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Passive Income Update: July 2020 ($7520.09)

August 28, 2020 by Lazy Man 2 Comments

Once again, I’m late in reporting last month’s numbers. However, this is a new one that I’m rushing to get it before the end of this month. Much of the month has been consumed by our tenant breaking their lease and subsequet condo turnover.

We’re looking to do a 1031 Exchange, which means that we’d be buying a new place on short notice. I always recommend making big financial decisions on no notice when you don’t have any time to evaluate it. I hope the sarcasm came across there because it’s the exact opposite of what I recommend. Alas, it wouldn’t be 2020 without having to adapt to some kind of a mess, so here we are.

I could spend paragraphs on this August, but I don’t want to short-change July. That said, I barely remember some of the pictures below from July. The ones at the beginning were essentially two months ago – or two decades in Pandemic Time (PT).

I always like to take pictures of good times and good events. When I look back on them later, it seems like it was a perfect month. There’s a lot less of the sibling fighting and stress in day-to-day life. It’s all there, but it is covered well.

Because July is such a blur, here’s what in some of the pictures below. We got to do a charity “Beach Bash” for a local nature preservation. The kids had a great time on the beach with s’mores, Ben & Jerry’s ice cream, and live music. We had a day of blueberry picking. My wife and I tried to celebrate our 13th anniversary, but it didn’t go well the first time – so we tried again. The kids got to play in a friend’s inflatable hot tub… and now I’m thinking we might need one. We got to spend an evening with friends in one of Newport’s most famous public parks. The kids jumped of a rock a few dozen times planning their stunt landings.

Not pictured is the giant red-tailed hawk that decided to hang out in our back yard and the kids’ first trip the arcade since COVID. I also didn’t get any camp photos. Yes, the kids had a successful few weeks of camp.

That’s enough lead-in… let’s start the Passive Income report. I used to call this the Alternative Income Report, but everyone loves passive income better. While I transition to the new terminology, there may be some “alternative income” mentions including the FAQ. If you are a new reader, you’re going to want to refer to my Alternative Income FAQ as you’ll likely have a lot of questions.

The way I calculate these numbers requires that long explanation – it isn’t intuitive at all. The reason why I do things a little differently is that it is a journey. For example, we don’t have passive income from our rental properties while we are paying down their mortgages. These numbers reflect the progress of that journey.

Lazy Man’s Passive Income – July 2020

I categorize our passive income into 3 main sources that are largely represented in my passive income pyramid. For this report, I ignore the bottom section, “career/job” – that’s not passive at all. I combine dog sitting and blogging into one section of “somewhat active” income. I leave real estate and investment income as their own separate main sources of very passive income.

1. Blogging + Dog Sitting Income

After a few months of zero dog sitting, we’re getting dog requests again. The requests tricked in late June, but July was almost half of a normal non-COVID month.

(This is my own dog. He so proud of finally ripping that dog toy and doesn’t look one bit guilty. He’ll get no judgment from me. That’s what the dog toys are for.)

Blogging income has been consistently low since coronavirus started. Advertising is down, but our spending, in general, is down too. Few people are searching for information about retiring early. In July we had the kids at camp and I got to write more. Often writing blog posts doesn’t pay off until the future. Also, sometimes an advertiser may make a small change that temporarily negates a month of writing. It’s a little like investing in the stock market. I’m investing more money, but the stock market could go down and end up losing money. That still doesn’t mean that I shouldn’t have invested that money in the first place.

In June, dogs and blogs combined for a total of $1,804.15. In July, it was:

Total Blogging + Dog Sitting Income: $2,407.09

This is almost exactly the average for the year. As you can tell from the chart below, this is ticking upward nicely.

Now that dog sitting is coming back my kids can get back to work and pitch in to help. My 7-year old even went to the animal shelter for camp and came back with so many tips and tricks for training dogs. This help means that I can pay them a legitimately earned income (a small percentage of the overall dog-sitting income). Because the income is earned they can save money in their kid Roth IRAs and it will be money that they’ll never pay tax on. I want to get them more involved in blogging, taking pictures, and things like that, but it’s going slow. I have a plan for them to be able to help with a few articles by the end of the year. I need to work quickly though, because once school starts in a few days, it will be hard to get them focused.

