Third Quarter Passive Income Update

It has been quite some time since we’ve provided an update on our passive income streams or discussed anything finance-related.  Between everything involved with moving overseas and not having a home internet connection for the majority of the last two months, this has pretty much fallen off our radar.  Thankfully, these income streams are passive, so they’ve just been chugging along as usual.

Dividends

I was really hoping to grow our dividends by about 25% over last year, but we’ve hit a few bumps in the road.  Namely, one individual stock in which we hold a fairly large position cut its dividend by 89% earlier this year costing us roughly $460 over the last two quarters.  Secondly, each of our index funds paid out significantly lower dividends this past quarter than they did the same quarter last year.

Still, we’ve managed to earn $2,470.40 in dividends year to date, including $764.61 during the third quarter.  You can see in the chart below the drop off in September payouts compared to the same month last year.

3q16-dividend-tracker

Clearly, we’re not going to meet our original 2016 goal of $6,000.  Instead, we’ll probably end up around $3,500 which isn’t too bad.  I knew going into the year that our target was very optimistic.  Regardless, the vast majority of these dividends are being reinvested and we’re looking more towards steady, long term growth anyway.

Private Real Estate Lending

On a more positive note, we have been absolutely crushing it with our private lending.  We’ve talked about this before, but for those who are new here’s a quick overview.  In early 2013, we began partnering with a friend of mine who flips houses for a living.  Under our current arrangement, we provide funds to rehab a specific house and in return receive our loaned funds plus interest when the house is sold.

Up to this point, we’ve had six loans close out with four more that are still active.  One of the six completed projects closed out earlier this year in July.  That was a $30,000 loan which lasted for 183 days, earning us $2,030.55 in interest.

Here’s a quick summary of 10 projects we’ve partnered on so far.  The data is current as of today.

real-estate-loan-tracker-20161007

The goal we set for 2016 was $10,000.  With over $2,000 already in the books and another three projects expected to close out this year, it looks like we’ll surpass our goal and end up making around $12,000 this year from private real estate lending.

Lastly, I didn’t include our two rental properties in this passive income update.  We had to do a lot of maintenance on both houses over the summer and this really deserves its own post which I’ll get around to one of these days.  Once everything is settled, we should be making about $300 a month between the two houses above our mortgage payments.  While this isn’t a huge amount, we’re getting two houses paid off by our tenants which should provide us a nice chunk of change once the houses are sold.  In the meantime, we are building about $1,500 in equity between the two properties each month.

Total Third Quarter Passive Income

Dividends:                                           $  764.61

Private Real Estate Lending:        $2,030.55

Total:                                                     $2,795.16

 

8 thoughts on “Third Quarter Passive Income Update

  1. Brian - Rental Mindset says:

    The rental income and mortgage paydown will absolutely be passive income. I look forward to that update!

    I’d be careful about the lending for flipping. Getting your return is based on them selling the property at a handsome profit – when / if the market turns, flips will get squeezed, and some might lose money. Friends and business partners have a much harder time when there are losses to be shared instead of profits.

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    • Ditching the Grind says:

      Brian, you’re 100% right about the rentals being passive income. For the sake of this post, I just didn’t have all the numbers on hand. One of our houses needed some fairly extensive repairs after longterm tenants (5 years) moved out. Some was normal wear and tear (paint, carpets), but that house also needed some work due to settling issues. It has been vacant for two months getting fixed up and is now back on the market. We’re hoping to get new tenants any day.

      Second, I agree about the lending. The amount we currently have loaned out is the max I’m comfortable with. We always spread the money over multiple projects to reduce risk. But yeah, we’re definitely taking a huge risk right now and this is not a forever source of passive income by any means.

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  2. TJ says:

    How long do you expect those private RE loans to stay active? It sounds like you have done pretty well. Did some of the current loans replace some of the closed ones?

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    • Ditching the Grind says:

      TJ, most seem to stay active for 6-7 months. There have been a couple outliers that have lasted over a year which have skewed the average length toward the high side. And yes, as of late we usually open a new loan about a month or so after one closes out.

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  3. Graham @ Reverse The Crush says:

    Hey DTG,
    I’ve had a few bumps in the road as well this year that will make my dividend income not as high as I had hoped for. However, it should still be an improvement over last year. You’re still having a fantastic year. Your passive income for the 3rd quarter is amazing. Thanks for sharing!

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