Current Political Panorama

Here we go, ready for another exciting year on the path to financial independence. I usually do this post in the month of December rejoicing over the financial results of a great year. However, 2022 was not the greatest. I had two shitty tenants, and like all of us, inflation has made everything a bit more difficult for this family of six.

The Numbers

The growth prediction for our net worth in 2022 was $84,911. I anticipated a 20% increase back in December 2021. If you are interested in the breakdown, read my January 2022.

We had many different struggles this year. First of all, the pesky tenant who ended up being the lover of an unscrupulous lawyer. Once the tenant left there were about $2,000 in repairs including painting, carpet restoration, doorbell repair and some other random things along with about 35 hours of work that my wife and I did in 3 days.

What truly made this tenant swap expensive was a new air conditioning unit that added $3,500 to my yearly expenses. Unfortunately, every spring  the old unit would run low on gas. My family and I were happy paying about $120 every spring and that would cover the AC needed gas for the year, and saving ourselves the money of a new unit.

Unfortunately, the tenant was running the unit at 62 F during 90+ F days. Needless to say, the one charge of gas would not be enough; I don’t even think a brand new unit would have been able to keep up with that abuse.

The AC became a point of friction , and as a matter of fact, she tried to use the AC as a crutch to delay her moving-out date, claiming that “the unit was uninhabitable.” Thanks to my AC contractor, her tactic didn’t work. We got it fixed for the last 6 days she had left in the house and then we went ahead to replace the unit. The downside was that I had to pay $180 even when I knew I was going to replace the whole unit; that was better than keeping the tenant longer and messing up the schedule with the new people coming in.

More Problems…

Then there was my other tenant, who had endless problems with the plumbing of the house including the flushing of an adult diaper down the toilet.

I could truly write a book about this one but I will keep it short. This tenant was taking a night shift to make more money, leaving her two younger kids under the care of her other 2 teenager kids. Needless to say, that didn’t go very well. From the oven door gasket ripped off, the thermostat ripped off the wall and glued back on, vents full of food swept from the floors along with tooth flossing picks and candy corn…I am surprised we didn’t have an infestation of rats in the house. And of course….she wants her security deposit back, and wants to sue me.

This was an expensive flip. About $3,000 in repairs and about 60 hours of work.

In the meantime, the government has granted her the ability to move to a beautiful house where she will be paying $2,800 in rent and will continue driving her SUV Mercedes GLC whatever number it is. Unreal!

These two tenants I knew from the beginning were risky and I can confirm that in hindsight, that I was absolutely right. I consider myself lucky now that I got them out.

Our Short Term Rental

Our vacation rental did amazing. We got about 16K from renting through the summer and a few fall weekends. It sounds like a lot, but there are a lot of expenses involved such as having a cleaning service, management, repairs, and improvements that occur throughout the year.

We also had the bad luck strike with a humongous tree that fell right behind the house. It was going to cost $3,800 to get it removed and all cleaned up but due to a big misunderstanding on their original proposal we were able to get the job done for $2,000. Great price but still I was not expecting that extra expense.

We had our share of shitty people here too. One party claimed that the house was infested with rodents and requested a full refund without giving us a chance to get the property manager on the scene; they abandoned the house.

After getting our manager to the house we made sure to take pictures of the same things the guests were claiming to be mouse droppings. It turned out to be lint on the stairs and little marks on the wooden floor. Although, coupled with the movement of a handheld cell phone, the picture made it look like mouse scat.

Luckily Airbnb reviewed the case and after some time they sided with us.

We also have someone complaining about swimmer’s itch in one of the lakes, and a couple of people who were not very clean in the kitchen.

Other Expenses and Hurdles

Along with all those unexpected expenses we also had: the continuous orthodontic treatment bill for two of my older kids, summer camps, our own vacation in Michigan, some hefty car repairs, and affording the new cost of food. We especially felt the effects of inflation during the time my mom stayed with us for 4 months and my brother came to stay for two weeks.

But with all that, the numbers are still strong for the end of 2022. We got to increase our net worth to $527,926. That is $115,574 growth!!!! It’s unreal to think how much I have to work at my 9-5 to only bring in $105,000, which in reality is more like 68K after taxes and all deductions. That is a freaking 28% increase in our net worth despite a real estate market rather tamed during 2022 and a bearish stock market.

Predictions and 2023 Expectations

Well, on one hand I had a year of dealing with shitty tenants, but now I am simply enjoying my tenants. In one house I have a retiree with her adult working daughter and they are simply awesome. They are taking great care of the house and are very independent.

Our other rental always goes to a recipient public housing aid due to the area where it is. In previous years in an effort to maximize profit I have rented to participants with vouchers for 4 bedrooms. This time though, I decided to go with a 3 bedroom voucher participant. The amount of rent will be $100 higher than what it was but instead of having 6 people living in the house I will have only four and no children under 8; it is unreal how destructive children can be!!!

Growth Prediction for 2023
Mortgage mo.Rent mo.Monthly Rent cash flowYearly
Mortgage A1283.0024001117.00$13,404.00
Mortgage B1760.002700940.00$11,280.00
Mortgage C1152.00Offset by short term renting$0.00
Savings from W-2716$8,592.00
Tax return$14,000.00
Property appreciation1,392,0003% growth$41,760.00
403 Plan751188% growth$6,009.44
Total growth for 2023$95,045.44
*That would be a 17% growth
* If growth is similar to 2022, 26%, the growth would be $137,182

If everything goes somewhat as planned…my calculations tell me that our net worth should see an increase in the range of 95k-137k.

By maintaining this kind of net worth growth we should see our wealth cruising the million dollar line by the end of 2025. I am excited about that! I never imagined that I could someday consider myself a millionaire but we are getting closer and closer.

Happy Belated New Year 2023!