(Note: The blue line is the monthly number. The red line is a 3-month average which helps smooth the curve.)

2. Rental Property Income

After a brief pause where I thought that Zillow was starting to finally factor in COVID-19, we reached new highs in real estate ownership. The value of our properties went up a bit. As with every month, we paid off a couple of thousand dollars of mortgage debt and grow some equity. This combination leads to growth in this area.

(The kids picking blueberries. We’ve made progress on mask-wearing since these pictures. However, we were socially distant and outdoors.)

The big news is that we lost a tenant due to financial hardship, so this category is going to look a little different going forward as we sell one property and buy another. I have to think about what I’m doing over the next couple of months during the transition. I’m hopeful that in a few months, we’ll be able to say that this number is moving up nicely with the new property.

We now have 64.81% of the equity in our properties with a combined rent of $3,325 after insurance, property taxes, condo fees, and estimated maintenance. I use that number because it represents our net gain.

If you multiply $3,325 by 64.81% you get $2,155 in estimated monthly passive income. When I started tracking this (beginning of 2017), we only owned 36.4% of the properties and they had lower rents. The math worked out to $1,174 back then. So in 42 months, we’ve seen the number grow $981/mo. That’s like giving ourselves an annual $11,772 raise until the end of time. It’s a very nice gain from 3+ years ago.

The change in properties will be a real test of this accounting procedure. We’ll suddenly lose a percentage of equity, but the rent profit should grow. I’m curious to see how it all works out when the dust settles.

As the years march on, the ratio will grow to 100% of a rent that should be around $3,750 monthly Since rent is inflation-resistant, we can raise it as costs of living go up, we don’t have to factor in inflation like other investments. With the change in properties, we may be more likely to reach the annual $40,000 income. It should be enough money for us to live on with our own home paid off (plus our solar panels, frugal shopping habits, and military healthcare.)

In the previous report, the rental property income was $2,141. This number always moves slowly as it only changes if one of two things happens: 1) The properties go up in value. 2) We charge more for rent.

Total Rental Property Income: $2,155

3. Dividend Income

For this section, I assume we will earn a 2.5% dividend yield on our holdings. That could be from a high-dividend ETF or from simply holding strong companies that have a long history of dividend growth. For that we’ll look at making passive income with dividend kings. If I wanted to simply retire on this dividend income, I would get Sure Dividend’s newsletter to try to get closer to a 4% average dividend yield. That link to the newsletter has a special discount rate and in full disclosure, I make a few dollars if you sign up for it.

(The kids enjoying the beach. It’s a different kind of enjoyment this year, but it’s better than what many people have, so we’ll take the wins wherever we get them.)

On the last snapshot, July 7, the market was doing great. Maybe the market loves the free money that the government is giving out. Maybe it’s looking forward to vaccines and opening up the country for business. I’m scared by all this, but I can’t deny the math. The market has done very well over the last month. Those last four sentences were actually straight from the last report. I didn’t have to change anything, because the market continued as you probably know.

We continue to get a profit-sharing check since I bought (a lot of) a company. The business is doing well. It’s actually almost ideally positioned due to its virtual nature. The investment income from this is essentially the same as dividend income. It is taxed differently, but for the purposes of this report, it makes sense to group together all stock ownership in this bucket.

Total Dividend-ish Income: $2,958

Last month, it was $2,856. We’re now at pre-COVID numbers and the stock market is back to where it was. Growing $102 over the month is a lot. These numbers were from August 5th, so writing this on August 28th, we’re looking at greater numbers for September’s report.

Annualized, this monthly $2,958 is ~$35,500. If our mortgage was paid off, we probably be able to live on this by itself. However, because most of our investments are in retirement accounts, we can’t use much of this income for now. (We can use the profit-sharing check as it goes straight to our checking account.) We’ll let the rest of this income continue to compound for at least another 15 years, but hopefully a lot longer.

