Business Finance – Small Business Tax Myths

This week we are going to go over some myths regarding taxes for small businesses. I get a newsletter from our CPA each month that covers tax-related topics. The articles are written by other people and I am assuming his website subscribes to these articles from a service.

I found the topic of this one interesting, so I searched for the title on the web and found the original author. Here is the original article, by Juanita Farmer, CPA, of Germantown, Maryland.

There are a lot of myths & misconceptions around what you can and can’t benefit from with regards to taxes in the US. Below we are going to cover seven of the most common ones.

***DISCLAIMER – I am not a CPA and DO NOT Offer tax advice over the internet or otherwise. Please consult with your CPA for tax advice. This article is for informational purposes only***

Click on this link to get your own free copy of the Rental Property Tax Guide by Stessa.

Start-Up Costs are Deductible Immediately

Business start-up costs are the costs incurred prior to the business actually beginning operation. They range from advertising and travel to surveys and training. Organizational costs such as these fall under capital expenditures.

Just like you can amortize depreciation of equipment, when you start a business, you can amortize some business start-up costs.

You can deduct up to $5000 of business start-up costs and up to $5000 of organizational costs. For start-up or organizational costs that exceed $50,000, the $5000 deduction is reduced. The remaining balance must be amortized.

Overpaying Taxes Makes You Audit-Proof

From a business perspective, the IRS is only worried about if your documentation matches your deductions and that your deductions are legal and legitimate. Properly document expenses and follow the advice of a good tax accountant to “Audit-Proof” your business.

You Can Take More Deductions for an Incorporated Business

You don’t need an Incorporated Business to deduct business expenses. Plus, depending on the corporate entity, you may have more tax and tax filing burden.

Home Offices are an Audit Flag

Home offices used to be a common audit flag, but with so many people now utilizing home offices, the IRS issued a a simplified home office deduction that is easy to claim, with proper recordkeeping.

No Business Expenses are Deductible If You Don’t Take a Home Office Deduction

All business expenses such as travel, business supplies, equipment depreciation, etc. Are deductible, regardless of if you take a home office deduction or not.

Filing an Extension Delays Your Tax Payment Due Date By 6 Months

Regardless of whether you file for an extension or not, if you owe any taxes, payment is due on the original due date, typically around April 15. All an extension does is allow you a six  month extension to this deadline to turn in all of your paperwork/documentation.

Part-Time Business Owners Can’t Have Self-Employed Pension Plans

Even if you are working a full-time job with 401k benefits and you start a  small business, you can still set up a SEP-IRA for that small business


Source Attribution: Juanita Farmer, Managing Partner of J.D. Farmer & Associates, LLC

And, as always, let me know what you think in the comments. Ask questions, tell your story.

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REI – Free Rental Property Tax Guide!

A few months ago, I ran across an ad for a free rental property accounting web application on Facebook. I didn’t think much of it and continued on about my merry way. Then I started hearing ads for the same company on the Bigger Pockets Podcast. So, I decided to check out Stessa for myself.

I like it! Stessa is simple to use and allows you to output your financial data to hand over to your CPA at tax time. As a perk, the team at Stessa put together a free Rental Property Tax Guide. I liked it so much that I have partnered with Stessa to share that Tax Guide with my readers.

Click on this link to get your own free copy of the Rental Property Tax Guide by Stessa.

Let me know if you like this guide and if it is helpful to you.

I plan to do a more detailed review of my experiences with Stessa in the near future, so stay tuned!

And, as always, let me know what you think in the comments. Ask questions, tell your story.

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Personal Improvement: Podcasts – What I Listen To

I recently connected with someone on LinkedIn who is a Life Coach for High-Performing Remote Workers. As part of his getting to know me messages, he asked if I listened to any good podcasts lately. That got me thinking about the regular influence on my thinking of the podcasts I listen to. The more I thought about it, the better the idea to turn it into an article listing what I am listening to and why.

