My dear dudes,
As I told you in a previous post, I will be taking a year off, starting either from January 1st, April 1st or November 1st, 2017. Most likely, it will be from January 1st onwards. Before I am hit by a lot of you guys, I will be doing this because (1) I am putting my health before everything else, (2) I know that my portfolio will not decrease during the year and (3) I am willing to shift my retirement by one year.
This post serves to tell you about my plans on what to do during the year, and what my goals are. Right now, I am not sure I will be getting a part-time job. If I do, it has to permit me to work from home.
Regarding my costs during this gap year. I do have one unit RP#3 that I planned on keeping for myself, so paying rent is not in question. I also put some monies on the side, during 2016, to leave off during the gap year. This means that I will not eat a single cent from my portfolio, which also means that I plan on getting richer during the year, as the yields of the portfolio will be entirely put back into the portfolio. In particular, I expect the following gains:
- RP#1 will either net me €1800, if I continue on renting it out, or €10.000 to €15.000 if I decide to sell it. I am not sure what the market will look like in the future, as the population is decreasing in this market (although the no. of people renting is increasing). If I sell this condo (which I am very inclined towards), for 45k, I will re-invest about 30k on a new condo (which I already have an eye on) and pre-pay the mortgage of RP#2 with the remaining €10/15k. The only reason why I should not sell the condo for a €10/15k profit is not expecting appreciation that surpasses this value (or expecting the appreciation on this condo vs any new condo to be higher, which is not the case).
- RP#2 will net about €1000-1500. This will be used entirely to pre-pay the mortgage on this property, as I am planning on paring it down significantly (maybe 50% or more) till the end of the year. I want to minimize my liability on this property and increase net cash flow quickly.
- I will most likely get a part-time job, which enables me to work from home. I expect either to make enough money to enhance my lifestyle during this year, or make enough money to increase my portfolio significantly (my original plan was to get a part-time job so that I could increase my portfolio by at least €10k). Depending on the type of job I get, I will be adding somewhere between 0 and €30.000 to my portfolio.
- I also expect to make at least €2000 net on the rest of my investments.
So, very conservatively, my portfolio will grow €6000 (up to a maximum of €50000). This is more than 5% of the total net worth I expect to have by the end of 2016 (110-115k). I expect inflation in Portugal to be about 2%. Now, I haven’t talked about RP#3, as I can’t really say how much it will net, right now. Plus, I will be creating other sources of income which I can’t measure as well, as I say below. If I manage to grow my portfolio by 50k, I would be growing it by about 45%, which is actually more than I first estimated to be needed in order to retire by 33-36 years old.
I also mentioned that I intend to pay down my mortgage on RP#2, which may sound odd to some of you. The goal is two-fold: first, I want to pare it down as much as I can because the interest rate is high (4,65%) considering how much money I am making on my other investments right now. Note that I could make at least 10% on my other investments, thus having a reason to not paying down the mortgage, but these would not be liquid investments and I do not want to burn my liquidity as I expect a huge crash in a few markets soon.
- The biggest reason why I will be taking this year off is because I want to improve my health, which is currently not in the best shape ever. I feel that I need to reduce stress to minimal levels. I will be doing a post on this subject soon.
- I also want to take this blog to an entire new level. I feel that I can add a lot of value to the blog and attract more users by proper promotion. I will be aiming at 2-3 posts a week, if not more.
- Improve my financial IQ, as part of improving this blog. I challenged myself to read 100 books in 10 months time, as I posted the other day. While some books will simply be re-read, so I can write summaries and reviews of them, many will be books I never read.
- Create more sources of income. I love Real Estate, but my portfolio is currently depending too much on Real Estate. I will be writing 2/3 books during the year, and I will most likely do regular consulting.
- Find more Real Estate deals. Having more free time, I expect to increase my search for Real Estate deals and, as a result, to find really good deals.
Thank you for baring with me,