After gutting our former rental following the destruction brought forth by our tenants (and soaking in bleach for about a week), we were able to enlist a few trusted contractors and turn our attention back to our current and future homes. We decided it made the most sense to use our sweat equity for our future home, but for the other two that we were trying to wrap up quickly (the former rental and current/soon-to-be-former home), we enlisted contractors since they’re much better equipped and skilled to finish things faster than we could. This was in the interest of cashing out quicker.

As for our current (soon-to-be-former) home, we already had the new roof, siding, and heating/ ventilation/ air conditioning (HVAC) installed, plus had a huge tree removed and some grading work done in the fall / winter of 2017, just prior to the fiasco with our rental. This work cost us about $25k, most of which was borrowed from a home equity line of credit (HELOC) on the property. Our painter and carpenter that were also working at the former rental each had about $4000 of work here as well, and we hired additional contractors for hardscaping, repaving the asphalt driveway, installing a new shower stall, and installing new carpeting, costing us another $10k. All told, we had about $45k of work going into finishing up renovations at our soon-to-be former home!

In addition to this work on our current home, as detailed in the previous chapter of “My Journey”, we also had about $30k being invested into fixing/upgrading our former rental. So besides borrowing against our HELOC and using thousands of dollars worth of credit card debt to buy materials for all of this work, we also took out a $25,000 loan against my 401k account to fund the renovations!

Another Rich Dad, Poor Dad lesson learned: there is good debt and bad debt. Good debt is actually a thing if you’re making more money than you borrow after accounting for principal and interest over the term the money is borrowed. In our position, we were borrowing money to fix up a house, and we expected to make a lot more money than what we were borrowing. The interest paid was very little; about 2.5% on the HELOC, between 0 and 3% on the credit cards (new introductory rates and credit card cash advances at 0% with a small up front fee), and about 5% on the 401k loan. The 5%, 401k loan may have been the highest, but that interest would be paid back to me and deposited into my 401k account. Bad debt is pretty simple; if it doesn’t fall in the definition of good debt I just mentioned, it’s bad! Back to the story…

While this was underway, our family was still making trips at least twice per week to our future home, the one originally purchased as a flip. I still remember the chill each time we walked into the house to do more work. I’m not sure if it was underlying excitement that we were taking on another fixer to upgrade and make ours, or more likely the fact we kept the thermostat at a chilly 50-degrees!

“Hey Honey, I turned it up to 60 while we were there, quit yelling at me!”

We had finished installing the new kitchen cabinets in late January between trips to gut the rental, so by February we were focusing our energy on installing all new flooring throughout the main level. Our goal… to move in by the first week of March, only a month away! And yes, I was still a full-time consulting engineer and managing contractors at our other two properties!

My typical day started at either 6 or 7 AM, depending if I was driving to the office that day or working from my home office, working my full time job from 8-6 while juggling the occasional phone call or visit from a contractor, stopping to grab a sandwich or fast food on the way to whichever property we planned to visit that night, sometimes dropping off the kids at their grandparents’ house, working until 10:30 or 11 PM, picking up the kids, and then getting to bed somewhere around midnight! On the weekends, we took one day to split between family time and errands, and the other day we used to do more work. Caffeine was my friend! So was the occasional pair of toothpicks to prop open my eyelids.

Somehow we made our deadline (I’m guessing lack of sleep had something to do with it), and we moved during the first weekend of March! We were as ready as we were going to be, but the house definitely was NOT! The smell, which I kind of like, and the feeling, which I kind of don’t, of construction zone sawdust was everywhere! Although we had installed the kitchen cabinets and most of the new flooring, we had no kitchen counters. Without counter tops, we also had no kitchen sink or dishwasher. At least I had a coffee maker plugged in and could fill it with water from the bathroom sink. Oh, and our family room had no flooring. But we made our deadline! If you’ve followed my blog, this story may give you a sense of deja vu because I did the same crazy shit before!!! (https://fthattreadmill.com/2021/06/01/living-the-renovation/) What doesn’t kill you makes you stronger, right?

So in March 2018, we had again moved into a house that was far from complete. After a couple of weeks of unpacking and trying our best to get comfortable in our new home, our contractors had wrapped up their work at the rental, so most of our free time in the second half of March was spent driving back and forth to that property, about 45-minutes each way, to do final touch-ups, cleaning, and landscaping to prepare it for sale. The folding seats in our little Honda Fit came in handy since dropping them flat turns it into quite the mulch hauler. Meanwhile, I was still managing contractors at our former home and settling into the new home when we weren’t traveling to the former rental. Despite the chaos, I felt the weight slowly lifting. By the middle of April, our former rental was under contract, and… drum roll please… our new home finally got the new granite countertop and kitchen sink installed! Five weeks of living without a complete kitchen was over! With this minor inconvenience wrapped up, we were able to finally get the flooring finished in our family room, and by the end of April, it was starting to feel like a home.

But, it didn’t quite look like a home yet on the outside. The overgrown landscaping had been neglected for a decade or more, and had menacingly threatened to overtake our quaint 1950’s Cape Cod since we had bought it months ago. With our former rental under contract and having the inside of our new home reasonably put together, we started to focus our energy on clearing out the overgrowth. Among the mess were hedgerows alongside the house, in front of the house, and surrounding the back yard, plus a bunch of full size trees including a couple of arborvitaes, a 20-foot pine tree, two holly trees that were each about 30-feet tall, a rotted dogwood, and a cedar tree that had grown directly behind the house and curled to partially lie on the roof. Oh, and there was a beautiful, only-God-knows-what growing in the front yard that looked like a cross between a 10-foot toothpick and Charlie Brown’s famous Christmas tree (not so famous if you’re under 40 years old).

By May 2018, while we were focusing on transforming the exterior of our new house into something that looked less abandoned, contractors were well into renovations at our former home. We had new flooring installed in the laundry room and downstairs bathroom, all new carpets in the family room and upstairs bedrooms, fresh paint in every room, and the sunroom off the back of the house received a full transformation with all new windows, cabinets and countertop, trim, and paint. In just a few months time, our vision of what the house could be, came into focus, and we couldn’t have been happier with the results. After a final cleaning, we were ready to list for sale in July, and in just over a week we had two offers above asking price!

The next two months felt like the longest months of my life. When we sold the former rental, we were able to pay off the outstanding balance of the equity line of credit for that property and the debt we had accumulated for it’s renovations, but it was basically a break-even proposition. With this house though, we had bought it for just over $188k 9 years ago, but were selling for almost $365k! It was shaping up to be well worth the debt we had accrued, but the wait for our payday was painful. By now, I had been carefully tracking our debts and cashflow for a decade or more, and figured pretty quickly we were not only going to pay off everything we owed, but also have a 5-figure sum leftover. Some people might start thinking about a dream car or a down payment on a new house, but we had no needs and were way beyond any desire for that kind of nonsense. Admiral shares of Vanguard’s total stock market fund, VTSAX, was the only thing we planned to buy with this payday.

Here we were in our mid-40s, about to receive a 5-figure payday after paying off all debt, and we had no mortgage, plus a 6-figure 401k that had been accruing 10% of my salary since 2015.

There was no way in hell I was going to fuck this up.