A little background on my interest in podcasts:

I have listened to podcasts for almost 12 years. Up until the start of this year, I always had a long commute. Whether a 200+ mile daily round trip to Lafayette, Louisiana or a 1,000+ mile round trip driving to Houston, Tx every other week, I had a lot of highway time on my hands. Podcasts allowed me to be entertained and informed, in addition to allowing me to utilize “dead” time for learning.

Podcasts I Listen To

Podcast Link Category
Bigger Pockets Podcast https://www.biggerpockets.com/podcast Real Estate Investing
Tim Ferris Show https://tim.blog/podcast/ High Performance
DH Unplugged https://www.dhunplugged.com/category/podcasts/ Stock Markets
Rich Dad Radio http://www.richdad.com/radio Current Affairs/Rich Dad Theory
James Altucher Show https://jamesaltucher.com/podcasts/ High Performance
Akimbo https://www.akimbo.me/ Personal, Professional Improvement
Private Lender Podcast http://privatelenderpodcast.com/ Education on the Subject of Private Lending for Real Estate
Bigger Pockets Money Show https://www.biggerpockets.com/moneyshow F.I.R.E.: Financial Independence, Retire Early
Freakonomics Radio http://freakonomics.com/archive/ Various Topics

Bigger Pockets Podcast

The Bigger Pockets Podcast helped me to learn a great deal about real estate investing. I have the Bigger Pockets website listed as a resource on this site, but the podcast is an additional tool to learn about REI. Each week, the podcast interviews guests, most real estate investors, sometimes famous authors who provide useful tips for investing, business, and personal improvement, and every once in a while, they will do an occasional webinar-type podcast to educate listeners on a particular topic.

I especially like the investor interviews to get tips, tricks, and strategies that may help me in our REI business.

The Tim Ferriss Show

Tim Ferriss, author of numerous books on increasing performance (4-hour Workweek, Tools of Titans, Tribe of Mentors, etc.), conducts long-form interviews with high-performers across various domains. Even when interviewing guests who have been on EVERY medium you can think of, you always learn things no one else has ever asked. Tim listens to guests’ answers and responds to the answers with deeper questions. He also does extensive research on guests and does not rely on canned press release questions.

I generally like to listen to his interviews because the people he does interview are “Doing It”. They don’t have a theory, they are not selling snake oil, they have done/do whatever they are recommending to increase performance.

DH Unplugged

DH Unplugged is an unscripted conversation about markets between investment advisor Andrew Horowitz and pundit John C. Dvorak.

I like DH Unplugged because they discuss what is going on in the markets and aren’t trying to sell you anything. In fact, they frequently point out how most “Money” shows on cable news channels are always “BUY, BUY, BUY” no matter what is going on.

Rich Dad Radio

Rich Dad Radio is an interview podcast featuring Robert Kyosaki, author of Rich Dad, Poor Dad, and his wife, Kim Kiyosaki, author of Rich Woman. The interviews are mainly related to money and economics, (in a broad way), and generally promote Rich Dad, Poor Dad Principles.

In addition to interesting information from guests, it’s fun to listen to Robert interpret the guests’ statements into Rich Dad principles.

James Altucher Show

The James Altucher Show is another long-form interview podcast, similar to the Tim Ferriss Show, that delves into what makes high performers “tick”. Where Ferriss delves into tools, self-talk, and motivation, Altucher focuses a little more on the path to peak performance, teasing out the development of “micro-skills”. Altucher’s overarching thesis on micro-skills is that high performers build up a toolbox of them that help them to succeed. Like Ferriss, Altucher goes far deeper in his interviews than you normally see in regular media.

Because of the depth of detail and wide range of topics covered in each interview, I really enjoy Altucher’s show.

Akimbo

Akimbo is a podcast put out by author and marketing guru Seth Godin. This podcast is a combination of self help and career advice for entrepreneurs. You don’t have to be an entrepreneur to benefit from the topics & advice given, either.

I enjoy the perspectives, suggestions, and tips provided by Godin in this show. I don’t necessarily subscribe to all of his philosophies, but that is OK. It is good to hear different perspectives from your own to allow a balanced understanding of the world.

