Category: Real Estate Investing

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REI: Getting Out of a REI Deal

Escape-Contract-Reject
Contract Contingencies or “loopholes” can help you get out of a bad deal.

 

This week I am going to go over how you can be protected by contingency clauses in your purchase agreement contract, specifically from an investment perspective.

Purchase Agreement Loopholes

When you sign a standard real estate purchase agreement, you have the option to include contingencies, to protect you and allow you to get out of the agreement. You can include a financing contingency, (if you need to get approved for financing), a title contingency, (in the event the title is not “clear”, in merchantable condition, and the seller cannot remedy it), sale of another property, appraisal price being equal to or greater than the sale price, no issues found during an inspection period, or pretty much any other contingency you would like to include.

The key thing to remember is that the seller has to accept these contingencies. The specific ones listed above are standard contingencies and sellers are used to seeing them. As a real estate investor, you should know that the number of contingencies could possibly affect the seller’s decision to accept your offer if there is a similar offer for the property with less contingencies.

The main contingencies to include are the inspection period and clear title.
You should have your financing in place already, to make the deal go smoothly. This can be personal cash, private money, hard money, or being pre-qualified for a loan from a traditional lending institution.
In selecting your properties, you should have a pretty good idea of the market value of the property and in pursuing the target property, have negotiated a sale price that is discounted from market price, allowing you to cover expenses and cash flow.

Utilizing a Contingency

A couple of weeks ago, I posted about making an offer on an REO property. I was excited for the opportunity to acquire this property because it was in the same neighborhood as the last property we acquired and had a couple of more amenities.

We were at the point of waiting for the asset manager to respond with the final signed contract so we could start the inspection period. We waited and waited…but did not hear anything for a whole week.
We were told to expect up to a seven day wait for a response, but when we finally did get a response on the ninth day after we submitted contract signatures, the asset manager had signed the contract two days after we submitted it. This left us with approximately two and a half days for inspections, title search, etc., and late on a Friday morning. There was no way we would have been able to get the title search completed at that point.

We exercised the contingency and canceled the contract.

Because of issues like this, I am glad I had the option to exit the deal. Some investors may not worry about the title, but I do. I have run into title issues in the past that made it hard for me to sell a property, so I wanted to be sure that the title was clear. Especially with the property being an REO property.

With it having been through a Sheriff’s Sale, the title “should” be cleared of all liens, but if a lienholder was not notified that the property was going up for Sheriff’s Sale, then their lien is still in effect.

I could have run the title search before getting confirmation that we had a contract in place but did not want to spend $500 and not be able to get the property under contract.

So, on with the property search!

Oh, if you are in the Houma/Thibodaux area and have property you need to sell, get in touch with me.

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

If you like my posts, please share them with others and subscribe to this blog.

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REI – Buying a Property While on Vacation

Yes, you can legally sign digital documents from your phone!
Today I am going to go over how we negotiated a purchase agreement for a new rental property while we were on vacation. I will summarize how it can be done and why you shouldn’t sit around waiting for something.
REO? (Not Speedwagon)
Part of my process for finding properties is to have searches set up on the various real estate websites such as Trulia, Zillow, and Realtor. They send me emails on a daily basis with local properties in my areas of interest that meet my investing criteria. I noticed that there was an REO property up the street from the last property we purchased. REO is Real Estate Owned and means that it is a property that the bank has foreclosed on and wants to get off of it’s books, hopefully recouping the money they have into it.
This property had been foreclosed on by the bank and sold at a Sheriff’s Sale back to the bank at some point prior to February of this year.  They then listed it for $98,800. About six weeks later, they dropped the price to $89,900. A month later, it was $79,900. Then they ramped it back up to $98,800 after 6 weeks, but dropped it to $79,900 about 5 days later, so it must have been a typo. And roughly two weeks after that, they dropped the price, again, to $69,900.
It was at this point that we decided to go look at it. There was no power or water service connected, so we couldn’t inspect the plumbing or electrical functionality, but we were able to look at everything.
The property apparently had doors and paint updated in recent years. The floors were mostly tile throughout, with real parquet wood floors in two of the bedrooms and damaged/improperly installed laminate flooring in the master suite. The back exterior will need a little attention along with the roof, but all in all, the property appears to be in good shape and not needing as much in rehab as our last acquisition.
The Rub
The day we looked at the property was the day before we were leaving for the week to go on vacation out of state. We did not have time in our schedule to travel to the realtor’s office and sign paperwork. Luckily, we did not have to. The offer was submitted online via a secured signing portal.
All further counter-offers were done in a similar manner either from my phone or laptop, allowing us to enjoy our vacation and still take care of business on our schedule.
We are currently waiting on the “paperwork”, but we have come to an agreement on price and are waiting for the start of the due diligence process, where we get the property inspected and look for any deal-breakers.
I will detail the whole deal in a future post, once the deal is complete and the  property is rehabbed and rented.
And, as always, let me know what you think in the comments. Ask questions, tell your story.

