The Surplus

As I’ve been settling into my new land lording lifestyle I’ve started taking a look at the new balance sheet. I’m currently taking in $900/month from house 1, and $1,000/month from house 2. After taxes, water bills, trash bills and insurance I’m netting about $1,400/month from the two houses. I also like to set aside an additional $300/month for future maintenance and vacancies, which leaves me with about $1,100/month left over.

My personal monthly budget includes; taxes on the house I live in, utilities, insurance, gas and groceries. After all those “bare necessities” are paid for I’m left with a monthly surplus of about $530/month.

Out of that has to come the discretionary and occasional expenses like vehicle replacement/maintenance, clothing, gifts, entertainment, hobbies, etc..

I definitely think it’s a sustainable budget as long as I remain diligent about keeping expenses in check.

But it leaves little room for some things I’d like to do in the future like putting up a PV array, building a solar thermal heating system, playing around with other alternative energy systems, flight lessons, buying a second-hand sailboat or RV, maybe building a green house on to the side of my home. After those projects are done with I’d also like to build up a securities portfolio so that my financial safety margin just gets bigger and bigger as I age.

I think what I’d really like, in order to make those types of projects feasible  is to be running a surplus closer to the $1,500/month range.

Which means, basically, I want one more rental property. But I’ve invested almost all of my savings into the 3 houses I own now, so I need to come up with about $20k-$30k in order to do it.

I see a few avenues for making this happen:

1. Borrow. I have no debt right now and about $250k of equity in my 3 homes, and a good track record with real estate so far. But I don’t have a job. When I had my part-time job last year I approached several banks to see if I could secure a home equity loan on one of my properties, but since my rental income was newly established, and my part-time job income wasn’t very much, no bank or credit union would loan me money.

I do have several friends who I could approach about some kind of secured loan/investment/partnership deal. I could take someone’s money, get a property purchased, rehabbed, and rented, and then just throw virtually all the rental income from that property back to the investor until the loan is paid off with an appropriate amount of interest added on to compensate them for their risk. The whole thing could probably be paid back in less than 5 years. I could also break it down so it’s not so daunting an amount by asking for, say $10k from a few friends rather than $30k from one.

I could also look into alternative financing like peer to peer lending.

2. Sell. I could sell one of my houses at its new, higher value because of the rehab work I’ve done. I could get $80k-$90k from one sale and use that money to buy two or maybe even three distressed properties to replace it. I’m a little averse to this plan because I purchased and fixed up the properties I did with an eye towards them being easy to rent out, not easy to resell. To get the maximum return on resale I would really have to put in a little more work on the places like re-siding and getting prettier appliances. And they’re small places, good for rentals, but not likely to be anybody’s “dream home” so I’m not sure how long it would take to sell. Plus, they’re good rentals providing a good income stream and I’d hate to sell at what, in my area, is pretty much the bottom of the market.

3. Work. I think with a small amount of effort and patience I could get a temp job in the $30/hr, 40 hr/week range. Large law firms, when they’re commencing a big law suit with hundreds of thousands or even millions of documents to sift through, will farm out work to lawyers to help sort through it all on a temporary basis, often on a 3 to 6 month contract basis. It’s a soulless, uninteresting, repetitive grind that most lawyers see as the mark of a failed, dead-end career. And indeed, if you had to do that for years when your life goal was be a crusader of justice or to make partner and eat fancy lunches, I could see why.

But for me, looking to scrounge together ~$25k, putting my nose to the grindstone for 6 months in a $30/hr temp job might be a pretty good arrangement.

4. Be Entrepreneurial. I think of this as a scatter shot approach to develop multiple avenues of income. Kind of like working a job, just without the mandatory regular schedule. I could do some legal work here and there. Handyman work here and there. I could buy, fix up, and sell things at a profit like furniture or vehicles. I could make a plan to try to make some money off of my garden or worm-farming. Play the credit card game of collecting $500 sign up bonuses. Brush up on my PHP and build some websites. Look for some avenues to get paid for my writing.


