<![CDATA[CastleWallet.com - Blog / Archives]]>Fri, 23 Feb 2018 12:01:15 -0800Weebly<![CDATA[House hacking]]>Thu, 02 Jun 2016 17:05:15 GMThttp://castlewallet.com/1/post/2016/06/house-hacking.htmlPicture
House Hacking
I want to share a “hack” that, when properly done, can have a huge effect on your wallet and the wealth of your family. I’m talking about hacking your housing and living for free. I’m talking about building wealth automatically. I’m talking about buying an owner-occupied multifamily property and getting paid to live for free.

It’s often called an “owner-occupied multifamily property” but you probably have heard other names for it, like “duplex,” “triplex,” or “4-plex.” There is a good chance you’ve even rented a unit in one of these places in the past or you know someone who has. They exist in every market, every neighborhood, and every price point – and by purchasing a small multifamily property, living in one unit, and renting the other units out – you can live for free and get paid to do so.

House hacking can take other forms – like buying a house and living in the basement suite or garage apartment. Check out this guy for example who paid off his mortgage super fast.

Why Purchase a Small Multifamily?
By purchasing a great small multifamily deal, the rent that your tenants pay each month can cover all of the expenses for the property – and more.  For example, if you buy a 4-plex, live in one unit, and rent each of the other units out for $1200 a month, you could be making a certain amount per month in income. If your mortgage, taxes, insurance,  utilities, and maintenance expenses come to just $3000 – you could get paid $600 a month just to live in the home.  

Where to Find Small Multifamily Properties
The easiest way to find them is by speaking with a real estate agent. Ask your family and friends for recommendations and start up a conversation. 

Keep in mind, however, that you are only looking for properties that have 2, 3, or 4 units. Once you hit 5 units or more, the entire world of real estate changes into commercial real estate. So for now, focus on the duplexes, triplexes, and 4-plexes.

If you want to just start looking, you can also use sites like Realtor.com, Zillow.com, HAR.com (i.e. in Houston, TX) or Trulia.com to start looking at properties. With each of these sites, you have the ability to limit your searches to only multifamily properties.  Start looking at the cheapest properties in your area and try to find neighborhoods that you would want to live in.

Why purchase a single family home (SFH) with a basement or garage apartment?
Personally, I think buying a SFH is the best way to get into real estate. Why? The numbers are smaller, its easier to manage and it will give you experience being a landlord. Its much easier to deal with one tenant than 3-4. Also, these places are typically cheaper, require a smaller downpayment and its less likely you will make a mistake on the math.

There are risks involved, for example, here in Houston, TX - a common problem is that a local subdivision or homeowners association will not allow you to have more than one family living on a property. You can find this out just by calling the subdivision or the property management company before you start making offers.

How do the numbers work? Here's an example I was working on (deal didn't go anywhere because of the subdivision rules). 
  • List price of $205,000. 
  • Offer price would have been $195,000
  • Downpayment of 5%: $9,750
  • Closing costs of say $5,000
  • Total upfront costs: $14,750
  • Monthly rental income $1,400 for the house
  • Vacancy assumption of 8%
  • Result would have been slightly cash flow negative of around $300. 

So in this case, it would have cost me $300 a month to live in a garage apartment. That's pretty cheap "rent" if you ask me. And that's on a cash flow basis. I would still have been paying down my mortgage by around the same amount. So, all that's happening here is that I get almost free place to live and I pay down my own mortgage.

Can you think of how quickly you can build wealth while almost essentially eliminating your largest cost in your life? In 5 years, after paying yourself $300 a month... you'll have created equity in your home and plus started perhaps a nice investment portfolio using the money you used to pay on rent!
<![CDATA[Renting a car on the cheap - try Turo]]>Mon, 21 Dec 2015 02:55:11 GMThttp://castlewallet.com/1/post/2015/12/renting-a-car-on-the-cheap.htmlPicture
Renting a car can be tedious.

I recently had some work done on my car by a "small time mechanic" who does not provide loaner vehicles. I saved lots of money by using this mechanic, so it was worth it to rent a car during the time my vehicle was in the shop.