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Personal Finance: Saving Money Versus Saving Money Versus Saving Money

Saving Money…Maybe you should think of it as Rescuing Your Money!

 

This week I am going to cover saving money. There are many differing thoughts about this topic these days, some of which have valid points. I will also lay out my thoughts on the idea.
Saving Money – Why Should You?
Why should you save money? You can save money for an emergency. You can save money for to buy something special. You can save money for a dream vacation. You can save money for retirement. Your reasons are valid for you.
Tim Ferriss advises that you set dreamlines…goals you want to achieve and figure out how much it will cost, both per month and one-time charges, so you can figure out how to get your retirement now rather than delaying and saving for “one day”. There is also this whole part about coming up with a muse, or business idea that will provide the extra income to cover the costs of achieving that mini-retirement. The other thing is that they should be frequent.
Robert Kiyosaki says “Savers are Losers!”. His reasoning is that no matter how you are saving money, be it in a bank, in a Certificate of Deposit (CD), or in a pickle jar buried in the back yard, you are losing money, at least at this point in time, because of monetary inflation.

“MonetaryInflation is an increase in the money supply which generally results in priceinflation.  This acts as a “hidden tax”on the consumers in that country and is the primary cause of price inflation.Monetary inflation is commonly referred to as the government “printingmoney” although the actual process is a bit more complex than just cranking upthe printing presses but the effects are essentially the same.As the money supply increases the currency loses its purchasing powerand the price of goods and services increases.”

Why under the mattress, In a savings account, or In a Certificate of Deposit Costs You Money
 
Currently the rate of inflation is approximately 2%. Based on the definition above, that means that your money loses 2% of its purchasing power. If your savings account is paying 0.25% interest rate, your money in that account is losing 1.75% with this rate of inflation. If your CD is paying 0.3%, you are losing 1.7%. And if you have it in a pickle jar, you are losing the full 2.0% of purchasing power by not doing anything with it.
Ultimately, as far as I am concerned, instead of just saving money, put your money to work in an investment that will earn you more than the rate of inflation. Historically, the S&P 500 has provided positive returns over the long term, but in some years, like 2008, it had a negative 37% yield.
Overall, accounting for inflation, the market seems to average about a 7% return, but you will be advised to leave your money in the market and let things work themselves out. We have money in the market in the form of traditional & Roth IRAs, regular managed investments, my 401k, and various individual stocks that I play with (not very much).
I, personally, don’t want to devote my time to attempt to master the market.
Why you should make your money work for you
We also are investing in real estate. So far, those investments are working out to about a 9% return. Real estate has many options from flipping, to buy and hold (rentals), to lending, to investing in notes (becoming the mortgage holder for other borrowers). As stated before, BiggerPockets is the best free education on real estate investing you can find.
Additionally, we invested in a high-end door manufacturing business. It is not currently providing a return on investment, but it is improving and still self-sustaining, in addition to providing me and my fellow investors with some of the best business management lessons we have ever run across.
The bottom line, make your money work. To paraphrase the old adage, if your money is not moving forward, it’s falling behind.
And, as always, let me know what you think in the comments. Ask questions, tell your story.
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REI – How We Found Our 2nd Property

Our Second Rental Property!

This week we are going to talk about how we found our second real estate investment property. If you have been playing along, you know that our first property was my wife’s inherited childhood home that we turned into a rental.

