Networth Update – 04/2021 (April)

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As some of you might have noticed i’ve skipped the March update. I’ve not felt motivated to post last month since i think i was stuck in this loop, networth – real estate – construction – construction is not under control – shit. And then my attention would wonder into something i could do to speed things up. Since that was not possible..well..you see where this is going.

Lucklily now the contrators that we hired to do the garden have finished – well it still needs some working but most of the work is done. And… we have now a contract signed with the “big contractor” (lets call it that) for the value of ~147k + VAT.

This is a big number and it took several weeks of back and forth to also have the executation plan and the construction quantities defined.

Another reason maybe related with my motivation has been that our first contractor told us he wasnt too interested in the project since he would never be able to match the values we had and thus walked away..this was a setback but we managed to find another one via referrals.

The first payment is also done and will be reflected in next months networth update. For now, the trend is still down with -5k in April and -3k in March. Those are all related with the expenses for the garden.

April

On the P2P front, not much new besided getting a few cents back from Aforti. Hopefully Monego would pay soon.

Construction on the façade of our apartment is finished and the building end up quite nice. All of this is the result of the organization of Mrs.Firecracker. The next batch of works including the door repairs have not started yet.

Reno Updates

General updates:

1- Construction: Update above. Another info is that the reno should only be finished by end of February 2022.

2- Tax gains “Mais-valias”: Submitted the taxes for this year. I’m expecting to pay ~4k on that.

Savings Rate

Our savings rate has not been constant, in March we saved ~5% (with some extra 500€ health expenses) and on April we had another extra expense with our car of >2k. This adding up to some extra health expenses on January, February was the only month we had ~20% savings rate and saved 900€.

If we disregard the extra expenses we have even spent less that we budgeted.

April Summary:

1) Auto: Our car broke down and needed a new piece. They dont sell the piece individually and we had to buy a big chunk of parts..this was a very big expense but we need the car…

2) Projects: Received the 2.5k! Happy with this.

Now, coming to our monthly networth…

Summary:

Our Networth value for April is 441 162.18€ (– 5 040.30)

Assets:

Investment accounts

ETFs Portfolio: 33 446.03 € (+391.97)
Retirement Accounts (aka PPR): 17 653.38 € (+418.98)
Certificates Deposit + Emergency Fund: 35 485.59 € (– 6 665.56)
P2P Portfolio: 2 238.76 € ( +0,01 )
Total Investment accounts: 88 823.76 € ( -5 854.60)

Real Estate (Based on Market Values)

Primary Residency: 300 000 €
Farms: 70 000 €
Rental House: 414.500
Total Real Estate: 784 500€

Cars

Mr.Firecracker Car: 20 000 €
Mrs.Firecracker Car: 18 000 €
Scooter: 1 500 €
Total Cars: 39 500€ (=)

Total Assets: 912 823.76 € (-5 854.60)

Liabilities:

Primary Residency: 187 763.49 € (-370.46)
Rental House: 283 898.09 ( -443.84)

Our Networth drilldown looks like this:

You can follow our Networth status always here

Networth Update – 02/2021 (February)

February

We have gone back and forth with budgets about the renovation for the house and luckily we have now 2 people doing the demos so we started with that straight away. This category has been given a quote of ~10k and so far we’ve spent 1k with all the works almost done..we even added some extras like removing a tree and checking some of the plumbing. Besides that we also paid for the execution plan for the architects which cost us 3 431,7€.

On the P2P front, we got some money back from Mintos on our Monego loans (finally!) after a year waiting for that. It wasn’t the full amount but ~60%. That got transfered right away to our savings account.

Construction on the façade of our apartment continues and should be finished by next month. We all decided for some additional work (water drains and mailboxes) which has increased the construction for +900 on our side.

Reno Updates

General updates:

1- Construction: Got the new budget for 183k (wayyy above our capacity). We did a 4h meeting and changed construction approaches. Got the second reviewed budget for 173k. Still 23k above our capacity. We will now be sending the tasks we want them to complete (removing demos and some paintings) which should make 150k. I’m still wondering what we can do in the roof which seems to have now wooden beams in poor condition.

2- Tax gains “Mais-valias”: Got the anwser back from the laywer and there is no decisions going against our case, they recommend that we go ahead with submitting our tax returns and be prepared to show evidence. This research and consultation will cost us ~950€. (yes…legal advice is crazy expensive here…more than IT, go figure..) Additionally i’ve had a meeting with an accountant so that we can have a double opinion on this.

Savings Rate

I’ve made my peace with our Networth taking a plunge. We will be using the 40k given by the bank to proceed with constructions so this is only following the plan.

February Summary:

1) Health: Mrs.Firecracker had some exams on which we spent 400€ but got back 240€. Our farm also needed to be looked after and the grass cut for which we have paid 50€ to our neighbor.

2) Projects: nothing to add for now. I’ve done a proposal for a potential customer and invoiced another one for 2.5k.