The Private Lender Podcast

The Private Lender Podcast is a combination of interviews, case histories, and education with regards to the utilization of private lending in real estate investing.

I like learning about the details of the non-financial industry financing.

I actually met Keith Baker, the host, and have become friends with him. He’s a cool and funny guy. Oh, and he LOVES the band Rush!

Bigger Pockets Money Show

As the name indicates, BPMS is another podcast from the group at Bigger Pockets, focusing on F.I.R.E. (Financial Independence, Retire Early). The podcast is in an interview format, covering guests’ stories, tips, and tricks for becoming financially independent.

I like listening to the BPMS to better plan my own “retirement”. It has also led me to resources that allowed me to recognize that I could retire right now and be comfortable from a financial perspective.

I hope this provides you with some insight into resources to use for personal and financial improvement in your life!

And, as always, let me know what you think in the comments. Ask questions, tell your story.

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REI – Observations on Finding Tenants

Hello there, trusted reader! This week I am going to discuss a few observations I have made on the subject of finding tenants for my rentals.

As discussed in a previous post, we purchased another rental in December. Before the purchase was final, we started advertising it for rent. We listed it with a couple of different syndication services, Put a “For Rent” sign in front of the property, and posted it in pretty much every local and/or rental-related group on Facebook, in addition to posting it on our Facebook business page.

Syndicated Listings

Cozy.co

The property was listed on Cozy.co because we are evaluating their service for application, rental payment, and other tools that assist property manager.

The set up was easy and they list the rental as available on their site, in addition to syndicating the listing to Doorsteps.com and Realtor.com.

Cozy also offers one of the top-rate low-cost online rental payment platforms, based on reviews & comparisons. If tenants use the ACH (Automated Clearing House) option, payments are free. They also have the option to use a credit card to pay, but add a small percentage service fee. I have not implemented it in our business yet, as our tenants are more comfortable paying with checks and money orders.

In addition to the online rental payment system, Cozy provides an online maintenance request system, tenant screening, and document sharing with tenants. The maintenance request platform is only available if you are already using their online payments. The tenant screening offers options for background checks and credit reports, at no cost to the property manager, due to the tenant paying these fees. The document sharing is the equivalent of a shared drive to upload leases and any other documents for tenants.

Cozy Syndication

From our experience, neither the Cozy listing, nor the syndication partners are popular in our area for attracting potential tenants. People looking for places to rent don’t seem to frequent these sites.

Zillow Rental Manager

Zillow offers a similar set of services, excluding the maintenance requests and document sharing. They provide tenant screening and online rental payments, similar to Cozy. Where they really shine is the listing syndication. Zillow lists rentals on Zillow.com, but since it also owns Trulia.com and Hotpads.com, it syndicates listings on those sites simultaneously.

For this recent property we had issues getting the rental listing to be accepted by Zillow due to it still being listed for sale on Zillow when we first put it up for rent, but it syndicated to Trulia and Hotpads just fine. We received quite a few inquiries from these sources.

Facebook Groups/Facebook Business Page

Facebook seems to be the hands-down winner for attracting prospective tenants. We ultimately received more inquiries from Facebook than any other advertising channel that we used. It involved a little work…there are a lot of groups! I will post a detailed methodology on that some day. It is kind of interesting.

I created a video of pictures from the home and a digital flyer that was shared on and from our Facebook business page. The flyer listed the location, rental rate, the lease length, and basic restrictions (No smoking, some pets allowed). This helped to attract interested inquiries and potentially screen out anyone not interested in what we had to offer.

Traditional Advertising Channels

If you haven’t noticed yet, the only cost of the methods we utilized was a “For Rent” sign. Ads in the local newspapers cost too much, plus we have much better circulation on the channels we do use. That is why we don’t even bother to list anything in the with the papers.

If you have rentals, what do you use to attract prospective tenants? Leave me a message in the comments or email me at clint.galliano+ObservationsFindingTenants@gmail.com.

And, as always, let me know what you think in the comments. Ask questions, tell your story.

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Personal Improvement – ‘New Year, Totally New You’ May Not Be The Most Successful Approach

rdj-nynmbs

Another new year!

