How I Bought a House to Save Money

 

Dollar_House.tif

Prior to Starting My Business

It was 2008, about a year before the financial meltdown which we now call The Great Recession.  I owned just one property at the time (currently rental house #1) as my primary residence.  I had owned this house for approximately 2 years.  I had also taken advantage of easy financing by only making a down payment of 5% on a 205k property.    The great part was I didn’t have to come up with a lot of cash to buy my first house but I had a higher monthly payment.

This was the year I decided to quit my day job and start my own business.  I mentioned a little about this on my ABOUT ME page.  My total mortgage payment with taxes, insurance and PMI was $1920.  My interest rate was 6.5%.

I was living with my soon-to-be wife at the time.  We were in a suburb just outside of the city.  Her commute downtown with traffic was an hour each way.  So what we decided to do was look for a cheaper property that was closer to downtown and try to rent out our house.

We first found a location that was much closer for her and actually slightly closer for me.  This area was a great compromise and there were many affordable condos here.

Next we started looking at viewing these condos that were in our new price range of less than $120k.  We ended up finding one that was about 750 sq. ft.  This would be a big change from being used to about 2200 sq. ft. but we both agreed we could make it work.  My wife took advantage of the first-time homebuyer credit as well of about $8,000.  We were able to purchase the condo through the FHA with a minimal amount down at an interest rate of 5%.  We figured our new total monthly payment would be right at $1050 per month.

We then had our realtor pull rent figures in the neighborhood our house was in.  They averaged about $1600/month which is what we ended up getting.

INCREASING OUR DEBTS TO SAVE MONEY

So here’s what the new numbers looked like:

House Monthly Bills – $1920

House Monthly Rent – $1600

Condo Monthly Bills – $1050

————————————

New Monthly cost of $1370

======================

Monthly Savings:  $1920 – $1370 = $550

As you can see, these numbers look pretty good.  Not only could we save $550/month but we were investing into another property that would eventually become our condo rental.  My wife was also happy about her new commute time of less than 30 minutes!  It even cut a few minutes off of my commute time as well.

So we downsized, sold a lot of our furniture, and I began finding ways to spend less.  The $550/month savings at that time was huge when I wasn’t making any money yet, not to mention the gas savings that we now had with the shorter commutes.  This point in time was a giant turning point in my life.  I was now working for myself and learning how to live on less than ever before.

2014

Now fast forward 6 years and the house is still a rental.  It was refinanced a couple years ago and is currently getting $1700/mo in rent.  The house has also had some nice appreciation which is just a bonus if I ever sold.  The Condo is also a rental, currently at $1000/mo.  You can find details of these plus my new Rental #3 on my REAL ESTATE page.

In the end, I’m extremely happy with our decision.

 

Dividend Increase – Southern Company (SO)

SO announced today a quarterly dividend increase of $0.0175 from $0.5075 to $0.5250 per share that’s payable June 6, 2014 to holders of record as of May 5, 2014.  This latest increase was 3.5% which is about what you’d expect from a utility.

SO is currently the only utility that I own so I’d like to diversify there later on.

SO currently yields over 4.5% and is a Dividend Contender, having increased their dividend for 13 straight years.

Since I own 225 shares, this will increase my yearly dividends by $15.75.  This is the 16th stock in my portfolio to increase their dividend already this year.

I’m Moving My Blog to WordPress

So I’ve decided to make the transition to WordPress from Blogger.  The time has now come.  Since I’ve had Blogger, it has been a great learning experience and I’d still recommend it to anyone that plans on creating a basic blog.  It’s very easy to use and I’m happy to have had a free hosting service this entire time.

While I don’t know the future of my blog, I do know that I’ll continue posting updates in real-time.  I also know that I want to be in full control of the content and actually have ownership over it.  This is a big reason for the switch.  The other big reason is functionality.  I’ve had a difficult time getting buttons and plugins that I want on my blog to work properly and WordPress has a plethora of options I’m anxious to take advantage of.

So I picked up a cheap hosting plan for about $6.50/mo through my current provider but may have to upgrade it if I start getting many more pageviews.  For now, I think it will work fine.