Very Close to Passive Income

Our “very close to passive income” is a combination of rental property income and dividend income. If there were some royalty income from books, movies, or music, I’d include that here. I’m too tone-deaf to have a rockstar music career, but maybe there’s room to have a book someday.

The stock market goes up and down fast, even more so nowadays. That makes the dividend calculation fluctuate a lot more than it normally would. We don’t even know if companies can reliably pay dividends anymore. Without customers and profits, many companies have cut their dividends.

(This was view of our annivesary lunch. With the kids in camp, it was easier, and cheaper, to escape for the day and watch the sailboats with some wine.)

The rental property income typically keeps going up because the mortgages are always getting paid down every month. Unless there’s a housing market crash, this should continue to happen. That housing crash may be coming, but for this month it hasn’t happened.

For a few years, I’ve been saying:

I love having both types of income working together for us. I think everyone interested in FIRE should have stocks and real estate income streams. The diversification gives me great confidence that we’ll be better prepared than most people in the case of an unfortunate economic event. We’ll still likely get rent checks if the stock market crashes. We’ll still get dividend checks if a tenant is late paying for awhile. Of course a bad economy may impact both at the same time, but that’s what an emergency fund is for.

Here we are in an unfortunate economic event. Our stocks went down a lot, but then went back up. Our real estate has held steady. A couple of our tenants continue to pay rent, but one couldn’t and chose to move out before telling us. Overall, the plan keeps rolling along, even during COVID.

While the stock market is doing well, the real economy is terrible. No President wants to see long food lines, six-figure homeland deaths, and an unemployment rate balloon to ~15%. The best answer is a bailout of nearly everyone and everything at a cost of several trillion dollars… and it may go up from there. If only the people in political power believed that an ounce of prevention was worth a pound of cure, the United States would be in a much better situation. To make things worse, he doesn’t acknowledge that the United States had the worst response of any country.

I know some people don’t like politics, but those politics directly lead to more than a hundred thousand deaths, economic disaster, massive job losses, kid homeschooling, and overall loneliness and doom. It’s simple cause-effect and I’d rather not have a repeat in 2021… or worse if we have to wait until 2024 for competency. I don’t like it when the world laughs and pities America for being an unmitigated mess.

Very Close to Passive Income: $5,113

Last month it was $4,997. We are now well into new highs. That would be $61,354 a year of almost completely passive income thrown off investments without ever drawing down on them. We would still have all the underlying assets (property, stocks, etc.) and be able to will these to the kids for them to build on.

This “very close to passive income” has grown from $2,354 in January 2017. It’s worth noting that, once again, these are fudged numbers that aren’t “real” yet (except for that profit-sharing check). Add in stock market growth (of a conservative 4%) and this number could be real, non-fudged $100K/year. I’m especially looking forward to 7 years from now when most of the mortgages on the investment properties (and our primary residence) are paid off. That’s going to be a huge financial swing for us.

Final Passive Income

When you add up “dogs and blogs” to the “very close to passive income” you get:

Passive Income: $7,520.09

Last month it was $6,801.15, so we’re getting back to some growth. All of our passive-ish sources are trending in the right direction now.

This nearly $7500+/mo income is $90K+ a year. That largely hypothetical annual income for writing on a blog, taking care of one dog, and investing feels like a dream. In the long term, $90K would be a lot more income than we’d need. Here’s what our necessary expenses look like… for the next 45 years. Of course, those necessary expenses aren’t everything, but it’s a large percentage of everything.

As 2020 has proven, you never know what bad news is lurking around the corner. This preparation gives us the financial flexibility to fight it.

(This is my favorite picture of the month. I took a lot of pictures, but this one of the best ones I got them jumping. Maybe when you are a 6 and 7 year old, COVID doesn’t ruin ALL the fun.)

None of the numbers here include my wife’s bread-winning pharmacist income, her vested military pension (more passive income), or the freelance work I’ve been doing over the last couple of years (which isn’t passive at all). That’s the fuel that drives the passive income engine – it allows us to invest more and live well.