One of the first trends I noticed for the new year were sarcastic memes about “New Year, New You”…it made me think about why these are popular.

This week we are going to discuss making changes for the new year. Comparing and contrasting the typical approach with what is more likely to be a more successful approach to making changes.

williewonkanynmlastyear

 

A Totally New You for the New Year!

You realize there are things you don’t like in your life. You decide to change them. These thoughts usually seem to occur at the end of one year or the beginning of the next, hence the popularity of New Year’s Resolutions.

The common approach is to decide to change everything at once. This, in turn, sets you up for failure. Because the volume of things to change is large, it can be hard to figure out where to start in addition to being perceived, mentally, as a tedious task. Because of this, we tend to have little follow-through on these resolutions and end up abandoning them early on due to little demonstrable success.

These are some of the reasons why most people don’t keep up with their New Year’s Resolutions.

I once joined the gym, went on a diet, and decided I was going to get up at 06:00 every morning. This was many years ago…back when I was single. I went to the gym once, then never went back because I felt that if I didn’t get up early to go to the gym, there was no point in going. The diet didn’t even last that long. It was too much for me at the time.

There is a way to be successful at it and achieve your goals.

An additional thought on Resolutions – Many political bodies make resolutions all the time. Most are ignored. And we wonder why we have trouble keeping New Year’s Resolutions! Instead, choose Goals. Goals are attainable. #CandyForYourSubconcious

morpheuspositivechange-new-years-meme-03

The Incremental Approach

The end of the year is a good time to take stock of your life, but you don’t have to wait until then to decide on changes. You can decide on changes at any point. To paraphrase sage advice “The best time to change was in the past. The second-best time to change is NOW!”

The key to making successful changes is to make them incrementally. You don’t start out an exercise program by running 10 miles, doing 500 push-ups, and 20 suicide sets. Start with a small immediate goal. Get that to become routine, then expand it.

 

By making incremental changes and incorporating them into your routine, they become habit. By becoming habit, they are more likely to turn into permanent changes.

 

So, instead of joining the gym, going on a diet, and quitting smoking, in addition to taking karate, yoga, and crossfit classes, try one at a time. Build it into your routine. Let it become habit. THEN tackle the next goal.

New Year’s Goals

My New Year’s Goals are as follows:

Spend less time commuting – Since 2012, I commuted from Houma, La. To Lafayette, La. Roughly about a 215 mile roundtrip commute. At the end of last year, I proposed that I start working at the company facility in Houma. My supervisor and his supervisor both approved, so that goal is more or less accomplished.

Spend more time with my family – This will be facilitated by having eliminated my commute.

Do more exercise – Now that I have eliminated the commute, I joined the local Planet Fitness so I can get more exercise.

Find my “New Normal” – With all the changes to my health near the end of last year, I have not adjusted my “drive” to match my “bandwidth”. I am still trying get the medications adjusted and wrap my head around my limitations.

What are your Goals for this year?

 

And, as always, let me know what you think in the comments. Ask questions, tell your story.

 

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Hello 2019!: A 2018 Review

Good Bye 2018, Hello 2019! Happy New Year!  This more or less marks the first-year anniversary of this blog. We’ve covered a lot of territory between Automation, Personal & Business Finance, Real Estate Investing, & switching blog platforms and are looking forward to covering more, in addition to revisiting some topics from the past. And by “We”, I mean you, the readers, in addition to myself.

I’ll start off with a quick recap of the past year:

Combined Blog Stats

50 blog posts

8457 page views

2468 viewers

 

Combined Post Popularity

2018Top10Posts

 

Top Traffic Sources

LinkedIn

Facebook

Search Engines

WordPress

 

Audience

US

Germany

Canada

Poland

France

UK

Ukraine

Australia

Norway

Netherlands

 

I’m looking forward to getting back into the swing of things in 2019 and welcome suggestions for topics you would like to hear about. You can comment here or email me at clint.galliano@gmail.com.

 

And, as always, let me know what you think in the comments. Ask questions, tell your story.

