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When I jumped into real estate investing in late 2020, I approached it as an experiment. I knew roughly how much it would cost to buy and maintain a house, and what market rent would be, but I didn’t know how much time/effort it would take, if there would be major repairs, if there would be long vacancies… 

I’m happy to report it’s been going far better than I ever expected. Here are the numbers on my first property for the last 2 years:

2020

• Cash Inflow = $2,160 (Security deposit, rent, selling the fridge that came with the house)
• Cash Outflow = -$26,547 (Purchase, renovations, mortgage/insurance/taxes)
• 2020 Net Cash Flow = -$24,387

2021

• Cash Inflow = $10,062 (Rent)
• Cash Outflow = -$6,480 (Mortgage/insurance/taxes, water bills and ~$200 of repairs)
• 2021 Net Cash Flow = $3,582 (~13% of my initial investment)

2022

• Cash Inflow = $10,820 (Rent and security deposit for new tenant)
• Cash Outflow = $7,650 (Mortgage/insurance/taxes, water bills, security deposit refund and ~$600 in repairs and cleaning)
• 2022 Net Cash Flow = $3,155 (~12% of my initial investment)

From a cash flow perspective, I’m doing better than I anticipated (estimated $2,000 per year and actually averaging ~$3,300). This is due to both higher rent and less repairs/maintenance than expected. You can see my original estimates in my blog post from 2 years ago.

But the cash flow is only part of the story. I also paid off principal on the loan, and the property appreciated in value over the last two years. Let’s calculate the total return for 2021 and 2022:

• 2021 Net Cash Flow = $3,582
• 2021 Principal Paid = $878
• 2021 Estimated Appreciation* = $21,000
• 2021 Total Return = $25,460 (~96% of my initial investment!)

• 2022 Net Cash Flow = $3,155
• 2022 Principal Paid = $922
• 2022 Estimated Appreciation* = $21,000
• 2022 Total Return = $25,077 (~94% of my initial investment!)

When factoring in price appreciation*, this little house made over $25k per year in back to back years, which is more than I spent in the entire year of 2021. That said, that extra $22k per year is locked up in the house’s equity value. I could access some of that by refinancing and taking some equity out, but can only get all of it by selling (which I’m not planning on doing any time soon). 

This is some pretty incredible performance in 2 years, but it’s mostly dumb luck. I had no idea the housing market would go bonkers in 2021/2022. This trend will likely not continue, and I wouldn’t be surprised if the value of the house goes down in the next few years and wipes out a decent amount of those gains.

That said, it’s been a successful experiment thus far, and I’m currently looking to add more real estate to the portfolio. I’ll check back in on how this house is doing in a year or two. Stay tuned!

*calculated by taking the current Zillow estimate of $114,500 and subtracting the purchase price of $72,500 = $42,000 and dividing it by 2 years = $21,000

As many of you know, my bike was stolen last weekend. Besides my laptop it was my most valuable physical possession. I bought it in 2015 for $650.

While it is frustrating to have someone steal a valuable item that was my main mode of transportation, I am full of gratitude for the two years of service my bike provided me.

Since I didn’t have to own a car over the last two years, my bike has saved me thousands of dollars. It’s kept me in great shape, and the physical benefits of riding roughly 10 miles a day for the last two years should add a substantial amount to time to my expected lifespan (not to mention more savings on healthcare costs).

Beyond the quantifiable, my bike has provided for great memories, riding with friends, family, or by myself. It has even sparked some friendships, and many conversations on campus.

So thank you bike! It was nice knowing you :’(

Then again, for two years of physical fitness, thousands of dollars in savings, longer lifespan and unforgettable memories, $650 seems like a steal (pun intended).

#MoneyGoals

Imagine you are at a restaurant.* A bow-tie clad waiter approaches your table and hands you a menu. You open it, and are surprised to find that there is no food to order. Rather, this menu is filled with paths your life can follow. You can choose to be whatever you want, do whatever you want, go wherever you want.

This may sound like a dream, but it’s more reality than we often realize.

While it can seem like our only option in life is to work 5 days a week for 40-50 years then spend our last couple decades on Earth sitting in an armchair watching other people play golf, there is an endless amount of other options out there.

You can travel the world, like this guy who lives in a new country every 4 months. You could save aggressively and retire before you’re 35 like this guy. You could live a life radically different from anything you’ve ever seen before.

ALL OPTIONS ARE AVAILABLE TO YOU.

Yes, some things require more work. Yes, some require taking risks. Yes, your family, friends, coworkers (even strangers) may not agree with what you want. But at the end of the day it’s your life. Take some time to think about what you want to do with it. Please don’t read this post and look back at your life while you’re sitting in an armchair at 75 years old and regret not taking that cross-country trip on your bike (I’m talking to you future Greg).

The first step is figuring out what you want.

Then go.

Do it.

 

 

*Which should be hard to imagine because you cook all your own food and never eat at a restaurant right? 😉

Being home for my little sister’s graduation party took me back to my own transition from high school to college. I accomplished quite a bit freshman year, but here’s what I wish I would have done on top of those accomplishments.

1. Get a job (preferably on campus)

I worked a few jobs in high school and had a decent amount of savings going into my first year of college. I burned through those savings real quick, and then I had to get a job sophomore year. Looking back, I had so much free time as a freshman, and definitely should have picked up a part-time job.

2. Talk to my professors

This becomes easier as you progress in college. Class sizes get smaller and you become more comfortable talking to profs. But it is also less important at that stage as well. I needed the most help freshman year, but didn’t make it to a professor’s office hours until I was a junior.

3. Join more organizations

You get to meet new people who are interested in the same things you are, make friends, and most importantly eat free food. I didn’t want anything to decrease my free time after being involved with everything in high school, but I wish I would have joined more student organizations freshman year.

4. Eat healthier

I sometimes think that I wouldn’t eat as cleanly now if I didn’t experience throwing down multiple burgers with a side of Lucky Charms every meal as a freshman. But once you start grocery shopping and cooking on your own, you’ll realize that fresh fruit and vegetables are much more luxurious than Lucky Charms. So take advantage of the healthy food you can eat on your meal plan while you still have it!

5. Learn how to cook

The summer between my freshman and sophomore year I told myself that I would learn a few good recipes. It never happened, and the first few months of my sophomore year I was eating sandwiches, mac n cheese, and oatmeal cream pies. Now that I know how to cook for myself, it’s one of my favorite things to do, and it’s a fun and cheap way to entertain other people (who are usually impressed by your cooking skills).

And one thing I wish I didn’t do: Compare myself to other people

My first months of freshman year were spent looking at Facebook at what all my high school friends were doing at their colleges. I compared my experience to theirs, and I also compared myself to the people I met at my school who were taking huge class loads, landing awesome internships, and driving fancy cars.

One of the smartest people I know once told me that comparison is the thief of joy. It’s fun to reconnect with old friends, or meet new exciting people, but don’t use them as a yardstick for how your life is going. You have the power to make an awesome experience for yourself wherever you end up in college, or in life for that matter. Make your life what you want it to be.