As always, I’m still hoping to write a book someday. That would add some more passive income. My wife will probably get her book out first. She had an incredibly interesting life until she met me – I am so boring. I may tip my toe into self-publishing sometime next year. I would love to talk to a real publisher, but I don’t want to take on the “job” of writing. That’s probably a deal-breaker. If you know someone who I could talk to contact me.

My favorite thing about the graph below is that it doesn’t dip down too far. It’s been above $6,000 for a while now. I thought that it may be tested with the coronavirus, but it doesn’t look like it will be.

(Once again, the blue line is the monthly number. The red line is a 3-month average which helps smooth the curve.)

Net Worth Update

My net worth updates aren’t very exciting as I don’t share the exact numbers. That’s why it’s just a footnote here.

I truly believe that net worth is one of the most important numbers in personal finance so it is worth sharing in some way. Showing relative growth can be useful, I think.

(Boarding on the beach is a good way to stay safe from COVID and have some fun. Hopefully, next year surfing classes will be back and we can start on that as a family.)

Like most investors in July, our net worth did very well. It was a big jump of 3.57% growth. For the year, our net worth is UP 9.02%. If you didn’t know better you might think 2020 was another boring year and a typical saving and investing plan.

Diversification helps a lot in bad times. Even when the stock market was way down, we were still grounded with our real estate. We can’t control the market, but we can be happy that the amazing river of compound interest has been working well for us over the years.

I feel it’s important to acknowledge that everyone is in a different place in their financial journey. I’ve been blogging about personal finance for 14 years. FIRE wasn’t a “thing” back then, but it’s in the news all the time now. We naturally are further along in that journey than some younger readers who may be more towards the beginning of their journey. If you are one of these readers, I hope you won’t be discouraged by some of the numbers above. I didn’t start many of these graphs until year 11 of blogging (year 13 of early retirement planning). Please try to use it as motivation for what may be possible (depending on your circumstances and market luck) over 10-15 years.

(We really need to get one of these inflatable hot tubs, right? I’m afraid of getting one this late in the season. Seems like it would better to purchase in the spring and use it from March on. It’s worth the $750 and maintenance, right?)

There’s a big wild card in calculating our net worth. Now that my wife’s pension is vested, it’s reasonable to ask whether to include a pension in your net worth. I decided that it does make sense to include it. She could have earned more direct monetary compensation if she didn’t work for the government. That would have boosted all the numbers across the board. Calculating pension value is not easy, but here’s the best way to know what a pension is worth. In the end, it seems my wife’s pension may be worth $2.3 million. However, like most of the money mentioned in this article, this isn’t money we can spend right now.

Because the pension would ridiculously dominate our net worth, I’ll note two separate numbers in my personal spreadsheet. I don’t share the numbers anyway, aside from these hints, so I don’t think it should matter much to you. It’s not like I’m suggesting that you might want to make a financial-based decision on a pension.

I always end this article by asking how your last month went. I know that COVID-19 is making everything difficult. I hope that some of it is getting easier. I’m sure that for many the kids going back to school, in whatever form, represents new challenges and anxieties. Feel free to use the comment space to vent, I try to give a thoughtful reply every comment I get.

Was I Prepared for an Emergency?

August 21, 2020 by Kosmo 5 Comments

On August 10, my state of Iowa was hit by a derecho. This is a type of storm with destructive straight-line winds. In this particular case, winds topped out at 140 mph. The city of Cedar Rapids, a dozen miles north of me, was devastated. I’m writing this article ten days after the storm, and quite a few people still don’t have power, and even more don’t have internet access. The road to recovery is going to be a long one. The city has lost half its tree canopy, and already 22,000 tons of debris have been removed.

“A windstorm”

The early forecasts weren’t particularly concerning to me. There was going to be a storm with high windows in the afternoon, with the possibility of people losing power. That’s not particularly rare – it’s not unusual for storms to briefly knock out power. My neighborhood has buried power lines, so we’re generally less affected than other people.

My wife and I are both working from home, due to COVID-19. She works upstairs, and I have a desk downstairs, in the finished basement. As the storm approached, she and the kids came downstairs. I continued to work, updating documentation in Jira. I was working right up to the point where we lost power and internet access.