 

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REI – Acquisition of Rental #3

This post is just a short update on REI. We had a deal drop in our lap.

122.Sagewood.FrontElev

The Deal

We were not specifically looking to buy another property immediately. As detailed in a previous post, we were working on a deal earlier in the year, but it did not work out.

 

A member of the local REIA, who is also a realtor, has been looking out for properties I might be interested in. I had given her the specifics: three-bedroom, two-bath home on a slab foundation, preferably brick façade, in Thibodaux, in a decent neighborhood.

She had showed a couple of homes that were close, but not quite right for us, in addition to a mobile home park that was just too much for us to take on. (This was just prior to my surgery)

She contacted us with a property that fit our description exactly and told us the listing price, $144,500, and to make an offer. She indicated that the sellers were motivated. I looked it over and saw that we would be looking at a similar ROI to the property we bought last year with an offer of approximately $111,300. I did not think that the owners would accept that and they didn’t. They countered with $125,000 and we countered back with $112,451 cash sale with an end of month closing as a best offer. This would give us a ROI of just under 7%, based on a conservative analysis.

We fully expected things to end there. The sellers asked for the weekend to think about the offer, so we agreed.

On Monday, they accepted the offer (to our surprise) and we began the inspection period.

We set the closing date for the first Friday in December, as this was the soonest that the real estate attorney could complete the paperwork.

 

During the due diligence period, we determined that the only things needed were to change the locks, change an over-sized circuit breaker, and some minor cosmetic work.

 

Updated: We now have it listed for rent and are taking applications. The property was rented for January.

122.Sagewood.RentalFlyer2

And, as always, let me know what you think in the comments. Ask questions, tell your story.

 

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Personal Improvement – Gratitude: I am Thankful

For those of you in the USA, I would like to wish you a belated Happy Thanksgiving. We celebrated it last week with a quiet day at home, spending time with family and adding final touches to the Christmas display so we could turn it on Thanksgiving Night.

Gratitude-is-peaceIN

Gratitude

I am going to assume that a combination of it being Thanksgiving in the US and some smart marketing by  @ajjacobs for his new book “Thanks a Thousand – A Gratitude Journey” that made the topic of  gratitude continue to appear in my media consumption. From a podcast of Jacobs talking about his inspiration to write his latest book to memes on Facebook, both expressing gratitude and admonishing for expressing gratitude one day, then scrambling for doodads on Black Friday the next.

 

It got me thinking about how if you truly embrace the idea of gratitude, it helps to relieve stress and anxiety. Where @ajjacobs takes it to the extreme to thank everyone involved in his getting a single cup of coffee in the morning, you don’t have to be that exhaustive.

Be thankful for what you have. Or don’t have. But also remember to not use that as an excuse to stop pursuing your goals.

 

I would like to know more about my readers. If you could spare about 2 minutes of your time, please take a survey to tell me what you like about the blog. Just click here to take the survey.

 

What am I grateful for?

  • My Family. Without my family, I would not be who I am or where I am today. Specifically, my wife. She inspired me to strive to be greater. She inspired me.
  • My career. I have learned many things that have allowed me to grow outside of my job.
  • My health. Yes, I have medical issues, but I am luckier than a lot of people. As a benchmark, as morbid as it is, I have lived longer than my father and plan to live longer than my mother and grandparents did.
  • My friends. They make me laugh and encourage me.

 

What are you grateful for?

 

Please comment here on the blog about what you are grateful for. I would  like to know.

 

And, as always, let me know what you think in the comments. Ask questions, tell your story.

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Automation – Data Frequency: How “Real Time” Is Real Time?

Happy Finter from South Louisiana! Fall started to show up, but winter was riding shotgun! We went from highs of 81 degrees F / 27.22 degrees C to 45 degrees F / 7.22 degrees C AND clouds and rain. Christmas light show can wait a few more days to get set up.

Today we are going to go over Data Frequency and how it relates to aspects of drilling automation. How often we receive a data point for a given channel or curve.

 

Variations on Real Time

 

Ask someone what their definition of real time is and depending on their particular needs, you will get different answers. Some people feel that getting mud report data as checks are made is real time enough to keep them informed.

