End of Feb update

Goods news first:
Got my first dividend for £6.53 from SVCA. I'm well chuffed.

Here are the stats:
Total Month Dividends  £6.53
Total Month passive income  £310.35
Feb Contribution £830
Total Contribution  £2826
Stock market value  £2454
Portfolio dividend 7.39%
PE 6.9(could do with going slightly higher, but not over 20)


Current stock holdings -

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House sale update:
Hmmmm well where do i start. The house is sold and the exchange date is set for 1st May , yay :) .
Oh god here comes the but. I have kept the tenants in the loop the whole time  but their rent was not received on the 1st May. They have never missed a beat in the last 7 years, so alarm bells quickly rang. I sent them a couple of messages to ask is everything ok (i had no reason to think otherwise) but none of my messages were replied. So i decided to pop round.
I went to the house and knocked on the door; they were clearly ignoring me at the door. I stay persistent  so much so, one of the children even shouted that someone was at the door. They reluctantly opened.
I really did not like doing this as they are a nice family, but at the end of the day i had to keep telling myself that while its their home its still my house; and it will be landing on my shoulders to pay the property works that are looming if i hold. This is something i cannot afford. I must and have to sell.
The wife opened the door and i explained i had not received any rent. In no uncertain terms she explained to me that im not getting any and basically i should go.

Anyway i explained the property needs to be vacated by the 1st May and they have received it all in writing. I've also explained i will pursue the loss of rent money through the courts. The wife walked away. I was left talking to the husband and we met for a chat later that evening down the road away from the house. We have agreed a handshake deal that he will pay the rent weekly, i won't take them to court and as a good will gesture from me they can have April rent free as long as they are out for the 1st May and the house is left in good order. He gave me a weeks rent there and then.
Oh i hope this works out.

First Major Correction

Today 06/02/2018 is day 6 into a market correction.

  This post is just a general one as part of my diary and something i will look back on in the future and smile. All the index's are down and everywhere is red; its all over the news. The reason they "the news" are giving is because "the world economy is growing on average 4% and the markets are expecting an increase interest rates". The Standard and Poor is currently down nearly 10%. As a dividend growth investor im not too worried.

1- This is now a buyers market though i currently don't have funds to buy (arggggh) . All i can do is watch as i miss out on this great opportunity. So what will i do for the future.....Nothing. I cannot time the market and as a drip DGI investor all loses are soon recouped over time. My money allowance is normally at the end of the month so i just missed this by a couple of days.

2- I can also now see the weak stocks in my portfolio for when a real crash comes.

Lesson learn't

Lesson Learned






After i left school i decided that i would work for my self. It was awesome at 17 earning money with little expenses except the pub at weekends and running a business. I'd advertise my skills in the local paper, go price it up, do the work, and get paid, it really was that simple. I'd keep spending and  buying more equipment so i could do bigger jobs and get paid more.
Fast forward to about when i'm 24. My business now employs a couple of guys and a secretary and everything is going great; well that is until a brown envelope containing a letter from the tax man comes through the letter box. At first i'm not too worried as 'most' of my money was declared and anyhow, how would he know how much i don't declare?
 I'd send in my accounts to him , thinking he will find something wrong (as they always do i guess), i'll get a small penalty to pay and Bobs your uncle i can carry on as usual. And.............. No he was not happy! He wanted more information and he started digging really deep and hell i mean deep into my accounts. My accounts came back looking like i had sat an exam in top set though, really i'm in bottom and i had zero chance of getting a A* mark.
2 years later
No progress has been made - he asks for paper work - I supply - it all goes quiet then he asks for more paper work . It goes round and round like this for a  2 whole years .Im not stressed now as things are going forward and i've not paid any money (so i thought). "We need a meeting" the tax man writes to me. Of course i agree. We agree a date and i go to his tax office. Oh my god within 2 mins of sitting down i know i'm in trouble. I need this, i need that, i need to show this and that. Ok i'm no expert so im thinking "how much do you want and lets get this finished".  He finally says "you need to get an accountant and i cannot yet give you a final bill though you currently owe roughly 15K.
Jeez now thats alot of money considering the average weekly wage was around £220 a week. So i asked can he recommend an accountant, on which he did and i still use today.
5 years later 
I have to write that again in case you think i miss printed. 5 years later.
Business is still growing and has now amalgamated with another company and there are two owners with myself being one of them. The investigation is still going on and i and my account cannot supply any more information. I have a child on the way and pleased that  i had never ever been on any benefits of any kind from the government. I'm now paying alot of taxes as i employ a number of people, and i feel that i successfully contribute to society.
Going Bankrupt
One morning my business partner says to me "i hear your going bankrupt", Of course i ask where did you hear that and he goes on to explain that he has a friend who has a friend that is a tax man. Yep this tax man has a big gop on him and has been telling people about me in his local pub.
Of course as i often am, i'm onto the phone to  my accountant and tax man to get this finished. This time it was different as my accountant had that morning received a letter for the final bill to close the investigation. OMG it was bloody 22K and it had to be paid within 14 days other wise i faced going to court.
Smelling of Roses
Let me explain what i had learned at point. It was truly amazing , over these years of the investigation i got to see all my mistakes and all the loop holes that were available. (This is the point  where i have a evil laugh a i write this).It also turned out that out of the 22K bill only 7k was actually what i owed , the rest was interest, fines and interest on fines. Fortunalty at his time i had bought and moved into a second home and my first one had just sold that same week with 30k going into my bank account. I can pay the bill :)
I wanted my 22k back.
Even to today i still use the same rules that i learned and i certainly had my money back.
1- use an accountant