The aftermath

My wife and kids went back upstairs after the storm passed. I attempted to continue working. I tried using my cell phone as a hot spot. This didn’t work the best, but I was able to sporadically get connected. Eventually, I stopped trying, and just did some work offline.

I expected the power to be back within the hour (as it usually is), but a few hours had passed and still no electricity.

The FDA recommends discarding refrigerated food if you lose power for 4 hours and frozen food if you lose power for 48 hours. This assumes that you have left the doors closed to prevent warm air from getting inside. As the four-hour mark approached, we ate an early supper. Anything that didn’t get eaten was going to get thrown away.

Later, we went through the process of taking everything out of the fridge, cataloging it, and throwing it out. Luckily, the next day was trash day. Many homeowner’s policies have coverage for refrigerated contents. In our case, there was no deductible. We turned in a claim for $300, and it was promptly paid. $300 might sound high, but there’s a lot of stuff in your fridge. We had 75 unique items on our list.

Nightfall

We chatted outside with the neighbors. The main topic was the power outage – when would we have power back? Hopefully by morning. The local news stations had been knocked off the air, so nobody was really sure what was going on.

We had plenty of flashlights around the house, but not many spare batteries. I went onto Amazon and ordered a bunch of D batteries since we didn’t know how long this might last.

[Editor’s Note: We lost power the week before for about 4 hours. We have a ton of AA and AAA batteries for kids toys, which work well in some of our smaller flashlights. I didn’t plan it this way, but it worked out.]

I used my work laptop to top off my phone’s battery. Then I remembered that the battery charging packs for the car had a 12V port. The battery packs didn’t have much battery left, as it has been about a month since I had last charged them. Still, they had plenty of juice to charge a couple of phones. We also had quite a few portage power packs for the phones. We’d be able to keep our phones charged for a while.

My wife ordered a couple of battery-powered fans. Days later, I realized that we actually had a couple of them. I’d ordered some a couple years ago when my daughter’s Girl Scout camp occurred during a heatwave. Unfortunately, they got put with the camping stuff and forgotten.

I was able to take a hot, albeit dark, shower. Unless you have a well, you don’t need electricity to have water. We have a gas water heater, meaning that we also don’t need electricity to have hot water.

Power!

Around 1:30 AM, we got power back. Hooray! The joy lasted about 90 seconds before the power cut out again. Finally, around 4 AM, the power returned for good.

The next day, we saw the extent of the damage. Our town had been hit with winds of about 80 MPH, meaning that we were spared the brunt of the storm. Almost all of my coworkers were without power, and most of them would be without power for days.

In Cedar Rapids, it looked like a war zone. Power lines were down all over down, and trees had been uprooted and had landed everywhere, including on houses. Each batch of pictures looked worse than the last. It was – and still is – sickening.

Near Des Moines, one of the grocery stores disposed of 800 gallons of spoiled milk by dumping it down a storm drain. That causes a fish kill and they had to pay for the Department of Natural Resources to prevent the water from reaching a river. If it’s not rainwater, it doesn’t belong in a storm drain.

How did we do?

Although my family had fairly minimal impact, it seemed like a good time to see how we fared in terms of disaster preparedness.

Electricity

We don’t have a generator. We almost never lose power for more than a trivial amount of time. Also, I know quite a few people with generators, and in most cases could probably borrow from them. Unfortunately, in this case, the destruction was so widespread that all generators were in use.

Honestly, I doubt that we’ll get a generator. I’m not sure that the risk of this happening again is enough to justify the cost. But I’m definitely giving it more consideration than I had in the past.

In terms of batteries, we were in OK shape. Our cell phones would have lasted for several days on the power we had. I did go ahead and buy some solar-powered battery packs so that we can produce our own power next time. My kids don’t know it, but if we were still without power the next day, I’d have confiscated their chrome books and bled the batteries dry to charge phones.

Food

We wouldn’t have starved. We had peanut butter, cereal, summer sausage, crackers, fruit cups, and some canned goods. Our propane grill could have generated some heat for cooking.

Communications

We do have a landline phone and a low-tech non-electric phone. This worked fine. Our cell phone service was spotty, but we were able to stay in contact.

