I like to capture some of the news-making headlines as I reach new milestones.

Here we are again at the end of another wonderful year. I have been away for almost 6 months craving to have the time to sit down and go through all the events unfolding in my life.

My last post was in June and little did I know what I was in for. 

June is usually a very glorious moment for me because it means one thing: SUMMER! That is one of the benefits of being a teacher, you work hard through the year and then you get almost three months of beautiful weather and plenty of free time.

For me, free time usually means catching up with projects that need to be done with our rentals, driving our kids to summer camp, and our favorite thing of the year, which is going up north to Michigan.

Everything was happening as it should until I got the first phone call from one of my tenants letting me know that she was planning on moving. After two years, they decided it was time for a new beginning in a new state; a new chapter. Sometimes I wish I could do that, don’t you? Just pack up and go. However, with how crazy the rent prices have skyrocketed I figured this would give me an opportunity to raise my rent. This meant a lot of work ahead of me, nonetheless.

Then, just a few days before starting school, in the middle of my Michigan trip, I get a call from my other tenant trying to break the lease with barely 5 months renting from me. I couldn’t make this up. To make matters worse I have just gotten a flat and my spare was low as well. It turned out to be half a day of dealing with a car problem plus the tenant breaking the lease looming in my head. 

I am not going to lie the idea of having two vacant properties at the same time was freaking me out. There is usually a lot of extra fixing and spending when a landlord switches tenants. I do have a nice emergency fund cushion for this kind of situation, but still; it makes me nervous. We have only one income, and I know that a tenant who feels shackled by a lease can cause a lot of property damage.

For a few weeks, I thought the tenant had put off the idea of moving but then it resurfaced and things got heated. I like to avoid litigations, lawyers’ fees, and long-drawn issues, so I agreed to a conversation and let them do the talk.

Negotiating with tenants and people, in general, is not an easy task. Everybody wants to win. I find that particularly males like to feel that they are getting their way and forcing the other party to simply accept their terms, even if those terms are quite unreasonable.

This is not my first time negotiating terms with tenants and by no means do I claim to be an expert. My starting point is always listening to what they want. What is it that will make them happy, and yes, feel like they are getting their way? In this case, the starting point is that they had a legal obligation and a binding document with me as the landlord. By law, unless I am able to find another tenant without lowering my screening standard, they are obligated to continue paying rent. Once that I explained this to them, without getting pissed off, they agreed to pay three more months of rent and get their security deposit back. I never understood what was their negotiating strategy but, as I said before, I always let them do the talk. I rejected the offer by saying three months is too much. Let’s do a month, and I will keep the deposit. They didn’t quite like that idea but in the end, they agreed. We set up a time for them to vacate the property, and I reviewed my expectations as far as the condition of the property goes when they were ready to move out.

Moving forward a month, they left and I was able to find another tenant. The property was in great shape. I was not able to rent it for a higher price, but I was able to rent for the same price I had before to a family that is covering the expense of the yard, which was about 7 months of $30 a week. So, in essence, I am getting a little extra a month and I was able to get out of a sticky situation without paying a lawyer, going to court, etc and I am getting more cash flow.

That property was not much work or money, except for a garage motor replacement that needed to be replaced probably since we moved in that house 6 years ago. Other than that, I touched up the walls for about 15 minutes, replaced a blind and it was done.

Our other rental was a different story though. It had a lot of different colors and we had not painted anything since we lived there. We had the pink girl room, the green and blue boy room, and other crazy colors that at the moment we thought were very modern and trendy but now we were just wondering what were we thinking? Anyway, painting a whole house was not easy, even on a teacher’s schedule. I put in 6 to 8 hours of work after my regular school day hours. It was exhausting! But I knew it was temporary, and I knew I could rent for an extra $300 a month. I was super pumped and motivated every day to work hard and get to the finish line.

November came, and both properties were rented with new tenants in and life was good again, plus we had a super exciting event unfolding very much at the same time…

Another home

Finally, after years of visualizing this moment and camping in the area, it happened. We found a home in our favorite Michigan spot! Since about March we had been exploring the idea of putting an offer in anything we could get our hands on in this area of Michigan. We didn’t want anything fancy, but comfortable enough for our family of six, and more importantly close to all the places we like to visit in this area, including beaches.