For the first time, I tried Turo. Uber calls itself car sharing, but this is real car sharing. You have individuals that rent their own personal cars through the Turo platform.

Initially I wanted to rent a car for 3 days. I was quoted $281 from National Car rental for the airport - which was a $30 Uber ride away. Seemed like a bit much for a car I was going to use to commute to work and/or a grocery store. I tried using some aggregators and found the cheapest was $47/day - still cheaper than National.

I ended up signing up for and reserving a car (a nice 2014 Kia Soul) at 4PM on a Sunday and took possession of the car 3 hours later at 7:30PM. I was charged $115 for the 3 days - which is pretty competitive for a major cities during the week. Add on the fact that the owner of the car picked me up at my mechanic for free!

I will be using Turo in the future. Evidently it can be used all over the US in major cities. Here is my referral link - disclosure: I get $25 credit if you sign up using my link.

<![CDATA[Getting rid of your car]]>Fri, 18 Dec 2015 17:32:28 GMThttp://castlewallet.com/1/post/2015/12/getting-rid-of-your-car.htmlPictureMy 1st car - a 1972 Plymouth Cricket
In North America, many of us grow up in cities/towns where having a car is a sign of adulthood. I remember teasing other kids who didn't get their driver's licenses as soon as they could. We grow up believing / thinking that owning a car is a necessity and a right. I wanted a car so bad when I got my driver's license that I bought a 1972 Plymouth Cricket was $200. I sold it a year later for $220.

I have lived in 5 different cities/towns in North America. My hometown - where having a car was needed. A small city - a car was also needed. A big city - where I had a car, but probably didn't need it). Another big city that was very transit friendly. And unfortunately, right now, I live in a city where owning a car is a necessity. Some American cities are unfortunately not bike / public transit friendly.

When I lived in Montreal, I was transferred there by a company that initially told me that the transfer was going to be only for a few months.  I did not move many of my personal belongings to Montreal (including my car). I inadvertently was trained to live without a car. Eventually, after a few months, it became clear that I was going to be needed for more than a few months - by that point in time, I decided to get rid of my car.  Let me explain how I felt that my way of life was actually IMPROVED and how I saved money.

Personally, I don't really like taking public transit. I hate the idea of down time waiting for trains or buses. I like to get where I am going efficiently. I don't mind walking or taking a bike. Montreal was good because it had the Bixi bikes (if you don't know what I am talking about Google it). However, most of the places I have lived in have extreme temperatures (really hot and sweaty during the summers and really cold/frigid in the winters), so walking and/or biking year round have not really been practical options. 

Two things changed my way of living: Car2Go and Uber.

I'm sure most people have heard of Uber by now. If you haven't I suggest you check it out. The gist is that Uber is an app that allows you to connect with drivers (who are regular people like you and me) and they will pick you up / drive you to your destination for an amount that is typically cheaper than a taxi.  If you haven't tried it, use my referral link and you get a free $15 credit.

While living in Montreal, I lived in a neighborhood called Griffintown. I either walked / biked or took an Uber to the office. An Uber would cost $6-8 dollars depending on traffic. Which is still cheaper than the $12 per day parking at the office.


I love Car2Go. I used it a lot when I lived in Calgary and Montreal. Car2Go is pure car sharing. 

The unique thing about Car2Go is the idea of a home area, which is a designated zone within your city where your Car2Go resides. You may use your vehicle anywhere as long as you like but, when you end your trip, it must be left inside the home area in an approved parking space. This usually includes residential streets, so you can even park the car right outside your house when you're done. This benefit makes Car2Go ideal for short, one-way trips within the city. Other services require the vehicle to be returned to a specific spot, typically where you initially picked it up, rendering one-way trips impossible. This is why I LOVE Car2Go.

Car2Go charges standard hourly and daily rates like many of its competitors, but Car2Go also offers a by-the-minute option for short trips. The per-minute rate varies from city to city - but somewhere around $0.40 to $0.50 per mile or km. At that rate, a short trip to get groceries won't cost you an arm and a leg. Other services charge an hourly rate so, even if your trip takes 20 minutes, you still get charged for an hour. By charging by the minute, Car2Go gives you the most flexibility to drive for any duration. There are no annual fees.

