Welcome to the Million Dollar Journey February 2009 Net Worth Update – The Landlord No Longer Edition.

As some of you know, I purchased a cash flow positive rental property a few years ago. What you probably didn’t know is that the tenants were interested in purchasing the properly. I ended up selling the house for approximately the price listed in my net worth updates.

What did I do with the proceeds?  Since I have until the end of 2009 to pay the capital gains tax, I simply used the proceeds to pay down my primary residence mortgage balance.  When tax time in 2010 comes around, I’ll have savings set aside to make sure the tax bill is covered.

Am I in the market for another rental property?  Sure, but only if the deal is right! Even though owning residential investment property can be lucrative, it isn’t as passive as I would like. Perhaps I will do a little digging into commercial real estate.

As my real estate exposure is now reduced, I will be increasing my REIT asset allocation via my TFSA most likely.

Here are the assets/liabilities results for the month of Feb 2009 (compared to Jan 2009):

Assets: $439,650.00 (-22.04%)

  • Cash: $4,500 (+0.00%)
  • Savings: $35,700 (11.91%)
  • Registered/Retirement Investment Account: $40,000 (+0.76%)
  • Pension: $22,350 (+0.00%)
  • Non-Registered Investment Account: $13,100.00 (+0.77%)
  • Smith Manoeuvre Investment Account: $37,000 (-9.76%)
  • Investment Property: $ 124,500 (+0.00%)
  • Principal Residence: $275,000 (+0.00%) (purchase price)
  • Vehicles: $12,000 (2 vehicles) (-0.00%)

Liabilities: $127,900.00 (-47.77%)

  • Investment Property Mortgage: $92,000 (-0.11%)
  • Principal Residence Mortgage (readvanceable): $76,000 (-24.90%)
  • HELOC balance: $51,900 (+0.39%)

Total Net Worth: ~$311,750.00 (-2.29%)

Started 2008 with Net Worth: $309,950.00

Year to Date Gain/Loss: +0.58%

This months reduction in net worth is due to higher than predicted fees involved with selling the rental along with weakness in my leveraged portfolio.  Hopefully we can continue with the net worth increases moving forward.

Some quick notes and explanations to net worth questions I get often:

The Cash

The $4,500 cash are held in chequing accounts to meet the minimum balance so that we pay no fees (accounting for regular bill payments). Yes, we do hold no fee accounts also, but I find value in having an account with a full service bank as the relationship with a banker can prove useful.

Savings

Our savings accounts are all held with PC Financial. We hold a fair bit of cash in case “something” comes up. The “something” can be anything that requires cash such as an investment opportunity that requires quick cash or maybe an emergency car/home repair.

Real Estate

Our real estate holdings consist of a primary residence plus a rental property. The value of the principal residence remains valued at the purchase price despite significant appreciation in the real estate market that we’re in.

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