Now, coming to our monthly networth…

Summary:

Our Networth value for February is 449 645.47€ (– 882.01)

Assets:

Investment accounts

ETFs Portfolio: 31 392.25 € (+181.04)
Retirement Accounts (aka PPR): 16 960.51 € (+76.61)
Certificates Deposit + Emergency Fund: 48 303.61 € (– 1 703.95)
P2P Portfolio: 2 238.75 € ( – 228.96 )
Total Investment accounts: 98 895.12 € ( -1 675.26)

Real Estate (Based on Market Values)

Primary Residency: 300 000 €
Farms: 70 000 €
Rental House: 414.500
Total Real Estate: 784 500€

Cars

Mr.Firecracker Car: 20 000 €
Mrs.Firecracker Car: 18 000 €
Scooter: 1 500 €
Total Cars: 39 500€ (=)

Total Assets: 922 895.12 € (-1 675.26)

Liabilities:

Primary Residency: 188 464.12 € (-349.88)
Rental House: 284 785.53 ( -443.37)

Our Networth drilldown looks like this:

You can follow our Networth status always here

Goals 2021!

Financials

Savings rate at 18%

Last year we had 31% savings rate, slightly above our target of 30%. As i previously mentioned this year we expect to save ~500€ monthly. This would account for ~18% which is a target we are confortable on achieving. I’m also counting on our savings to go back to old values in November and December once the rental pays for itself.

Rental Units

After a few changes the plan will be to have 3x1B and a 4B duplex. Plan is to have it ready to be rented in the end of October. If earlier, better!

Increase networth in 10%

If things go as planned there is a significant equity gain from the renovation. After renovations the bank is calculating the rental building to be worth 585k. Well..after some easy search nearby we can quickly find out that market value is at least 700k. If we add the rental valuation method for a 5% cap rate (on that area, Lisbon is between 4%-6%) income of 3k monthly (36k anual) we would have 720k.

After some calculations i got to the number of 34% networth increase. Nonetheless, i want to be conservative so i will maintain the 10% increase. Which is already an awesome number.

Starting a company and having revenue of at least 10k

Here i will be keeping the same goal. I was able to achieve 34% of this goal last year and i will try my best to achieve the 10k mark. Time will tell if i’m succesfull. It won’t be for the lack of trying!

Non-Financial

Remodel the farm houses

Even if its not a full revamp (that would cost ~80k) i would at least want to have there running water and electricity.

Finalize maintenance on the building we currently live

Our current place needs some maintenance namely the facade (which already started). I’m going to leave this objective here as well.

Create network of real estate professionals

Something i noticed while doing this investment is that i have an almost non-existent network of real estate professionals. That worked fine for buying but not for a big Reno like the one we are currently. This means i want to get at least the following good contacts:

Real estate investors (2)
Property managers (1)
Architects (2)
“Do-it-all” (2)
Eletrical
Water
Plumber
Specialties (eg. Water, HAVAC, Eletrical, etc) (1)

Those are not written in stone but as you can see i want to increase my network dramatically since i think i will need those professionals for this or next deals.

Networth Update – 01/2021 (January)

January

Now imagine. On the other side. Me working all day…for 3-4 months. 🙂

The good news is that one of our 2020 Goals was/is being accomplished as we speak. Late December we finally got the permit accepted from the municipality and the construction company came last week to put the protection around the building.

In order to proceed we needed to pitch in for our part which was ~2.9k thus killing our savings rate this month. Otherwise we would have saved ~23% of our income.

I’ve also removed the P2P monethera entry from our network. The website is down and altough i’ve joined the telegram group i dont wish to spend my energy getting my hopes up about receiving any of this money…

How about the rest?

Portugal is now one of the worst countries in the world managing the pandemic with the biggest new daily infections per 100k habitants. We are having a number between 10k-15k on a daily basis with >200 people passing away every day. Our numbers of critical care patients (UCI) is now >800 which makes a lot of pressure in our national health system. Adding to this even with the number of vaccines being distributed in a good pace we got several cases of pety corruption with people bypassing vaccination priorities (eg. the husband of the secretary of a hospital manager). This causes social unrest as it could be imagined.

Trying to contain those numbers, the government put us in a more strick lockdown. Restaurants are closed, going outside only for small walks (when the weather allows), no crossing between municipalities on weekends (etc). For us this meant less spending with eating out.

Reno Updates

General updates:

1- Construction: Contractor gave notice that the designs would greatly go over the 150k mark so i’ve asked the architects to review the plan and put it in a minimalistic version. The idea for lowering the floor on the attic to have a 1 bedroom has been cancelled we will transform the ground floor 2B into a 4B duplex taking advantage of the stairs already next to it. Most of the changes will now be cosmetic and wont change the layout of the building.

2- Tax gains “Mais-valias”: There are several options on how the IRS will see this. Good news is that we now have someone knowledgeable on the topic. The advice was to wait for the IRS delivery happening in March to see what is the best course of action. Most likely this will generate an alert and we will have to clarify the tipic

There are some doubts on how to consider what was invested from our side and if that is applicable to the whole building. In the best scenario we will be taxed extra with 1.3k (great!) and in the worst with 34k (not good…).

