I have some important news. The minimum contribution to my Dividend Portfolio is paused. It has been said that life happens when you make plans. Well, right now life has happened. After doing some self-reflection and soul searching, I think this was the right decision. This may be a longer post as I try to explain my thought process and my rationale. Admittedly, I’ve been using phrases such as YOLO, which means, “you only live once” or phrases like, “life is too short” and “you only have one life to live” to justify a lot of my decisions recently. That is certainly not the best way to do things or make decisions, but, there is value in such lofty concepts. Anyway, to figure out why I have paused the minimum contributions to my dividend portfolio, let’s dive in.

I Want A Beach Condo

I’m not going to lie. I’ve been focused on getting a beach condo since 2019. I came very close to the process and wrote about it in my post entitled, I Bought A Beach Condo. However, since making that post, a lot has happened. There were construction delays in the new construction building. Additionally, the coronavirus hit and there were even more delays. I ended up cancelling the contract in 2021. I wrote all about it in my post entitled, I Lost The Beach Condo.

Importantly, in order to secure financing for the condo I initially was under contract for, I had to liquidate my dividend portfolio. That was a hard decision because I am invested for the long-term. Since that time, I have been slowly rebuilding my dividend portfolio.

Once the contract on that beach condo was cancelled, and I received my initial deposit back, I decided that it made more sense to purchase a permanent residence. So, I bought a home to live in and started house hacking. I wrote all about it in my post entitled, Real Estate Investing – I Just Bought A House! So far so good. I closed on the house at the beginning of July 2021. I have two roommates. One roommate is living with me now and the other will move in the first of September. My first mortgage payment is due September 1. Both rents from my roommates will cover the mortgage and leave me with $100 to help towards the utilities. It’s not perfect, but it helps.

Once I move out next year (or two), I’ll be able to rent the whole house for more than the expenses. In any case, my desire to own a beach condo has not gone away.

I Still Want A Beach Condo

I decided to keep an eye on the market for a beach condo. This is a horrible time to buy right now because the real estate market is high virtually anywhere you go. It seems like there might be a real estate crash coming, but nobody really knows! The last thing I want to do is wait and have prices rise beyond my ability to make a purchase. Does this sound like I’m a motivated buyer or that I have fear of missing out (FOMO)? You’re probably right! Haha.

This is also not a bad time to remind you that I am not a financial adviser, or planner or anything of the sort and so you shouldn’t look to me for financial or investment advice. I’m still very much a beginner trying to make my way to financial independence doing it myself.

Anyway, I again met with my realtor recently and have watched the market. More importantly, I’ve re-applied with my bank (since it’s been so long), and have been pre-approved to purchased a beach condo within a certain price range. It’s lower than I wanted, but I’ll take it.

Of all the properties on the market, there are exactly TWO properties that I am interested in. Let’s explore these further.

A. 2/2 Newer Build

The first property is a 2 bedroom 2 bathroom condo. It’s in a newer building that was built in the mid 2000s. The views on this penthouse unit are AMAZING! They are exactly the kind of views I want!!! The unit is a bit small, coming in under 1200 square feet, and is a bit dated, and so some of the furniture (etc.) might need to be updated. The location is almost perfect. It’s within walking distance to a shopping area by the pier. This condo is directly on the beach.

The downsides are that this is a very dense area, and so there are a lot of people in the building. During the busy seasons in the summer, it’s not unusual to wait 20 to 40 to 60 minutes for an elevator! I’m not joking. Now, it seems to make sense that the building managers would just fix the elevators to make them run faster, but this is a problem that has been going on for years!!!

However, it should be mentioned that the unit comes with several amenities including a movie theatre, an arcade, a gym, etc.

I haven’t really talked numbers yet (which of course is important). Rental revenue runs about 30-40k per year. Once I’m under contract on any condo, I’ll talk more specifics about the numbers including any projected cash flow on a monthly basis.

Finally, this unit is currently on the market and therefore subject to the typical negotiations that exists with real estate on the market.

B. 3/3 Older Condo

The other condo that I am seriously considering is a 3/3 penthouse in an older building. The building was built in the the 1980s. What’s more is that there aren’t many amenities at this particular building. Specifically, they only really have a pool and a hot tub that I would be using.

Here are the positives. This building is a 3/3. It is very hard to find a 3/3 on the market for the price I would be getting this deal at. For privacy and other reasons, I’ve decided not to provide the purchase or list price for any of these condos. I might do that in future posts, once I’ve secured the deal. Sufficed to say, I think the price I would be getting this unit at is reasonable.

Here are two very important pros to this particular building. This condo, which is also directly on the beach, has a lockout unit!!! So, that means that I could take my vacation in the 1/1 lockout unit, and still rent-out the remaining 2/2 for some income.