Right now I’m leaning towards option 3, mostly because it’s the simplest and likely fastest way of getting to my goal of having an extra rental payment coming in each month. But I’m not ready to commit to anything just yet. I jumped on an opportunity to do some travelling next month for only the cost of my plane ticket. There’s no hurry to take any action right now since I think real estate deals in my area are still going to be around for at least another year or two. So for right now I’m going to just enjoy myself, mull things over, and decide on my future financial course of action sometime this summer.


Related Posts Plugin for WordPress, Blogger...
This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.


  1. lurker
    Posted February 25, 2013 at 6:06 pm | Permalink

    I would probably write you a check right now…depending on the returns, of course. cheers and good luck

  2. lurker 2
    Posted February 25, 2013 at 6:36 pm | Permalink

    I’d also consider loaning a portion. Not sure if we’d be in the same range of desired interest rates but feel free to email me if you want to discuss

  3. Magnus
    Posted February 26, 2013 at 5:34 am | Permalink


    If you can buy and rehab a place for 30K and get ~1K / month in rent even if you had someone front you all of the money, you’d need no more than 3-3.5 years (rather than 5) to get it back to him, as I also assume that you’d pile in some of the 530$ you have as “extra” right now.

    You could also look for someone willing to pay you 30$/hr to rehab a property for them (in theory you can charge them a fixed fee for finding the property and/or also do the legal paperwork), which would be less soul-sucking and more fun!

    • mikeBOS
      Posted March 6, 2013 at 5:14 pm | Permalink

      I was just being conservative by estimating 5 years, if all goes perfectly the houses do pay back their initial investment within about 3 years.

  4. Jazz
    Posted February 27, 2013 at 10:48 pm | Permalink


    It is truly awesome to see that you are FI now and have all these options available to you. Your journey is incredibly inspirational. I think the most awesome thing is that you can take your time to decide your next move…I can’t wait to be in the same position (maybe another two years).

    I have a question: Do you plan to raise rents by 3% each year to keep up with inflation? Are you subject to strict rent control laws in Massachusetts?

    • admin
      Posted March 6, 2013 at 3:14 pm | Permalink


      I feel a real sense of possibilities right now. It’s a great feeling.

      I’ll raise rents as the market demands. I’d be unlikely to raise rent on a current tenant, just upping it when I get new tenants. There are no rent control laws in Massachusetts right now.

  5. Howie
    Posted February 28, 2013 at 12:13 pm | Permalink

    I have been reading your blog for the past 6 months now and truly enjoy that a young adult understands life on many levels. I would continue to raise the funds yourself then to owe anyone money. This gives you the freedom to answer to no one. If your freelance legal work becomes tedious and too boring then just switch to your entrepreneurial side for diversity. Good luck on your journey and thanks for allowing everyone to be voyeurs in your life.

    • mikeBOS
      Posted March 6, 2013 at 5:15 pm | Permalink

      Thanks Howie! Even though I could, the idea of borrowing doesn’t sit well with me, especially when I have other options at hand that would leave me debt free and still able to build my real estate portfolio.

  6. Greg
    Posted March 1, 2013 at 6:02 pm | Permalink

    They are all good options.

    Options #3 and #4 both have to do with work. Option 4 is a little sketchy, due to lack of a clear plan, and #3 sounds easier for you to do, though less fun.

    Options #1 and #2 are ways of accessing value out of your homes, by loan or sale. The quickest way is #1, no doubt. I would try the home equity route again, and see what happens. But if with no job you can’t get a home equity loan, how will you qualify for two loans on new home purchases?

    I would think you could (easily?) get a loan from a peer-to-peer lending service, like

    So, if I were you, I would first try #1, then #3 (if you can stomach it), then peer-to-peer lending.

