March 2019 Wrap-Up

It is simultaneously 'only April' and 'OMG how is it April already!' March absolutely flew by, to be honest I barely remember what happened.

March flew by and it feels like I spent every single night working on prepping the old house for rent, and moving into the new house. The actual moving day was the 18th, but there was so much prep work, then the first week we were in the house we were waiting for the painters to finish, and I'm still finalising the tidy-up and landscaping of the old place to get it ready for rent.

It feels like so long ago that we moved house because it's been so busy, but as I type this it's been less than three weeks. I'll be so glad when I hand the keys to the real estate agent, and

March Goals Update

Investing Goal: $110,000 in Vanguard

The goal is to have $110,000 in my Vanguard account by the end of the year. I started with $78,424, which means I want to gain just over $31,500. I hope that $5,500 will come from growth and dividends, and the remaining $25,000 will be investments.

Full year

Opening Balance: $78,424.57

Deposit: $3,700
Dividends: $1,214.86
Market Gains: $6,745.52

March

Opening Balance: $87,858.52

Deposit: $1,475
Dividends: $0
Market Gains: $751.43

Current Balance: $90,084.95

Rolling along nicely. After pausing the investments in February, I let them run again in March. The February pause gave me the necessary cash balance to pay for house renovations, so now it's nice to be investing again.

Spending Goal: Under Control!

The goal is simply to have my spending under control, and for March it is looking pretty good, all things considered.

Here's what I spent in March, which includes the save-to-spend amounts.

Category	Spent	Budgeted	12 Month Average
Home	$720.61	$938.17	$226.61 (up $13.87)
Under Budget! It's slightly cheating that this is under budget since I budgeted for a full months rent and only paid half. I did however, pay a bunch of bills, so that wasn't very fun. Expect to see the average of this category going up over the next year until I've actually got 12 months history for paying 'rent'. Details post over here about how we bought a house, but I'm paying rent.
OG Investment Property	$712.63	$1,190.83	$1,324.91 (down $145.32)
Under Budget! Just the mortgage. My favourite kind of month.
Home turned Investment Property	$976.43	$1,042.33	$1,226.51 (up $8.25)
Under Budget! Sliding in just under budget! This will not happen next month :p All I paid for this month was a load of bark chips for the front, which I had already been saving for. We're oh-so-close to having this property on the market, I can see the money coming in!
Personal Bills	$126.60	$126.67	$137.02 (down $1.69)
Under Budget. My annual 'let's charge more for the same cover' starts in April, so this will jump a couple of dollars then.
Groceries	$203.84	$190	$202.90 (up $6.45)
Over Budget. Not really sure how I ended up overspending considering I was away for three days, and we spent one junk food during the move because we didn't have the energy (or organisation) to clean.
Pets	$50	$50	$62.28 (down $1.23)
Under Budget. Eggs out, food in, and I've started saving to build a new chicken coop for the new house. The old one is falling apart, and we're planning a fancy build with two seperate outdoor spaces for the hens, that will be alternately Chicken Space, and veggie gardens.
Roller Derby	$235.05	$175	$227.07 (down $12.32)
Over Budget. Honestly, is anyone surprised when I report I overspent on derby? I replaced my old helmet (much cheaper than brain damage!) and spent three days interstate for a tournament.
Travelling	$110	$122.50	$75.83 (up $9.13)
Under Budget. Still trucking along saving for a future holiday. Still no actual plans to go anywhere... One day :)
Comfort Food	$35.60	$40	$47.77 (up $1.30)
Under Budget. Conssidering the work parties, and the house move, I am amazed.
Other	$40.00	$187.00	$267.57 (down $2.62)
Under Budget. Ummm. What? I was ready to fall on my sword about stupid spending here, because I impulse purchased video games twice, but apparently I did well on sales. I also got a dirt-cheap mates-rates professional haircut. My first actual haircut in over two years!
Total	$3,264.43	$4,062.50	$3,802.95 (down $119.66)
Under budget overall, with only 2 out of 10 categories over. Awww-yeah! How did that happen? Look at that! Honestly a lot of it comes down to automation and habits, because I felt like I wasn't really on track this month, but when it's a no-bills month even my not-great months are pretty good.