The other major pro is that this is an off-market deal. In other words, it’s mine if I want it! My realtor is also the listing agent and we’ve basically agreed on a price that is mutually beneficial to the sellers and to me. There’s a decent chance I could secure this deal in the next week or two. That being said, it’s a probate situation, and so I would have to wait for that process to work itself out (about 2-3 months). I hate waiting!

In other words, it’s mine if I want it!

Finally, and I’m not sure if this is a pro or a con, but the building is on the quieter side of the beach. Estimated rental projections would be 50-60k per year. It does have an actual rental history, so I wouldn’t have to guess what I could do with the unit.

Affordability

In all likelihood, I will be getting the 3/3 condo that is in the older building. The question of course is how to afford this particular unit. The purchase price is actually less than the 2/2 but the HOA is slightly higher. According to my bank, in order to meet their debt-to-income ratio, I would have to a) come up with a 20% down payment of the purchase price, and b) payoff my car.

In case you were wondering, to afford the 2/2, I would have to a) come up with a 25% down payment of the purchase price and b) payoff my car.

In order for me to come up with 20% of the purchase price, I would need to cash out one of my three retirement accounts, which I am now prepared to do. YOLO remember! However, in order to avoid touching my Roth IRA or my Roth 401k, I would likely need to again liquidate my dividend portfolio (grrrrr) and sell some of my crypto currencies. Decisions, decisions.

The decision to again liquidate is NOT made lightly. But it just makes sense. In an effort to keep some money in my account, I would probably liquidate about 15k of my dividend portfolio. That will be a sad day indeed.

Commitment

The goal of purchasing a beach condo is to make money! I hope that I will be cash flowing from that investment. The beach condo is the second property I would buy this year. After that purchase, I think I am done buying properties for the remainder of the year. The next task will be to tackle my mom’s house, but I anticipate doing so after Tax day next year. I want to ensure that I can cover all the taxes that I’m going to owe from all my investments this year.

If I take over my mom’s house (and that’s a big if), it will simply be a transfer of title to me, with me taking over the mortgage payments. I don’t anticipate needing money for a down payment or anything of the sort. There will likely be minimal costs to accomplish the transfer. So, why am I saying all this?

Well, the point is that after I’ve secured the beach condo, I do intend on using some of that cash flow (if realized) to help rebuild my dividend portfolio. Indeed, I hope to rebuild my dividend portfolio at a faster pace than I am now. Of course, life happens when we make plans right?

How Long Will The Pause To My Dividend Portfolio Last?

The short answer is, I don’t know. Because the property is in probate, my realtor thinks it could take two-three months for the property to get out of probate. I’m generally a patient guy, but I’m nervous about waiting again for a beach condo! The last time when I signed the contract for a beach condo in September 2019, I thought I would be closing in February 2020. Well, that didn’t happen, and the wait lasted until 2021 during which I decided to cancel the contract. I’m afraid that 2-3 months may turn into 7-8, which of course is anyone’s guess.

Arguably, there is no rush. I could delay going under a contract and keep looking at the market to see if anything catches my eye. There are several properties available for sale, but I don’t really see any in my price range that I would want to buy. I’m also not very optimistic that I would get a deal like I would with this 3/3 off-market deal. So, as the saying goes, patience is a virtue.

I hope to start contributing again to my dividend portfolio in January 2022. The main goal right now is to payoff my car. I’ve stopped doing my side hustle recently because a) I’ve been lazy and b) I’ve been super busy at work. However, I fully intend on starting my side hustle again to help make extra income. I will use that extra income to help payoff the car faster. So, I won’t be contributing a significant amount to my dividend portfolio until my car is paid off. I will still contribute a modest amount here or there.

Conclusion

I feel my life is at a crossroad and it can go in either direction. One road is a path to happiness and the other a path to sorrow. The next two months are key! If things go really well, I will be one of the happiest persons on Earth, but if they don’t, I’ll be one of the saddest. Only time will tell. In the meantime, I will continue to make plans and continue to work towards my ultimate goal of financial freedom.

To that end, I’ve decided to pause the minimum contributions to my dividend portfolio. Before, I was contributing approximately $1000 per month. Now, I’ll be lucky if I contribute $100 per month. I still waste a lot of money eating out, but slowly but surely, my financial habits are changing for the better. I don’t anticipate making anymore large expenses for a while. Indeed, I just got done buying furniture for the house I just bought, and thankfully, the beach condos will come furnished.

I’m convinced that I will have a portfolio balance that exceeds my 2019 levels sooner than one would expect. All my real estate properties were purchased for the long-term, and getting a beach condo would be no different. This is only a pause to my portfolio and not a stop. It’s also temporary. Once I make the decision to restart my contributions, you’ll be the first to know.

What did you think of this post? Let me know your thoughts by commenting below.

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