    • admin
      Posted March 6, 2013 at 3:17 pm | Permalink

      The plan would be to save up ~$25k and buy the next house with cash, no mortgage needed.

  7. lurker
    Posted March 2, 2013 at 10:06 am | Permalink

    do your tenants pay their own heat and electric? sorry if you already answered this elsewhere.

    • admin
      Posted March 6, 2013 at 3:17 pm | Permalink

      They do. I pay water/sewer and taxes.

  8. Posted March 2, 2013 at 8:43 pm | Permalink

    I would recommend being entrepreneurial. The returns on a tight, well-run small business in a high ROI niche market beats any real estate or stock market investments in my experience. Cheers!

    • admin
      Posted March 6, 2013 at 3:19 pm | Permalink

      Thanks for the inspiration Josh.

  9. Betty
    Posted March 8, 2013 at 8:09 pm | Permalink

    Wow, I see you have done some house cleaning. :)
    I like what you have done with the place or, should
    I say space. ;)

  10. Kenneth
    Posted March 12, 2013 at 11:39 am | Permalink

    I think you need two more rentals. At $530 discretionary now, want to get to $1,500 discretionary. Good rule of thumb is to reserve one quarter of the rent for maintenance and turnover. So $900 rent on each succeeding place nets you $675 a month. $530 + $675 is $1,205 discretionary. You’ll need a fourth rental, but I’d do it one at a time. Work for 6 months, then work your magic to rehab and get it rented. Take a little break. Then one final shot of another 6 months, rinse, repeat and you should be set for life with $1,890 discretionary. You are young enough, you can do this! I’m 63 and am still working, because I was not smart like you are, plus I had 4 kids. Two more years, and I’ll be done with $3,500 discretionary.

  11. anomie
    Posted March 27, 2013 at 10:29 pm | Permalink

    best wishes. landlording is apparently a profitable enterprise.

    MMM talks about being a landlord …

  12. Jack
    Posted April 17, 2013 at 5:53 pm | Permalink

    Recently found this blog, and man, our thoughts are aligned on so many topics (jobs, work, money, commuting, all of it). I love video games as well.

    I have a real estate/construction-related question. I am interested in doing a rehab project myself. I’d like to pick up a really bad property, gut it, and turn it into a quality project, including wiring, plumbing, h-vac.

    My problem is the lack of recent real-world experience. When I was young I was handy, helped build garages, do some electrical, sheetrock, insulating, framing. Knew my way around tools (saws, levels, lines, plumb bobs, squares, etc.). But the skills have evaporated in the last 20 years. So, do you have any advice or reference materials we can use to help us on a bottom-to-top, soup-to-nuts renovation project? Is there a “renovation bible” you found helpful or instructive?

    Reason for wanting to do this is to (a) learn, (b) build something with care and quality, even if it means less profit, and (c) a little side-business. I want to be better than the “flipper” who puts minimal work into a place and then dumps a problem property onto a hapless buyer. I want to do quality work.

  13. Posted May 2, 2013 at 11:25 pm | Permalink

    You are living the dream that I hope to live some day. I hope to one day have a couple of rental properties to call my own. One of them for weekends, events etc listed on a site like and the other one as just a regular rental property. I wish you the best of luck in getting your third rental property.

  14. Johnny Aloha
    Posted May 7, 2013 at 9:24 pm | Permalink

    I found this site through MMM and really enjoy it – thanks.

    Would you be interested in being a partner on a house? I buy it and own it, but you do the rehab and make some money. Could be a win-win for both.

  15. Jacqueline J. Young
    Posted May 23, 2013 at 7:03 am | Permalink

    Your idea is pretty neat and good I might say. I thank you for sharing some executable tips for earning extra income by being smart. But I will tell you house and apartment are hard to maintain, but when you invest in binary options as to what was stated in ioption broker review sites the returns you can get have endless possibilities (excluded the maintenance fee, and the vacancy thing) you can earn without some of those headaches.