Only bad thing I can think of is that Car2Go currently only employs smart cars. Alternatives to Car2Go are Zipcar - which is in a few US and Canadian cities right now, but is a bit less popular.

Car Rentals
In most cities, renting a car on the weekend is cheaper than renting during the week. Why? I would guess that most of the people renting cars are business people and they are typically coming into a city on a Monday and leaving on a Thursday or Friday. I found renting a car to pick up groceries, go visit friends in suburbs, go out to the mountains, etc was handy. These are things that having a car is useful for.

On average, I found myself spending $30 a day on car rentals during the weekend. Sometimes you could get a whole 3 day weekend for $50. But let's say I needed a car 2 weekends a month - that's only $120 a month + the fuel for the vehicle.

My Math - Owning a car 
In late 2010, I bought a brand new 2010 Toyota Corolla for $28,000. I sold the car in 2014 for $11,000 to a dealer. Wow - lots of deprecation on a car. I know I could have done better if I had bought a user car in 2010. Lesson learned.
Total value lost / depreciation ($28,000 less $11,000) = $17,000

$17,000 divided by 48 months = $354.17 in monthly depreciation.

Notice that I did not factor in any other repairs other than oil changes. Notice I did not include fuel. I simply looked at some of the easily quantified costs.

Here are my worst and base case scenarios I used for planning purposes. Renting a car from say Budget or National Car a total of 3 out of 4 weekends a month. Assuming another 3 trips per month where I use the car for 2 hours or more (think a grocery trip run). Also, using a Car2Go to commute to work - I used to be able to take a Car2Go from my apartment to the office for $2-3 dollars each way. Half the price of parking at the office!
I sold my car and just used car rentals and Car2Go. The result was quite a bit of savings. I found it to be incredibly flexible and such as relief to not have to worry about car maintenance or finding parking near my office or even finding it at my apartment. At the time, underground parking at my building cost a minimum of $250 per month.

I found that I ended up using a combination of Uber and Car2Go and it ended up costing me around $300-400 per month and I felt like I had not given up any freedoms whatsoever. Did it take a little more planning? Yes, but certainly saved money. In fact, what I enjoyed most about it was when I traveled out of town of the weekend, I didn't have a car sitting back at home doing nothing - I was in a new city using Car2Go or Uber and my costs were the same.

Will it work for you? Only you can say. Can it possibly help you get rid of your 2nd car? Perhaps. Give it a try - you might be surprised!

<![CDATA[Early retirement - good or bad?]]>Fri, 18 Dec 2015 00:52:34 GMThttp://castlewallet.com/1/post/2015/12/early-retirement-good-or-bad.htmlMany people equate retirement with spending lavishly, traveling in style, or playing golf everyday (such as this NYT article I read the other day). While I do agree with the mathematics of the first 50% of the article (yes, of course try to increase your present value (PV) by investing in yourself and your own earning power), I disagree with the second 50% of the article. The second half of the basically makes it sound like retired people are pathetic / bored / not contributing to society. 

I plan to retire early. As I write this article, I come up on my 30th birthday. I am starting to build up my portfolio so that one day I will have enough passive income to either retire entirely, or do work on a part-time basis (perhaps some consulting in my professional, some teaching in the profession, etc). I am hoping to get out of the full-time work force well before 60. 
One part of the article talks about taking on side hustles - which isn't a bad idea... but at some point, we all need to enjoy life in the present. We could get hit by a bus. We may not continue earning money tomorrow and then, at the end of the day, did those extra few hours of work really matter? Don't get me wrong - I have side hustles - I just think we can't take a purely mathematical view on life. In fact, because of how aware I am of my personal mortality, I want to retire early so that I can enjoy my health while I still have it.

What do I want to do in my early retirement? 