Housing

We weren’t forced from our home like some people. We do have a six-person tent. At this point, we’ve only used it for cub scout camping events. It wouldn’t be the most comfortable place to sleep, but it would work in a pinch.

How did we do?

Overall, I think we were reasonably well prepared. We should have had more options for power, but we’d have been OK for several days. We may want to look into the best ways to cook various shelf-stable foods on a grill, and maybe buy some extra grill accessories to make it easier.

Have you been through a natural disaster? How did you fare?

Reviewing the Profit/Loss of Our Condo Sale (and Subsequent Purchase)

August 18, 2020 by Lazy Man 2 Comments

This is a continuation of yesterday’s reveal: our tenant texted us that she is breaking the lease.

Almost exactly 7 years ago we purchased our investment property. Our oldest child was almost a year old and our other child would be born 4 months later. It was quite an interesting time in our life.

Now we are looking to sell the condo. Today I thought I’d take you through the numbers.

We ended up paying $95,000 for the condo. My wife had previously bought in the same complex, so we knew that they typically range from $140K-175K. However, this was 2013, and there was still a big housing slump. When the market got hotter, we were able to get $16,000 a year in rent, which is extremely good for a $95,000 property.

During that time, we were paying condo fees. We also got a condo assessment of around $15,000 – ouch. While the condo looked great on the inside, the whole exterior of the property needed replacing. At least it looks great now. We had to do the typical maintenance inside, but it was all minor stuff.

In the end, we put $23,750 (or 25%) as a down payment. We are expecting it to sell for $170,000. It may go for less, but that’s what the comparables are. It seems that the properties move fast, within a couple of days. We started ours a little higher and haven’t gotten any bites in the first few days. I don’t expect the final numbers to change too much, so I feel fine with using these as projected numbers.

I’m terrible at keeping track of all the expenses that we had to put in for maintenance. I could pull taxes for seven years, but I’m much too lazy. For the most part, we’ve been able to cash flow about $200 a month while paying down a 15-year mortgage. We’ll have to use that as rough measure of ongoing costs.

(Side Note: Thanks to 2020 being what it is and COVID, there’s a war brewing between landlords and tenants. The full story on our three rental properties is that this the only good one. The other two my wife and I bought when we were single to live in. My wife’s military transfer and housing collapse made landlording the best viable option for us. Those properties have recently only matched the price we paid after 15 years. So I view the numbers of this probably as representing a successful attempt at dollar-cost averaging.)

I’m hoping we can get about 172K, which would give around 160K after closing costs. If it sells for less and we get $155K that not a big deal. We owe the bank $45,000 for their part in financing the property. That would mean that we paid $23,750 for around $110K-115K of profit. However, as I mentioned above, we did have a big condo assessment. We took a loan on that and it seems that will be the buyer’s responsibility. We may end up needing to make a concession at a lower price because of that.

Hopefully, we’ll be able to roughly say we spent around $25K to make $100K. That’s a good rate of return. Thanks to the Rule of 72 (done twice), we can see that quadrupling is about a 22% annual return (72/3.5 for the first double, and the same for the second double).

The stock market has done well in the last 7 years too. It was certainly more passive (as it always is.) However, it “only” averaged 9.5% over the same time. That’s was enough to double your money, but I’ll take a quadruple to a double any day.

What will we do that with that $100K in profit? If you read yesterday’s article, we plan to buy another condo. This allows us to use a tax vehicle called a 1031 exchange. A 1031 exchange allows you to sell one property and buy another and avoid paying taxes on the profits.

We have a property in mind, but we couldn’t move forward before we listed the current property. We also have to rope in some lawyers, especially a 1031 exchange specialist, and our mortgage company. Each of these steps has about 5 sub-steps of paperwork and red tape that is simply tedious. It would be nice to make an offer, but all those pieces take several days, or even a week to get in place. It’s slower in a COVID world.

If we are able to get the condo we have our eyes on, we’ll pay around $205K for it. We’d put the $100-110K net proceeds towards it and get a 15-year mortgage on it. That would give us a mortgage similar to what we have now, but hopefully able to get $1800 a month in rent. The numbers would be much better at the old place, but this place would be closer and easier to maintain. That’s a lot less stress for us, which is the big driver to sell.