We put offers on 6 different houses and we were outbid in all of them. The most traumatic loss was a house that went to the market with a tag price of 250K and sold for 360K to someone who paid cash. At that moment, I was completely defeated. And if you have ever bid on a house and lost you know that feeling of having your dreams crushed…it’s hard! It’s hard not to get emotionally attached especially when it is a place that you plan to enjoy with your family or that may improve your quality of life. Anyway, after that blow, I gave up on the idea and told my wife that maybe we would have to wait a couple of years before we have a real chance to get something. I didn’t like the idea of keeping too much cash in the bank but I didn’t want to get another rental in my area. Then another house appeared on Zillow. We talked to our realtor and decided to go through the process one more time. We lost again. However, this time we were asked if we wanted to be a backup offer. We said “why not,” but with absolutely no hope of this really happening. 

Almost a month later we got a call from our realtor asking us if we were still interested in this last property because the buyer was considering our offer. The financing of the winning bid didn’t work out and we were up! We could not believe it! We were about 10K away from the original winning bid in a super hot market and we were getting this house. Incredible. Actually, after our inspection, we got an extra 5K credit for a small repair that I will be completing next week.

What’s next? 

Well, the portfolio now includes two rentals, our primary residency, and now our slice of paradise in Michigan. Which we will be enjoying for part of the year and also renting for about 8 weeks of the summer season. Rentals in this area are extremely sought after and you will be hard-pressed to find anything for under 2K a week after March.

Other advantages of this property are incredible low taxes, there is no water bill because we are on a well and in general gas and electricity don’t seem to be much either. We are looking at this property as a savings account. Every time we pay the mortgage bill it is a pleasure to see a huge chunk of the payment going towards the principal, instead of real estate taxes and mortgage interests; which by the way we got a 3% loan on that house. Simply incredible!

Net Worth 

My prediction last year around this same time was to increase our net worth by 30%. We closed our year 2020 with a net worth of $260,583 and I was blown away. We surpassed our goal.

I predicted back then a 79-82K gain by the end of 2021 if I could replicate anything close to that 36% we achieved in 2020. I would have been more than content with a 79-82K gain. That would have been amazing!

But the results are in and they are definitely deserving of a drum roll….again I am blown away.

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That’s how excited and motivated I feel about 2022!

Well, we have reached $437,273 in net worth. That is a 67% increase. Out of that, we had a windfall of about 50K due to a settlement we received after our car accident and the injuries sustained by my wife. Discounting that amount our net worth would still have increased 48% which is amazing!!

We are very very pleased and grateful. I can’t believe how our net worth has grown so much!

Years back I heard J. Money talking in a podcast with Paula Pant about the importance of focusing on net worth. At the time, about 6 years ago, my net worth was in the red with a big student loan and not much in home equity either. I thought to myself, “man these tech guys in the FIRE movement make it look so easy.” He was just crossing the million-dollar mark at that point if I recall correctly. Man, was he right?! Once you start looking at your net worth and create opportunities for your money to grow the magic of compound happens in a very generous way.

I simply can’t believe it, and I have no words to express how amazed I am with this progress. No doubt in my mind that we will cross that million dollar line and beyond in a not too far future.

It is beyond my wildest dreams to see my family and me in this position. 

My goal for next year 

I will set up again a goal of a 30% increase in our net worth or about 131K. 

I hope to achieve this by increasing my contribution to my 403B and potentially opening a 457 option through my job. I will continue with my two rental properties and the added income from the vacation rental in Michigan. I don’t anticipate the rental market prices coming down at all, although I do think that home prices will stabilize a bit in 2022, which may decrease our equity gains.

If you made it this far reading this post, thank you for hanging out on my site. I don’t know who you are but I hope you find this post empowering and pushes you to start your own journey of financial independence. There is no better day than today. 

Please, if you have any recommendation or suggestion that has made a difference in your financial life drop me a comment below.

I wish you a wonderful holiday season and a great 2022 full of great financial success!