Simply put: Volunteer. Think of all the amazing things that could happen in the world if there were more volunteers. I love capitalism and think its the best economic system ever developed by humanity, but it cannot accomplish all goals. Think of all the charities that need volunteers or could accomplish much more if they didn't have to pay everyone. Imagine all the causes you could support if you did not need to hold down a full time job.

What do I want to do when I'm not volunteering?

Imagine the places you could volunteer. From working in villages in Africa to refugee assistance in Lebanon to even large cities in Asia. Traveling / volunteering is something that many early retirees do. On a recent trip to Asia, I bumped into many retirees (some as young as 42). One case in particular stuck out: a single (never married) woman who worked until she was 40. She had earned some modest stock options, had paid off her mortgage, had saved up some money in mutual funds, and now she's living in a modest apartment (approximately $350 USD/month) in a modern city where she does not work and does volunteer work. 

Life can be so fulfilling; we just have to try to live it.

<![CDATA[How to get your first credit card in the United States]]>Thu, 17 Dec 2015 19:56:03 GMThttp://castlewallet.com/1/post/2015/12/how-to-get-your-first-credit-card-in-the-united-states.htmlGetting your first credit card in the United States can be daunting.

Its a tricky system. You can't get a credit card without having a credit history. You can't get a credit history without getting a credit card. 

Also, its nice to have a credit card for expenses when you first arrive; however, you may not immediately have a Social Security Number (SSN) which might cause problems with most banks. 

Keep in mind that a lot of foreign banks issue US dollar denominated credit cards, but most of the time this will not help you because it is still issued by the foreign bank. Your goal here should be to get a credit card and start building US credit history, which can help you qualify for loans, mortgages, cell phones, etc.

Here are my suggestions:

See if the bank you already do business with has a US subsidiary. 
HSBC - For example, if you are from the UK / Hong Kong and bank with HSBC, you can probably get help with a US credit card - especially if you qualify for the HSBC Premier service (to qualify you need to have $100,000 or more in deposit/investment assets. 

RBC Bank - Given that I am from Canada, I was able to easily make the transfer over (even before I moved to the USA). RBC Bank (the US bank subsidiary of RBC Royal Bank in Canada) was able to grant me a credit card based on my Canadian credit history. I have Canadian colleagues working elsewhere in the United States and they did the same thing with TD Bank (the US bank subsidiary of TD Canada Trust).

For those that are interested, I chose the RBC Bank Visa Signature Black card (link). Comes with no annual fee. I obtained the card about 6 months before I moved to the US and did not need a US SSN or US address. As an aside, if you are not intending to live in the US and simply visit a lot (from Canada), this might be a great card for you. RBC Bank essentially exists to service Canadians living/playing/visiting in the US, so I suggest checking it out. 

American Express (best option) - American Express offers a very helpful global transfer program if you have an American Express card in Australia, Canada, Hong Kong, Singapore, New Zealand, and the United Kingdom  I had an Amex card in Canada. Basically, Amex required a home address and a US phone number as proof; I believe they even wanted to call my US bank to verify that I was living in the US (i.e. my RBC Bank account in the US had a US address on file). It was a pretty seamless process (link). My Amex was sitting in my mailbox the day I moved into my apartment in the US.

Other options to get your first credit card

Unsecured credit cards with Federal Credit Unions - I contacted a credit union based in Dallas, Texas called Advancial. Theoretically, you need to be an employee of certain organizations to become a member; I mentioned that a friend of mine worked at one of the companies on the list and I was able to become a member without any issue. However, I needed a SSN - but surprisingly they did not pull my credit history (given that I effectively had no credit history anyways). They simply wanted a copy of my passport, work permit, and my signed job offer. My guess is other credit unions would probably be just as helpful. 

Secured credit cards with banks and credit unions - Your last resort should be to try to get a secured credit card. This is where you give a bank say $500 dollars and they give you a credit card with a credit limit of $500 dollars. As you spend on the card, and pay off the bill on time, you eventually build your credit score as you have a history of being a good borrower. I ended up not needing to go this route, but I had some colleagues at my office from eastern Europe who had to go this route.