income

Steps to Renting: Becoming a Landlord

Posted by

2

If you remember my previous post about generating additional income, it was quite a long time ago in which I wrote:

My wife and I have talked about renting out our current apartment to generate additional income. But we encountered three problems that have so far prevented us from making any success on this:

  • 1. we like it here and we don’t want to move yet;
  • 2. we still wouldn’t make any residual profit from renting our house out without paying off part of the mortgage principal (something we don’t have enough cash yet to do); and
  • 3. we can’t decide where we’d like to live other than here. Contribution $0. Potential contribution estimated at $100.

So if you like a rental income property (and who doesn’t?), what do you need to get started? Mmm… it’s hardly like we’ve made a start. So let me list the things that I think I would need:

1. Renovation:

We seriously need to do the tiling work in several rooms: the bathroom, where the tiling is beginning to separate from the walls due to the contraction and expansion of the concrete in summer/winter, and the poor workmanship when the place was finished. I also suspect that we need to replace one of the air conditioners in the study.

2. Redecoration:

We’ve got walls painted in a variety of colors, and it’s been a few years. It’s likely that our tastes aren’t exactly the same as our renters. So we’ve probably got a bit of painting to do, as well as other minor repairs.

3. Insurance:

Not sure how to handle that. I know that you can get landlord’s insurance… but what happens if the tenant absconds or worse? Can that be claimed?

4. Finances:

Since our property is mortgaged, the yields are just not very attractive since rents are fairly low in this neck of the woods. We know that we would have some gross profit, but there’s also a landlord’s tax of 10% on the income. So not sure how that would work. I think the only solution would be to pay off some or a lot of the principle. Still a good return on money invested.

5. Renting:

Finding good tenants would be a priority. The neighboring landlord rents his apartment, the tenants there have been anything but reliable. Dirty, filthy,… with problems paying rent. I think tenant screening would be essential to prevent this, even if it meant the apartment being empty longer.

With a sound plan, it might work. Still a few kinks to work out. I do know that the area is very desirable, with lots of chances to find tenants. Of course, that means we’d have to move! A chance to find a new area.

Current Holdings: October 13th, 2008 – Another Piece of the Puzzle

Posted by

Well, the market is back up today (but with the poor performance of the economy, it’s going to be a couple of months before we know the after effects), and in the interests of ‘coming clean’, I’ve decided to reveal what my current stock holdings are. And when it was done, I was staggered how much the portfolio had gone down.

current position

To view the entire sheet, just click on the image. What isn’t obvious from this chart, though, is the regular dividends that get paid into this account.

In 2007, they totalled $1031.53 and in 2008, they totalled $1078.24 with the prospect of another couple of months. In fact, the last couple of stock purchases had been made from the proceeds accumulating in the account. However, with the markets in turmoil, it’s likely that several or more of these dividends may be cut or axed altogether. Bank of America has already announced changes to its dividend as of this month. We also hold several thousand dollars in Mutual Funds via one of our insurance policies, but the details are quite old.

Since, 2001 I’ve focused more on investing for dividends as I believed that dividends do pay back some cash to the investor. Since purchasing my first dividend stocks, I’ve actually earned quite a lot over the years and managed to claw my stocks back to more than just par with 2001. But the last few weeks have eaten away approximately 45~50% of my portfolio’s nominal value. I had been underwater for a while (not including dividends).

The next few months are going to highlight how successful this process of choosing dividends has been, what volatility these dividends have, and whether dividends can actually bring some relief to the current mania. This is the next part of my gradual revelation of my personal assets, and once each part is out there, I will bring it together on a regular basis!

Credit Card Post: September 2008 – Was it a big disaster or not?

Posted by

After the modest spending of the last few months, I was greeted by a mighty thwack with September’s Bill. The damage was nearly NT$80,000! So what happened? How could it be so high?

Actually, most credit card statements tell a story: this was no exception. It’s a story of three parts.

Part 1: The business

We’ve been on an energy economy drive for the past four or five months, and the benefits are slowly beginning to pay off in lower electricity bills and lower carbon emissions. It’s staggering how little changes in behavior can have such significant effects: lighting choices, replacing older equipment, changing usage patterns, etc.. I don’t have complete stats for 2008, but I was surprised at how we’ve saved nearly 10% of our annual electricity bill, and there is still one major bill to go. Stay tuned!

Replacing A/Cs is perhaps the most notable way to cut energy use. Our oldest A/Cs are nearly 8 years old, and due for replacement, if nothing else because more modern A/Cs are comparatively more efficient. So after replacing one, we bit the bullet and replaced the one in the office (likely the single heaviest use appliance in the entire school). This month we replaced one that had been malfunctioning in the classroom ever since there was a power outage. It had just been blowing warm air, and wasting our money.

  • Damage: NT$48,800 plus installation NT$1450.

Was it worth it? Certainly. Will we save money in the long run? Likely enough to pay for the entire machine! Are our customers/staff happier? For sure.

Part 2: UK Trip

The second part of the story: my unexpected trip to the UK. It was late September when I decided to visit the UK to see my family and friends (an entirely social trip!) but long needed. Maintaining long distance relationships is at best very challenging, at worst almost impossible.

Though, this is the complete list of credit card expenses until September 19th, it was NOT the entire trip expenditure. Woops!

  • Phone Bill: NT$1154 – including national and roaming charges;
  • Nolita Restaurants: NT$6630 – a meal for my friends, Jane and Philip in Hatfield, which was surprisingly reasonable given the restaurant, but didn’t include much alcohol – one was exhausted and one was driving!
  • Boots and Asda: NT$1244 – daily expenses (esp. when I couldn’t cash my traveler’s checks);

Part 3: Online Related Expenses

I finally bought a ‘puter that I could put in my bag. One of the ironies though was that I bought a machine that was made by a Taiwanese company in Shanghai shipped to England and sold cheaper than you could buy in Taiwan at the time.

aspireone blue and white

Mine’s the blue one! Of course, not running Linpus. Sorry!

Enter the Acer AspireOne – Net Book. It’s proved very useful, and I’m seriously glad that I got it. I was able to make calls through SKYPE, surf the Net, listen to music and even do more than just rudimentary blogging on that little 8.9″ screen.

  • Damage: NT$17,310. Of course, being an overseas customer, I may be able to reclaim part of my tax (approx. NT$1800) making the deal even better value for me!

I also paid a writer who is helping me co-author a series of posts on the Dow Jones Indexed Companies. I also paid Google an AdWords activation fee.

  • Total cost for this: NT$1319.

And, finally, after earning points on the airconditioner purchases at Carrefour, bonus points on our credit card bonus points, we also earned a little cash back on some of my purchases: NT$-213.

  • I’m still not exactly sure what purchases triggered this, but still every little helps to reduce the total damage: NT$79,694.

There were no interest or penalties added to this month’s credit cards, and my secondary card had no outstanding purchases at all. oh, and I nearly forgot the NT$2000 life insurance premium that was paid.

It’s funny how credit card expenses can highlight the unfolding stories that compromise our lives. Have a look through your credit card statement? Can you see a story developing there?

  • Oh, and by the way: most frivolous expense trip – Hong Kong Airport Starbucks Americano and water bought with a credit card HK$39.00. Just silly.

Don’t forget to subscribe to the feed for this blog! Click here…