Others feel that getting a WITSML 1.3.x, (Wellsite Information Transfer Standard Markup Language), data feed that updates every ten to thirty seconds will be just fine.

Then there are others who are used to seeing the rig default of data coming in every 5 seconds and that is great!

Finally, there are those who opine for sub-second data frequencies to ensure valid tracking of rig component movement and calculations.

Depending on your particular needs, any of these might be valid. For a comprehensive approach, the platform should take into account the needs and requirements for the types of data being captured. It should be able to accommodate sensors or inputs that generate anything from one data point per day down to many data points per second.

 

(Just as an aside, I really like the way WITSML 2.x and ETP are shaping up for real time data)

I would like to know more about my readers. If you could spare about 2 minutes of your time, please take a survey to tell me what you like about the blog. Just click here to take the survey.

Data Frequency

The type of data should drive the frequency of data capture, in addition to what the usage of the data will be.

Some data doesn’t change very fast, so it does not need to be updated very frequently.

Things like wellbore and drill string geometry, fluid properties, and positioning data do not need to be updated every second or few seconds. In the case of drilling fluids, Density updates every one to two minutes is a decent frequency, whereas the oil/water ratio does not need to be updated as frequently.

Other data is constantly changing and depending the particular sensor, could indeed warrant the need for sub-second frequency data.

 

A good example for that need would be block position, which is used to calculate running speed or pipe acceleration. This is, in turn, utilized to calculate tripping hydraulics in real time.

The benefit of having the ability to do this based on sub-second data allows for simulating the micro-movement of pipe in tight window scenarios…too much down hole pressure, the formation breaks down, causing fluid losses and too little down hole pressure, the formation fluids/gases come into the wellbore, thus inducing a kick.

 

Logical Assumptions & Why It Matters

 

Not all data needs to be updated at a high frequency. As indicated in the above section, data frequency depends on how often the data changes. The higher the change rate, the higher the data frequency needs to be.

The main reasoning behind this idea is that you may miss significant changes in the data if your sampling frequency is too slow.

Below is an exaggerated example of missing changes to pipe acceleration (or Running Speed) due to sampling frequency. The data is fabricated, for illustrative purposes.

 

RunSpd-1s

 

In the image above, the running speed is a straight thirty feet per minute, with a data frequency of one data point per second. Everything appears smooth, with no issues.

 

RunSpd-SSv1s

 

In this image, I’ve added sub-second data to show that the smooth, steady running speed was actually not very smooth, it just appears that way due to when the data points were captured.

 

Because this data is not captured, it is not thought to have occurred. But if you don’t have visibility of it, you can’t know it is there.

 

The examples above are made up & exaggerated to prove the point. I have seen this play out over different data points in the drilling arena.

When we were first attempting to develop the Applied Fluids Optimization service, our original software would calculate tripping hydraulics at a one second frequency, but would only capture the data at a thirty second frequency. Running speed spikes would lead the software to calculate and display large pressure variations. When we would try to show these excursions after the fact, we could not because the thirty second frequency did not coincide with the actual deviations.

One more fluids-related example: Fluid density on a land rig. Land rigs are an exercise in economy, from an offshore drilling perspective. The rig crews are smaller, so there are less people to do a set number of jobs. The mud pits are smaller, contributing to the total circulating system being smaller. Because of this, it allows for less significant events to impact the fluid properties. The derrick hand is busy? He can’t dust up the density. The shaker hand is up on the floor making a connection? He didn’t adjust the flow on the shakers. Small system, less attention, more chance for changes.

The mud engineer, (person responsible for keeping the drilling fluid running within specifications), should be running four mud checks a day. So, we should see, at minimum, four density measurements…one every six hours. When we were conducting field testing on the DRU, we noticed that we had lots of variation and excursions in the density reading from the DRU where the mud engineer’s data showed fairly smooth trends. When we overlaid the two data sets, the mud engineer’s data matched almost exactly with the DRU readings, just that it missed the excursions.