Bonus Goal, if we can: $10,000 worth of an Asia focused ETF

A very small update on the bonus goal. My cash holdings barely moved over March, I'm still waiting to get tenants into my old house, and since we moved mid-month the painters are only just finishing up. Once I have paid them, had the house professionally cleaned (there's too much cat fur embedded in the carpets to do less) and laid lawn, then I can start giving this goal my attention again.

Lifestyle Level-up! New house

Guess what, we bought a house! A real, full sized house. After four and a half years in our 90m2 two-bedroom courtyard home we've decided to stretch out into a three-bedroom, two bathroom monster.

The shitty state of housing options, and the joy of deceased estates

On one hand, the new place is bigger than we really wanted or needed. On the other hand, we'd been looking for over a year and we'd come to the conclusion that there were two options out there: nice, new shoeboxes with no backyard and tiny rooms or places built in the 1960s that needed thousands of dollars work... or a bulldozer. After a year of looking we were starting to think that the perfect place didn't exist. We were even thinking that a 'tolerable not great' place wouldn't be happening. It seemed an impossible dream to find something we liked, and were willing to pay for.

Enter our flashy new place. Built in 2007 it wasn't an off-the-plan home. The original owners had tweaked and pushed, and built a beautiful three bedroom home with space. So much space - the smallest bedroom is 3m x 4m.

However, they also neglected the property for 12 years. They didn't damage the property, but they also didn't upgrade or maintain anything. The front room was painted a horrible plum colour - but lazily badly done with splashes of paint across the power points and window frames. The skirting boards were cracked and the walls were all scratched.

Then the owner passed away and the estate was being managed by relatives out of state. They didn't polish up the property for sale, and didn't maintain it for the three months it was on market.

The end results of this laziness? We purchased the property for $67,000 less than the original asking price. After a coat of paint we both agreed that the property now looks like it's worth what they were asking for it.

This is the second property we've purchased from a deceased estate, and I have to say it's so very worth it. My original property was the last item to be wrapped up in a deceased estate - eight years after the owners passed away. The place we just purchased was also a deceased estate, and the executors of the will lived interstate. In both cases they were keen to unload the property and accepted lower offers for a quick sale.

The awesome parts of the new place

Before I get into the costs (because there are costs) let me gush about how great this new place is...

We are now the overwhelmingly happy owners of:

• Three bedrooms! (or specifically, two bedrooms and a project room)
• 40m2 of living room, PLUS 24m2 of dining room
• A double garage (hello space to put the car away, and all the bikes, AND have a gym.
• 80m2 of GRASS! Well, actually, three corner jacks at the moment, but soon to be grass
• A spa in the en suite bathroom!
• Solar panels
• A dishwasher
• A kitchen big enough to to bulk cook, or to host a dinner party.

At the moment, we've sacrificed half the backyard to the chickens and entrusted them with killing off all the weeds in that area. They now have 10m2 each - the RSPCA recommendation is 1m2 each. They are having a great time and eating much less food. Win-win for everyone!

The only resident not thrilled with the move is poor FIRE-cat. While I thought she'd love having all the extra space, she hasn't settled in yet and is constantly pacing. Fingers crossed she settles in soon. Our first non-essential home upgrade will be putting together a catio so she can roam outside without escaping our yard and killing the wildlife.

Okay, but what does it cost?

Here we go, the thrilling numerical analysis!

Firstly, ownership and the deposit. While I have said 'we' through this whole post, it's important to clarify that I didn't buy this property - it's entirely in Mr. FIRE's name. This has been the plan for a while because I bought the last place entirely in my name. We like to keep our finances separate, so having one person as the property owner, and one as a 'tenant' works really well for us.

In terms of the deposit, this part is shared. We took out a mortgage ($90k) against the equity in my property, and combined it with Mr. FIRE's savings ($30k). Mr. FIRE will be working to pay off this loan first so we can untangle our finances entirely.

Secondly, my old house. I purchased it in late 2014 for $340k, and it's currently valued at $410k. Not only that, but the rental estimate is $350 per week, more than my mortgage repayments. The property isn't anything special, but it's neat, in a nice neighbourhood, and less than half an hour from the CBD (by car, bus or bike). I've been busily getting it ready to rent, and at this stage all that's left is painting, landscaping (bark out the front, grass out the back) and a quick pre-rent scrub.