Savings Rate

As previously stated, this month we had to chip in for the building facade renovations eating away our savings.

January Summary:

1) Changes : received a 66€ refund from medical expenses. We bought some gifts for babies of our friends and we only managed to give them in january.

2) Projects: Received 2k from an invoice from September. I will have some expenses with this so i’m antecipating my net return to be 400 € on this one. I’ve made a post just on my entrepreneurship journey – here.

Now, coming to our monthly networth…

Summary:

Our Networth value for January is 450 527.48€ (-6 060.13)

Assets:

Investment accounts

ETFs Portfolio: 31 211.21 € (+895.27)
Retirement Accounts (aka PPR): 16 883.90 € (-77.13)
Certificates Deposit + Emergency Fund: 50 007.56 € (– 2 591.72)
P2P Portfolio: 2 467.71 € ( – 5 079.28 )
Total Investment accounts: 100 570.38 € ( -6 852.86)

Real Estate (Based on Market Values)

Primary Residency: 300 000 €
Farms: 70 000 €
Rental House: 414.500
Total Real Estate: 784 500€

Cars

Mr.Firecracker Car: 20 000 €
Mrs.Firecracker Car: 18 000 €
Scooter: 1 500 €
Total Cars: 39 500€ (=)

Total Assets: 924 570.38 € (-6 852.86)

Liabilities:

Primary Residency: 188 814.00 € (-349.60)
Rental House: 285 228.90 ( -443.13)

Our Networth drilldown looks like this:

You can follow our Networth status always here

Goals 2020 – conclusions – Part 3 Company

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On my last posts i’ve started to analyse our 2020 goals and how did they went. I’ve started with the savings rate goal of 30% – we did 31% – followed by a networth increase of 10% – we did 15% – and today i’m going to focus on my entrepreneurship journey.

Back in February 2020 i did a post mentioning our 2020 goals and they could sum up to the following:

Financial

Savings rate at 30% – done (31%)
Increase networth in 10% – done (15%)
Starting a company and having revenue of at least 10k – 34% (3400 / 10.000) – not done
Find a new property to invest (Optional) – done

Non-Financial

Remodel the farm houses – we just had a small budget for some minor renovations in order for the main house to be usable. – not done
Maintenance primary house – not done

My entrepreneurship journey:

In the beginning of 2020 i had a goal of starting my own company and having a revenue of at least 10k. I’ve started with 2 business ventures. One was to do IT consulting that could afterwords even become my full-time job and the other was to use the company my partner already had to sell an additional training product.

Trough the year i’ve tried many different things which resulted in the following:

New IT Training venture – Failed
IT Consulting – on going
eHealth SW for doctors – Failed
Selling of software licenses – Failed
Bringing an energy company to PT and selling market analysis – Failed
Developed a solution for ehealth with integrated micro-services – Failed
IT Consulting partnering with a Marketing agency – Failed
IT Patent predictive analystics software – Failed
IoT Domotics project – on going
IT Lecturing – done

There were different reasons for each failure and i’ve indeed learned a lot while doing this journey. This was all on top of my regular job and even if some of them required more attention, dedication or lasted longer they were all a journey.

As you can see one of them still keep going and this is the one with a bigger chance of resulting into a permanent consulting contract or another solution.

The other one IoT Domotics project is something i wont be spending more time and i expect to be implemented mid of 2021 therefore I havent received payment yet. Only once it starts.

Learnings

There are several lessons i can take from this years entrepreneurial journey.

Verify who you partner with – make sure that your partner is someone able to execute and has the same standards for quality, vision, etc that i have. Leadership matters and also organization. If the partner(s) is not commited then it would be easier for me to overcommit (since i’ve self-motived by nature) and then have the expection to get some return.
Fail fast – do the minimum for a PoC and show the concept. if it doesnt fly i wont invest more time or effort into it.
Manage expectations – Company cycles are very slow specially Portuguese companies. They tend to pass multiple layers of decision and even once all seems to be decided and to move forward, they can crash.
How a small company operates from a tax perspective – major learnings into the in-and-outs of running a small company and how to set it up.
How much to charge for my services, my partner value (what i bring to the table) and to negotiate that into a partnership, how to calculate a DCF and pitch to a VC.

Results

I’ve managed to hit 34% of my goal (3.400 / 10.000) that came from:

IT Consulting – 2.000 €
eHealth SW for doctors – 200 €
IT Consulting partnering with a Marketing agency – 200 €
IT Lecturing – 1.000 €

To the revenue if i exclude expenses that i had to execute the projects this would bring the value down to 2.500 €. Here i would need to pay taxes and include this income into my anual taxes.

For 2021 i would like to hit that mark excluding the rental income coming from the property.

For confidentialy reasons i’m not disclosing too much details on the projects but i do think they can be understood. If this is not the case, please shout out!