 

Takeaways

  • More frequent data helps you to better understand what is going on
  • Depending on the environment, a data curve may need a higher frequency
  • Some data does not need to be high frequency
  • Choose your data focus wisely

 

And, as always, let me know what you think in the comments. Ask questions, tell your story.

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REI – Rehabbing A Property: Flipping VS. Renting

Welcome back to me! I was out for the last few weeks due to a combination of work and getting post-surgery treatment for my thyroid.

Today, I am going to go over some differences and similarities between rehabbing a property to flip it and rehabbing a property to retain as a rental.

 

home-exterior-renovation

 

Compare & Contrast

 

What is your “Plan A” for a property in a given situation? That is probably an easy question to answer if you only flip properties or if you only buy and hold them as rentals. Some investors do both.

Ultimately, you should already know what you want to do with your property. Then work on a “Plan B” and “Plan C”, just in case your Plan A doesn’t work out.

 

Compare

 

Whether rehabbing a property as a flip or as a rental, there are a lot of things that you would do the same in either case. Getting the main home systems in working order, such as plumbing, electrical, roof, HVAC, etc. You need these systems in working order and, with the exception of fixtures, don’t need a lot of variation between the two.

Structures should be stable, rooms may need to be added, and/or rearranged.

 

Contrast

 

Rentals

When rehabbing rentals, you want to keep things functional and not too expensive. Depending on the comparable quality of the neighborhood, you may go utilize a higher-end product in a higher-end neighborhood than you would in a lower-end neighborhood.

Especially if you have multiple rentals, you want to go for consistency to normalize your costs. Have a paint scheme, flooring style/type, appliance set, and plumbing & lighting fixtures as a standard so that time will not have to be wasted on trying to decide on colors & styles during rehab and turnovers. Your contractors or turnover specialists should already know what to use.

 

Flips

When flipping, you are attempting to renovate the property to a standard that will make someone want to buy the home to live in. With that in mind, you want to add finishing touches to a flip that you would not consider for a rental. This could include things like upgraded appliances, fancier light fixtures, premium paint schemes, and so on.

All of this assumes that you have the budget to achieve this and still make money on it.

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Plans B and C

I mentioned “Plan B” and “Plan C” above, so I just wanted to touch on that before wrapping things up. You should always have an exit plan. Or two. If you are planning to flip, be ready to rent or owner-finance. If you and planning to rent, be prepared to sell.

This is kind of second nature to me coming from the oil and gas industry. It has a direct physical basis, but can be applied metaphorically to pretty much anything.

Having an exit plan means not being stuck in harm’s way. When working on a drilling rig, this has life or death implications. Never put yourself in a corner where you cannot get out of the way of something.

I learned this the hard way when loading eleven and three-quarter-inch casing onto a boat when I first started out in the industry working as a roustabout.

For those of you who don’t know what casing is, it is the large-diameter pipe used to keep the wellbore pressure in and the formation pressures out when drilling and producing a well. Each forty-foot joint weighs approximately two thousand four hundred pounds.

The crane was set up to pick up four joints of casing at a time. Additionally, we were short-handed, so I would hook up the casing on the dock, then jump to the boat to help position it on the deck of the boat so it would stack properly for the ride out to the rig.

On one of the lifts, by the time I got onto the deck of the boat, the pipe was coming towards me and I did not want to be under ten thousand pounds of steel. I attempted to get outside the range of the swing of the crane, but realized that I had no more deck because we were loading onto the stern now.

I dropped down onto the deck, sitting, so that at least if the load dropped, the railing would help stop it from crushing me. I believe that maneuver startled the crane operator and he stopped the crane rotation, thus setting the load swinging like a pendulum. He immediately noticed this and started to drop the load as it got over the deck, but the casing had started to swing back towards the stern, where I was sitting.

The casing made contact with my left shoulder and chest. Luckily, it was only enough to bring out purple, yellow, and green bruises on me the next day, but no permanent damage.

 

The moral of the story? Have an exit plan that you can execute on.

 

And, as always, let me know what you think in the comments. Ask questions, tell your story.

 

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