The transition should start Monday so I appreciate any patience as everything is switched over.  I actually hired someone to make the transition seamless so there really shouldn’t be any downtime.  Just in case, I wanted my readers to be aware of what was going on.

The look and feel, however, will be changing over the next few weeks as I get to play around with many new plugins that I didn’t have available.  Hopefully, this should make viewing and navigation much easier.

For those of you that have had WordPress, I’d love to hear what your thoughts are about it?  I’d also be curious to know what some of your favorite plugins are?

Dividend Increase – Omega Healthcare Investors (OHI)

OHI announced Friday a quarterly dividend increase from $0.49 to $0.50 per share that’s payable May 15, 2014 to holders of record as of April 30, 2014.  What’s impressive is that this is their 7th consecutive quarterly dividend increase and the second time they’ve increased dividends this year, the first time being in January when they also increased the quarterly dividend by $0.01.  I love multiple increases in the same year!

OHI happens to be the only REIT I own.  I’m comfortable in the Healthcare REIT space and like the track record of this company.

OHI currently yields 5.7% and is a Dividend Contender, having increased their dividend for 12 straight years.

Since I own 200 shares this will increase my yearly dividends by $8.00.  This is the 15th stock in my portfolio to increase their dividend already this year.

Weekly Purchases – 04/15/14

I’m reporting my automatic purchases for this week:

I Bought:

$200 of FDO (Family Dollar)
$400 of ESV (Ensco)

I used $600 in new capital and added $28.07/year to my dividend income.  This is an average yield of  4.7%.

Note:

I plan to start increasing my weekly purchases again soon as tax time is over.  This should happen over the next few weeks.

ESV’s stock price took a hit late last week and recovered a little this week.  I still was able to average down on shares.  I plan to build up to a 300 share position in the short-term as long as I can keep averaging down.

I’d like to purchase companies in other sectors besides Energy, so it’s been a struggle to find good values elsewhere.

Picture:

Just for some fun and to add some color I will be posting pictures of places I’ve been to.  It’s also motivation to reach FI so I can travel and do what I want to when I want to.

While working on Rental #3 last weekend, I had lunch at a hole-in-the-wall barbeque place.  They had a Monster Migas Plate challenge on the wall so I had to take a picture of this.  This food challenge looks ridiculous and I asked them if anyone had ever won… nobody has.  The pictures of people are just challengers.  I thought it was pretty interesting.  Texas has a lot of places that have food challenges that you get your meal for free when you finish.  They are typically dinner meals, like burgers and steak though.  Most have actual winners, this one must be really tough.  I can’t imagine taking down 7 lbs of eggs, cheese and corn chips plus sides!

Dividend Increase – Kinder Morgan, Inc. (KMI)

KMI announced today a quarterly dividend increase of from $0.41 to $0.42 per share that’s payable May 16, 2014 to holders of record April 30, 2014.  This is up 11% from the same quarter of last year.

This is welcome news to investors as they held their last two quarterly payments the same.  If you follow KMI, you would know that they had a streak of increasing every quarter.  It looks like they may be back on track now.

KMI reported first quarter cash available to pay dividends of $573 million, up 12% from $513 million for the same quarter last year.  KMI is on track to declare dividends of $1.72 for 2014, which would be an 8% increase from the $1.60 declared in 2013.

I don’t know about you, but I’ll take a 5% yielder that grows dividends at 8% any day!  This would produce a 10% YOC in just 9 years.

Since I own 337.73 shares this will increase my yearly dividends by $13.51.  This is the 15th stock in my portfolio to increase their dividend already this year.

Dividend Increase – CSX

CSX announced yesterday a a dividend increase in the second quarter dividend by 7% from $0.15 to $0.16 per share that’s payable June 13, 2014 to holders of record May 28, 2014.

This would mark their 10th consecutive yearly increase which will move them up to Contender status.

Since I own 200 shares this will increase my yearly dividends by $8.00.  This is the 14th stock in my portfolio to increase their dividend already this year.