I always love reading blogs about other investors’ investment income. Watching other people’s investment income rise is my second favorite thing (the only thing better is watching MY investment income rise!)
Here is our investment income for March, 2019. This report includes income from dividends, interest, mutual funds, and rental properties.
Overview
March was a great month. The kids had 2 weeks of Spring Break (although I’m not really sure what they were taking a break from, because it looks like preschool is pretty much fun all day, every day). We took some time and went up to the SF Bay Area to stay with my sister-in-law and see Hamilton. If you haven’t seen it, I highly recommend it. I’m not normally a big fan of musical theater, but I loved Hamilton.
One highlight of the month was having the opportunity to have Dom of GenY Finance Guy fame and his family over for lunch. A while back I’d given him an open invitation to come visit the next time he was in town and he took me up on it. Surprisingly, our families spent about 3 hours together and we only talked about finance and blogging for about 5 minutes.
And, as usual, March was a great month on the income side. At work I had one of the best months I’ve had in years, and on the passive income side everything was firing on all cylinders.
Dividend & Interest Income
Total dividend income for the month was a very solid $11,963.46. As usual for the third month of the quarter, about 50% of our income came from mutual funds (held in our brokerage account as well as our tax-deferred accounts).
Our income was fairly well diversified but we remain a bit too concentrated in oil/energy stocks (about 15% of our dividends this month were from that sector).
Last March our dividend income was $9,452.21 so our dividend income this month was up a solid 26.6% from last year. I’d be happy to take that much growth every year!
In addition to having a great month, we are back on track with our cumulative dividends received for 2019.
Through the end of last month we were down 5% YOY from 2018, but we are back on track and I’m happy to see that we are actually up 15% through the end of March. At this rate we are on track to receive $67,700 in dividends in 2019.
Rental income
This category includes net income from the 4 rental properties that my wife and I own, plus 50% of the income from 4 rental properties that we own with my mom. This number does not include appreciation of the properties or the decrease in the mortgage balance (those numbers show up in the net worth report).
However, this income is net of all mortgage, tax, and insurance payments. That is, this is a true cash flow report for our rental properties.
March was also a solid month for our rental income. All the properties are rented and we had only one minor repair needed on one of the properties. As a result, we made a solid $1,480.51 from the rentals this month.
Our rental income in Q1 of last year was terrible. In face, if you look at closely at the table above you’ll see that in 2018 our cumulative rental income through March was actually lower than it was through February. Unfortunately, March was the first of multiple negative months we had last year.
Partly as a result of comparisons to such lower numbers last year our rental income through March is up 353% YOY (although still lower than where it was in March of 2017).
Total investment income this month
Total (dividend + rental) income = $13,443.97
Our total income is up a very satisfying 34% from this time last year, and puts us on pace to make a solid $83,334.76 for the year. And of course, that’s absent any additional investments or dividend raises we might enjoy this year. I think it’s reasonable to expect to hit $85,000 in total passive income in 2019.
Trailing 12-month investment income
Since I only started tracking these numbers in Sept, 2016, I only have actual 12-month totals starting in August, 2017. This graph is doing exactly what I want it to do – it’s trending up and to the right. We had a bit of a hiccup over the last 6 months (due to some rental issues) but I think we are back on the the right track now. March, 2018 was a particularly bad month, so now that it’s fallen off the trailing 12-month calculation things look much better.
Actual investment income over the last 12 months was $74,283.85. In general this number should continue to rise each month as dividends and rents are increased and new money is put to work.
As you can see on the graph above, this month was a new high for our trailing 12-month income.
My goal for 2019 is to have total passive income of $85,000. That’s only a 14% increase over our trailing 12-month income. I think that’s very achievable.
Our goal is eventually have $120k/year in investment income. That should be at or close to the amount we need to live on. As of this month we are 62% of the way there.
Recap
As is typical for the last month of the quarter, March was a great month. Both dividend and rental income were up from March of last year.
We are looking at purchasing 2 additional rental properties in April. This seems like a reasonable way to deploy some of our money into an asset class that’s largely uncorrelated with the stock market.
How did everybody else do with their investment income this month?
Are there any investments out there trading at reasonable valuations that I should be looking at?
Great month! I can’t wait to shift my focus to increasing our passive income once we pay off the mortgage in July. We only owe $40,000 as I type.
Two questions:
(1) Where are the two rental properties that you are looking at? What kind of cash on cash return is expected? What are some criteria you have for rental properties to fit into your investment strategy?
(2) How much capital is invested to generate dividends vs. rental income?
Looking forward to our next meet up.
Dom
At the rate you and Mrs. GYFG are saving money, I’m guessing you’ll have that mortgage paid off by the end of 2019. Does that sound about right?
Regarding the rental properties:
1. We are buying 2 rental properties in the Houston area. My conservative analysis is showing about a 2% cash-on-cash return, and a roughly 12% total return on each property. I look at a number of criteria when looking at a property. First we want something in a reasonable neighborhood. Houses in the very best neighborhoods with the very best schools tend to be really expensive, but I’ve found that you can find quality houses in good neighborhoods and have the numbers work out. I like to use Zillow to look up the schools in the school district and I require all of them to be rated at least a 5 (on a 1-10 point scale). Obviously the financial have to work out. Both of the houses we are looking at are already rented under 2-year leases, so that removes some of the initial risk.
2. I just ran the numbers for our net worth (I just posted an update on this), so I have the numbers handy. Note that these are the current equity numbers, not the original investment numbers, so this is ROE rather than ROI.
– Rentals = $569,660.53
– Equities = $3,317,166.05
Yes, we will have our house paid off by July of this year. We don’t have a bond allocation, but I do look at a paid off mortgage as a bond substitute.
Thanks for the additional color. We would like to see if we can’t close on a rental before the year is up – if we find the right opportunity.
Dom
Same questions on the potential real estate purchases as above. I haven’t found anything in any market in which I would buy that makes any sense for several years now. I have too much cash, but there are just no values in any asset class right now.
Yeah, the houses that we’re buying are reasonable investments, but nothing like the awesome investments we made in 2011 and 2012. However, I’m trying to get rid of a bit of our cash and this is a reasonable way to use some of it.
WOw, that’s a whopping amount. This is just brilliant and inspirational. I too interested in investing but couldn’t figure out where to start. So, I’m researching more about it. And, Soo I will be venturing into this. Thanks
Thanks for the comment. I’m still surprised by how the passive I come keeps growing.