I’m disappointed to have to go back to waiting for 15 years to be mortgage-free when we were 8 years away. We could get a 10-year mortgage or make larger payments to be mortgage-free faster. The 10-year mortgage rates don’t seem enticing. It’s painful for me to pay off a mortgage at 3.5%. That’s the kind of interest rate that I want to keep long term.

At the same time, I’m excited to move to a property that I feel has more room to appreciate and will be easier to manage.

There’s one additional x-factor of all of this to consider. Our kids are able to be a part of the process. At ages 6 and 7, almost all of this is going over their heads. However, this is a review of a Teen Titans Go! episode that they’ve seen many times. So far, they are dreading everything about this process. I don’t blame them – it’s adult stuff and not fun for kids. However, sometimes kids need to suck it up and do things that aren’t fun. I like them getting some exposure to this now. It builds character, right?

Perhaps someday they find this article and realize that real estate investing is exciting after all.

Tenant Text: “We’re Breaking Our Lease”

August 17, 2020 by Lazy Man 4 Comments

That’s the text my wife got a couple of weeks ago. As a landlord that’s the worst way to deliver (arguably) the worst news. You just know that your life is going to be chaos for a few weeks or more.

However, because it’s 2020 and the world is upside-down crazy, it was the best-case scenario – given the circumstances.

Our tenant chose to move out of due to financial hardship. Based on her occupation, I think she still has steady work, but it’s not the kind of thing I would begin to question. I’m actually surprised that we haven’t had to cross this bridge with one of our three tenants already. With COVID and high unemployment, there’s a lot of financial hardship going around, and we are in a position to help (to some extent).

We could have talked about reduced rent, but she had already moved out when she sent the text. She had already paid for last month’s rent giving us almost all of August to find someone new. Given the laws in MA right now, she could have stayed there. We couldn’t evict her. We’d have to scramble to talk to our mortgage lender and see what our options were before we begin to deplete our emergency funds.

This is a best-case scenario for us given the circumstances.

We could have immediately looked for a new renter, but my wife thought of something different. What if we took advantage of the sellers’ market and sold it?

The property is a couple of hours away. Without a property manager in the area, it’s hard. We’ve lost a few whole days to some minor fixes. I realize that we should be able to get a handyman, but we’ve been through a half-dozen and something comes up such as them retiring or move far away.

I was originally thinking that we should keep it. We are seven years to owning it and being able to pocket around $10,000 a year. When my wife brought up the idea of getting a different property closer to home, I started to warm up to the idea.

We could do something that I always wanted to try: a 1031 exchange. That’s when you sell one property and buy a new one within 45 days. Why would anyone purposely choose to subject themselves to this special kind of hell? If the new property is more expensive you don’t have to pay taxes on the gains. (As always, check with your tax attorneys, we are contacting a 1031 lawyer to help us with it.)

Since the property has appreciated quite a bit, a 1031 exchange is very useful. We’ll be able to keep that equity working for us instead of giving it to the taxman.

I’m keeping this short for today. Tomorrow, I’m going to dig into some of the (projected) numbers of the gains of the property as well as the potential purchase of the new property.

Amazon Fire HD 10 Sale ($100 No Prime Necessary)

August 11, 2020 by Lazy Man 15 Comments

Amazon is having a “back-to-home-school” sale on its tablets matching the lowest price they’ve ever been. They were lifesavers for distance learning last year. However, they work just as well for watching Netflix while you are crying in your bathtub (or so I hear). Usually, you need to have a Prime membership to get the new Fire HD 10 at its lowest price – $100, but not this time! I love the old version so much that I ended up buying two more. This version of the Fire is mostly the same but with a faster processor.

Readers may (and should) be skeptical about my view in this article. Amazon has a commission program and content producers (i.e. me) make some extra cash by reviewing their products if people decide to buy them. That’s one reason why you see a hundred articles about all the Amazon device deals. Even if I try my best not to be biased, there’s an element of human nature that it isn’t easy to suppress.

