It’s that time of the year to review and to
The key question I ask myself every year: Did I take more steps forward or backwards to long term goals?
The answer: Overall, I took way more steps forward. It was a solid year.
I ask myself that question to keep it simple and because nothing ever goes according to plan. Having a simple litmus test is important to me.
This blog article covers my 2019 goals and updates to my investing strategy. Consider reading my past ones to understand all the references:
- My Investing Strategy blog – Published: 8/15/17
- My Updated Investing Strategy and 2018 Goals – Published 12/5/17
Investing and Financial Goals
Here’s a quick run down of my investing and financial goals for the year. They are in no particular order.
Equity Heavy Condo in Reno, NV
A goal from last year was to determine what to do with my condo (Keep, Refi to pull money out, or 1031 the money to Denver.) and take action. Well, I determined what I wanted to do, I just didn’t take action (lots of unexpected curveballs… it got pushed down the to-do list.)
I decided to sell and 1031 the money into Denver. Below is my analysis
Recap: I bought it for $67,000 in 2011. Now it’s worth about $240,000 and has $38,000 left on the loan (Private money at 0% down, 5% interest rate, 15-year mortgage – I wish I knew back then what I know now!) It’s a 2/2 condo.
Keep as a rental or pull out cash?: First, I don’t want property outside of Denver. I have zero
- Price (Today’s value): $240,000
- Taxes: $850
- Insurance: $275
- Property Management (10%): $1,560
- Repairs (5%): $780
- HOA: $3,060
- Rent: $1,300
The cap rate is 3.6%
Sales proceeds: $240,000 sales – 7% for selling costs ($16,800) – loan payoff ($38,000) = $185,200. Using that as a 25% down payment leverages up to $740,800. I’ll 1031 it to buy multiple units in Denver.
Systematize theme: My thought process aligns with my plans to “systematize” my decision and investing process as outlined in a previous blog post.
Buy Another Rental
Between daycare savings (details below: “Mother-In-Law House Hacking”) and business cashflow, I’m anticipating buying another rental.
Max Out Our Health Savings Account (HSA)
This year we switched from a traditional health insurance plan to a health sharing program. Google it for more details. It’s been on my list to do a podcast on because it’s been great for us from a personal finance perspective. Essentially, our premium is about $400 less per month, has a lower deductible equivalent, and allows for an HSA. I like HSA’s because of the tax break and it has no income limits. For 2019 the maximum contribution is $7,000. Basically, I look at it as another account for cash reserves. Depending on account minimum and fees, I may put a portion of our HSA into the stock market.
Maintain and Increase Cash Reserves
Cash is king. My attitude towards holding high cash reserves have not changed. In fact, my cash reserves have increased.
A goal for last year was to come up with a cash reserve plan that balanced high cash reserves, while not losing too much to inflation. I came up with a plan that is the right balance for me.
Checking Account: Over one month’s worth of expenses to pay the bills. Enough to pay for everything and not having to worry about balancing the checkbook on a weekly basis. This for both my personal and business account. Return: 0%
Tier 1 – 6 months+ in a savings account. This includes 6 months of personal funds and 6 months (including salary expenses to myself) in my business account. Return: 2% in an Ally Savings account.
Tier 2 – 6 months+ in ROTH IRA investing in VBIAX – Vanguard Balanced Index Fund Admiral Shares – 60% stocks / 40% bonds. Last year I referenced a Betterment study that used 40% stocks / 60% bonds. I went with 60/40 simply because Vanguard had a fund with that ratio and it kept things simple. Return: 10.35% return over 10 years (this is volatile.)
Tier 3 – HSA – Max out every year. Returns: The HSA Account requires $5,000 in cash to avoid fees. All the extra money gets invested in the stock market (The closet I can find to an S&P 500 index fund.)
Tier 4 – “Oh Shit” Emergency fund with all of our retirement savings in 401k’s and additional ROTH money invested in VTSAX – Vanguard Total Stock Market Index Fund Admiral Shares – 100% stocks.
Mother-In-Law House Hacking
As I write this, we are going through our final punch list to complete the mother-in-law suite in our basement. I’ll have more details soon on the entire project. In short, it’s been a success! My MIL officially moved down there two days ago. We’re saving around $2,500 month between not paying daycare and sharing living expenses. That
As discussed in previous posts, becoming a Realtor was the fastest way for me to leverage my skills to start a new real estate business to fuel
- Networking – relationships matter and lead to business and deals.
- Learning – I’m a student for life and am always learning.
- Cash flow- I needed to replace my previous businesses’ income.
