household crap ($1,456.01): Mrs. 1500 goes through phones like I go through toilet paper. Instead of getting a budget phone, I bought her a new Pixel in hopes that it will last longer than a year. My Pixel 1 is three years old and still going strong.

Education ($351.34): We paid school fees and also donated money to our girls’ school.

Restaurants ($302.42): Life got busy and sometimes it’s just easier to eat out. #meh

Live-In Flip Spending: $2,180.27

I’m going to account for remodel spending separately. I’m doing this because these are one-time expenses that not normal living costs.

We had some big wins:

• We discovered our town’s toilet replacement program which gives you a $100 rebate if you replace your old toilet with a dual-flush model. Conveniently, we found dual flush toilets at Sam’s Club for $100, so our new thrones are free.
• The pool had a leak in an underground line. A pool guy came out and told me it could cost up to $5,000 to fix. Luckily, I did some poking around on the internet and found a solution that set me back $80.

Home remodeling deserves a stand-alone post, so I’m going to stop here.

September Performance Update

September was a down month. We started at $2,286,717 and ended at $2,260,730 for a loss of $25,987. $20,000 of this loss is because I’m no longer valuing personal property in these reports (see above).

2019 (as of 9/30/2019)

• Days elapsed: 273
• September gains: -$25,987
• 2019 gains: $346,290 (including 401(k) and HSA contributions of $32,182****) Note that the 346K number is inflated because as I mentioned earlier in the post, we’re now accounting for one of our homes as an investment property.

Since the start (1/1/2013)

• Days elapsed: 2464
• Gains since 1/1/2013: $1,309,687
• Investment portfolio and cash value: $1,895,730
• Net worth (everything!): $2,260,730

Real Estate Income: $1,793.51

Just because of timing, this was a slow month for real estate income. The trailer park pays out quarterly and so do our syndication deals. It so happened that September was one of the months where none of them had a scheduled payment.

• Coworking space: $1,000
• Mortgage notes: $500
• Private loan: $293.51

New Challenges

The last home we remodeled was a tough one. For most of the remodel, I had a full-time job, so getting it done along while maintaining the blog and raising two children was insane.

The home we just bought doesn’t need nearly the amount of work that the last one did. Almost all of the remodel is cosmetic. Redoing kitchens and bathrooms is my specialty. Setting tile is fun. I love hanging cabinets and redoing plumbing.

I’ll redo this house at a much more reasonable pace. The earliest we’d sell it is spring of 2022, but if the neighborhood agrees with us, we’ll stay until our girls are out of the home.

Going slow isn’t my style. I like to get stuff done. But, life is too short to go crazy. I need to remember tp stop and smell the roses gaze at the aspens. Going slow will be my biggest challenge by far.

*My goal wasn’t to have $1,120,000 at the end of 1500 days, but at any time before the day count was up. Why? It all goes back to the 4% Rule. Remember that our little friend, Mr. 4%, is nothing more than the most conservative safe withdrawal rate. Since my investment portfolio now sits at $1,550,000, I can spend about $62,000 in my first year of retirement.

**My original goal was $1,000,000 and no debt, I later raised the goal by $120,000 to $1,120,000 because I will have debt in the form of a mortgage and I firmly believe in not paying it off (LOOK at the MONEY I’m MAKING!). My compromise was to have enough money put away to cover the mortgage at the time of retirement.

***This is an affiliate link. If you sign up, the blog (me) makes some cold, hard, beautiful, cash. Personal Capital is a totally free and awesome way to keep watch over your investments. It’s worth it for the fee analyzer alone. I would never recommend anything that I don’t personally use and completely believe in, so give it a try. If you’ve already signed up through the link, please know that you are a fine person of above-average intelligence.

****My 401(k) contributions include my own, Mrs. 1500’s, and the contributions from my corporation. Self-employment with a solo 401(k) is a very powerful savings tool. I should have done this years ago.