With that disclaimer aside, I genuinely like Amazon’s products and services. However, I think the Amazon Fire HD 10 is in another class of value and I wanted to explain why.

Let’s rewind a few weeks.

I sheepishly said to my wife, “There’s a deal on the Amazon Fire, and I think we should get one.” I received the dagger eyes as expected. “How many tablets do you need? You don’t even use them. What are you going to do with the other three we have?”

The truth stings. It stings real bad.

We have a Nexus 7 from 2014. I also bought an Amazon Fire 7″ tablet back in 2014. I also bought a NuVision Windows tablet for $60 on a deal.

These were all great deals at the time, but every tablet was a compromise:

That Nexus 7 is still our best Android tablet… and we are in the Android ecosystem. I’d love to find a quality 10″ one for a similar price. You’d think in 4 years the technology would advance to that level, but it hasn’t.
The NuVision Windows tablet is like walking your pet sloth throw a pile of sludge in the wintertime. It’s terrible. I think the only redeeming value is that I was able to grab some free music off MicroSoft’s Music service before they shut down. I need to have a Windows 10 device and that’s the only thing that worked.
Our old Amazon Fire is good for watching videos, but non-expandable 8GB isn’t a lot of media and doesn’t have the best resolution. It’s old technology and it was a bargain at the time. I looked to see what I could sell it for now and could maybe get $25-30. That gives you an idea of the quality of this tablet.

Enter the Amazon Fire HD 10… Amazon’s best tablet. It came out last year, so there is that aspect of it being old technology, too. However, a 10-inch, full HD (1920 x 1080) tablet is very different from the tablets above. In any case, a flagship 2017 tablet is going to be better than a 2014 bargain tablet. Maybe Amazon’s top tablet can’t be considered a true flagship, but maybe it is just a notch below.

My secret reason for wanting the Amazon Fire HD 10 is the Scratch Jr. application for our kids. It doesn’t run on a PC and I think it is the best way to get started with it. I tried to introduce the kids to it on our old Fire tablet, but it didn’t go well. They slogged through it with a very cramped display. They got quickly bored of fighting with it. I’m hoping this will work better.

The biggest problem is that the Amazon Fire tablet is locked into Amazon’s world. There are pluses and minuses with that. For example, this “unlocked” all the old books I’ve had over saved or bought really cheaply over the years. I always had access to them, but I was never going to seriously read them on my phone or my PC. I realize that I’m explaining why a bazillion people read eBooks, but this is a new-ish discovery for me.

The other big thing is free new books and media. I was able to set up my library’s Hoopla and Overdrive applications to borrow easily. There’s next-level cool about borrowing a book for free without leaving your couch.

It’s also the perfect device for watching Netflix, Hulu, Disney+ or Amazon Prime. Those work extremely easily, but I was thinking about adding more complex stuff like Plex to access my DVR media. It’s almost like having an extra television around.

The downside is that it is also stuck in Amazon world. Not all of the Android applications are immediately available (though there are hacks to get them). I haven’t even set up a way to check my email on it. I want to learn to make it more of a family device with different accounts. I want to figure out how to get rid of the lock screen as well. I want the kids to be able to use it and not have me needing to unlock it for them. I could teach them the unlock code, which might be easier in the long run.

Last November, I had declared the Amazon Fire HD 10 an exceptional value at $100. Now, I can say from my own personal experience I’ve gotten over $100 worth of value.

The second reason I jumped on the pricing is that I figured, in the worst case, it is a decent digital photo frame. I’m still looking for the perfect app for that, but it is something that I appreciated out of my old HP Touchpad. I’ve been obsessed with Kallax “cubbie” shelving from Ikea lately, and I think a digital photo frame in there would be great when the tablet isn’t actively being used.

I think it’s not bad for being part book reader, library, television, digital photo frame, and a kids’ supplemental education device. I’m sure that people paying much more than $300 for an iPad can say the same thing and a lot more. I personally like spending less money whenever possible and this works for me.

For latest pricing click here.

Passive Income Update: July 2020 ($7520.09)