Prep-costs

I didn't pay for the move - Mr. FIRE hired the truck, and we had a friend come and help. We did shell out a lot more in the last two weeks on junk food because we didn't have the kitchen to cook with, and for a couple of days didn't even have the microwave available.

However I have prep costs before I can rent out my place:

• Front of house landscaping: $200 (bark purchase), lots of weeding (about an hours effort)
• Back of house landscaping: Levelling the ground (2hours digging), purchasing lawn $100-$120, laying and watering it down (another 2-3hours)
• Inside house : 2-4 hours worth of packing and cleaning left
• Painting: $2,400
• Deep carpet clean: under $100 (I need this done properly, cat fur is everywhere)
• Possible professional clean: $600 (If I get this done, it will be in place of the carpet clean. If paying cleaners gets tenants into the house 2-weeks earlier, than it's worth doing.)

In total, I'll need to spend $2,800 - $3,320 to have the house ready to rent out.

Ongoing costs

Once I've got tenants into my old property and settled in, I'll be earning and spending more money. I'm estimating that all utilities costs will not change - while we have solar panels on the new property, we also have a bigger space to heat and cool. The new house has a better air conditioner, so I suspect the utilities will be lower, however I can't confirm and I don't plan to estimate based on that.

Costs for the old house:

• Mortgage: P&I payments of $1,000 a month. Interest costs are only $700 per month.
• Council rates: $93 p/month
• Water Fees: $60 p/month
• Emergency Services Levy: $10p/month
• Insurance: $30 p/month

Total outgoings: $893p/month (or $1193 including principle repayments)

Income from the old house:

• Base Rent: $335 per week or $1450p/month - this is lower than the appraised rent, I'm being conservative :) 
• Subtract fees and charges, estimate 10% - leaves $1305 in my pocket
• Vacancies, estimate one month a year as a worst case, subtract a month of income.

Total income: $1196p/month

'Rent' at the new house:

Since Mr. FIRE owns the house and is fully responsible for the mortgages, I pay him rent. This is what we did when I owned the house and it works really well

• Rent: $350p/fortnight, or $758p/month (26 fortnights in a year)

Things I don't pay at the new house:

This is important, because I'm 'renting' I won't be paying the following things for the new house, they will be entirely Mr. FIREs costs.

• Council rates: $93 p/month
• Emergency Services Levy: $10p/month
• Home insurance (I still pay contents): $15p/month

Since I'm not paying for them, living in the new house will be 'cheaper'. It's all funny money, but arguably I save $118 per month by not paying these.

Total cashflow: $1,196 rent in, $758 rent out, $893 costs out, $118 reduced costs = -$337 per month

In a nutshell...

So what does this mean in a nutshell? It means I now own 2 rental properties, the original which is negatively geared, and the new which is positively geared. At the end of a year they should roughly zero out, and as I pay down the mortgages I'll start seeing positive cash flow. It also means that all my home loans are now tax deductible.

I'm 'renting' a lovely 3 bedroom house for $350 a fortnight. This is roughly the same amount I was paying in interest on my old house. Plus I'm saving on the costs of council rates, emergency services and insurance.

The above is a worst case scenario though. I've dropped the estimated rent by 10%, and then put in a full month of vacancy over a year. If the property is not vacant, and receives the estimated rent I'll only be paying an extra $170 a month to live in a new house that is literally double the size.

Mr. FIRE and I are currently discussing whether or not we get a house mate - we have the space for it, and if we have a third person living in the house we could (hypothetically) reduce my fortnightly rent to $200, as well as charging the other person $200. Or even charge that person more, $100 a week is cheap-cheap! I've looked into housing an international student - which pays the princely sum of $280 a week, however we need to feed them and cover their utilities 

I am keen to do a three- six- and twelve-month review on what this move actually costs, versus what I have estimated it to cost. Even if my estimates are out, we are stoked with the move and the space. Importantly we're one step closer to starting a family.... by which we mean get a dog. Or three.