2- don't be a sole trader , be a company.

3- Put as much as you can against the company.

4- Pay yourself as little as possible to receive maximum allowances.

Letting the tenants know.

Letting the Tenants know (09/01/2018)

This was quite hard, as while its easy to put the plan on paper, putting it into action is another thing. A letter was written last week explaining that i plan to sell this year and would they like to discuss before i put it on the open market. I was hoping they would of come back to me as they are really nice people and we could discuss if they wanted to buy at a reduction, or to give them maximum stay at the house. Alas i have heard nothing from "them". But i have heard from somewhere else :)

Social media can help sometimes and their plan is this: Keep quiet , keep their heads down and find a place fast. They don't want to be around while the house is up for sale.  So as you can probably guess i'm a little disappointed as it harder to sell an empty house and they might leave it in a mess.
My Plan: Ok so now i know their score (they don't know i know) i have this morning already phoned the estate agent and it should be on the market any day now.

 General chit chat.

Where I live I have noticed the exact same feelings as I had / saw back in the early years of the 2000's. Like then as now everyone was in work, money was becoming more abundant, people eating out more. Credit loans are now advertised again on the tv and more property is on the markets. 

More confirmation the economy is picking up is that this morning I had a letter from my credit card company. I never max my card and will spend about 1k a month on it; and always paying it if every month. Anyway my limit without asking ( just like they did around 13 years ago) have raised my limit to well over 10k. I now reckon if I maxed out all my credit cards , I could spend 50k. 50k on credit cards.....now that's insane.

Buying a property

I'm thinking to buy a property.

From my previous post I am going to free up some cash and my reasons for doing so. One of the calculations I'm also taking on board is that this current property is giving me  a 30% profit from the rental to mortgage costs. If a property starts to hit a profit margin of less than 50% then i start to take notice and need to justify why I'm holding. The house I'm selling makes  £151.85 month profit. I could raise the rent but the house is aging with bigger costs to come.

Current calculations : Rent =£510 month                                                                                                                             Mortgage =£385.15  month   TOTAL = £151.85 profit a month

Selling this property will free up the 50K equity it currently holds

My plan is for my next rental will be to make more than £151.85 a month and a lower mortgage.

Example:

 From the chart and using 30K deposit i can buy a property of lower value but with a lower mortgage and crucially higher rental value. This would give me an extra income of  £128.15 (total £280 instead of the £151.85). The mortgage will be fixed for as long as possible on interest only.

Why interest only?

My aim is to make a fixed monthly income with a bonus of the property price rising. The main goal is the fixed monthly income. To achieve this then interest only gives the maximum returns in where i have free liquidity cash. Secondly why pay it off when inflation eats away at the debt anyway? I bought my first house 16 years ago and its gone up in value by 300%. This makes the original debt look like peanuts now, so why stress trying to pay it off?

The magic number for rental is 30% deposit or more and then no income proof is required. Just as long as the rental value will cover the mortgage.  

Bonus 

This should leave me with 20K left and to decide what to invest this into. That will be in a future post.

Please note this is just my current thought and I've only just told the tenants that I'm selling. I've got all the selling hassle to come.Would be nice to have this sorted for the end of the summer.