With those three objectives in mind, it’s been a great year! I’m thrilled at how 2018 has played out.
The website has gained more traction in both the local community and the national level than I expected over the last year. I’ve had various brokers and real estate investing clubs around the country reach about duplicating the website for them to use in their local market. I love the idea and see a great opportunity there, but it’ll take a lot to scale it and my fear is that I’ll get spread too thin. Besides, I’m having too much fun networking around town and making friends locally. I miss having local friends. I spent my 20’s moving and traveling. I’m enjoying settling down. I don’t want to travel for business. For the foreseeable future, I’m tabling that idea. But, it’s nice to be in demand. 🙂
Rather, I’ll play to my strengths and keep 100% focused and on what Charles and I have built at www.DenverInvestmentRealEstate.com.
Creating Collaborative Partnerships are a big focus in 2019. What’s a collaborative partnership? Well, it’s a phrase I made up. My plan is to partner up with other experts around the Denver real estate investing community to bring their expertise and knowledge to the online world. It’ll be a win-win-win-win scenario for myself, the expert partners, my clients, and all the website visitors. I’m really excited because:
- It’ll increase my knowledge level.
- It’ll increase my network.
Both are great for my own investing and for my clients. I can’t be an expert at everything, but I can be an expert in my area and know who to call when needed for me or a client. Not only will I know who to call, but my calls will get answered and returned!
Collaborative partnership ideas currently in the works:
- “The Denver Real Estate Ride Along” IGTV show (Instagram TV) w/ Terrance Doyle.
- Terrance is up to amazing things between opportunity zone investing and repositioning small apartment buildings (15 units+).
- Once a month we’ll bring a guest along to explore his various projects and talk shop.
- We have professional videographers and editors lined up!
- Real Estate Financial Planning software w/ James Orr.
- James coded the most powerful software for real estate financial modeling that I’ve ever seen. There’s nothing else like it out there.
- If you didn’t see the “Building a 10 Property Portfolio” webinar series with James, then go check it out now.
- I’m helping James with some content creation using his software. Be on the lookout for really cool analyses of different investing scenarios in 2019.
- Diving Deep into accessory dwelling units (ADU’s)
- ADU’s are a great avenue for house hacking. However, between zoning, finding GC’s who can build them, and the lack of inventory, they can get complex.
- I’m talking with various professionals who are streamlining the ADU building process. We have loose plans to collaborate and share all the information online.
- Resources for Tax Planning and Entity Creation w/ Peter McFarland
- Peter’s webinars on taxes and entity creation are always toward the top of our most popular charts. A lot of people, myself included, want to learn more. Understanding the changes from the Tax Cuts and Jobs Act of 2017 is on my list.
- We discussed putting together an online educational curriculum so people can reference beginner to advance material.
I have plans for more collaborative partnerships. Stay tuned! The above ones may change and we’ll be adding more collaborations.
I’m not sharing all of my personal goals, but I want to share ones that are relevant to investing and building a business. Like most people, I want to get more productive, expand, and have a better work/life balance. I can’t create more hours each day, so I need to improve on my own activities.
- Accountability Partnership w/ Joe Massey
- Accountability partnerships in the past have done wonders for my business and personal life. 2019 is the year to start doing them again!
- We’ll hold each other accountable on our weekly and monthly tasks. Achieving those small tasks leads to accomplishing goals.
- There is a big difference between writing down your tasks vs sharing them with someone.
- I don’t have my “core money making activities” outlined yet. But we’re meeting the first week of January to get things going. It’ll probably involve a few emails a week with very short meetings as needed.
- Better Focus and Organization
- Every year I find it harder to completely focus on what I’m currently doing. I imagine smartphones and Facebook have a big part of that. Being organized and having better focus go hand in hand.
- Not sleeping with my iPhone in the bedroom. I waste too much time on it at night. Leave it charging downstairs in the office.
- It’s time to revamp my organizational system for my personal tasks and business tasks. The last few months I’ve tested different project management systems. We finally found one that works well!
- Revamp how I handle emails by not checking it as often and getting better inbox rules.
- The accountability partnership with Joe will help me focus on the important activities, which ultimately helps with staying organized.
- Years ago I started meditating. For the few months that I did it, it helped with my focus and reducing stress. Time to start meditating again.
- Work Harder, then Smarter, then Repeat, Repeat, Repeat
- Working harder leads to results, data, and opportunities to improve and start working smarter.
- I’m adding this in here as a reminder to myself to keep grinding because that is what leads to results.
- 2019 is another year to work really hard and perhaps a little smarter!