Because I work a full-time (+) job in addition to being a minority shareholder & director of a manufacturing business, I don’t have a marketing pipeline set up to find properties. That doesn’t mean I won’t ever have one, just that right now I am moving slowly. Mainly, my wife and I watch the MLS (via Zillow, Trulia, Realtor.com, and local real estate companies) for properties that fit our criteria. That criteria is three bedroom, two bathroom houses built on a slab foundation with central heating and cooling in decent neighborhoods. We have more or less decided to focus on the Thibodaux, La area, mainly because I am very familiar with Thibodaux and Nicholls State University is located there.

We noticed a price drop for a property just outside of the city limits of Thibodaux. It is about a 5-minute drive from the university. Initially, the property was listed at $120,000. I thought that was a little high for us to buy as an investment, so I did not pay much attention to it. The price drop was $40,000, so that was enough incentive for us to go check out the property.

In looking at the pictures on Zillow, I recognized the name of the listing agent from the sign in the yard. It was the same agent that acted as property manager when I was renting a house a block or so away from the subject property some twenty plus years ago. So, I emailed her to ask about a showing. We were able to go look at it and liked the structure. While there were some superficial repairs and painting needed, structurally, it was in good shape. We estimated that we could rehab it for approximately $20,000, with a $5,000 contingency budget in case we needed to do anything else.

Below are before pictures. More of the story after that.

 

 

 

 

We put in an offer of $72,581. It was accepted and had 10 days from their acceptance to perform due diligence on the property. We immediately lined up an inspection by our HVAC contractor and a certified home inspector, in addition to requesting an estimate from an electrical contractor.

The home inspector identified some issues with the electrical panel & feed lines and confirmed that the water damage to the ceiling tile was due to the air conditioning duct work sweating and leaking through.

The HVAC contractor identified that the furnace chamber had rusted out and the whole inside unit needed to be replaced. We had the option to replace the inside portion for $4,200 or the whole system for $5,700. If he would have to come back to replace the outside portion, it would be $2,000. We decided to wait on replacing the outside unit in the hopes that we could get another 2-3 years out of it. #ThereWentTheContingency

The electrical estimate came back at just under $2,000 to install GFCI outlets by the kitchen and bathroom sinks and to repair the panel/feed line issues, with $1,500 of it accounting for the panel/feed line issues.

I mentioned this fact to the real estate agent, who then got back with the seller and they responded with a counter offer of $71,000 for the home, basically negating the cost of repairing the panel/feed lines.

Next, I lined up a title company to close the transaction. Because the property was owned by 9 surviving heirs, it took a while for claims against the title to be researched. In addition to that, closing was delayed because one of the heirs owed child support and we had to get the district attorney to sign off on allowing the sale, as long as that heir’s proceeds were directed to monies owed.

We finally closed and began to work on the rehab. While waiting for closing, we identified a general contractor to change out doors, hang & finish drywall, and lay down new flooring and trim, among other things.

We handled painting, lighting fixtures, trim in the kitchen, and plumbing. The contractor handled everything else. It took us about 3 and a half months to finish everything and another 2 months to find the right tenants.

There were a couple of things that needed to be fixed after the tenants moved in, but it has now been six months since the lease started and everything is running smooth. The tenants are under a two year lease, so we have locked in cash flow through Q3 2019 for the property.

Because we purchased all cash, we have no debt service expenses. We may look at refinancing the property in the future, but I like the idea of cash flow because my goal is to get to the point where I can live just off of cash flow.

Numbers Breakdown

Purchase Price – $71,000
Rehab Costs – $20,637
ARV (After Repair Value) – $130,000
Annual Gross Rents – $11,100
CoC (Cash on Cash Return) – 5.38%
ROI – (Return on Investment) – 5.38%
Expenses – $4949
NOI – $5041
Debt Service – $0
Cash Flow-Annual – $5,041.22
Cash Flow-Monthly – $420.10
Cash Flow/Door-Monthly – $420.10

After pictures below:

 

 

 

 

 

 

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

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REI – Analyzing a Property as a Rental

This week is a bit of a follow-up to last week’s article about finding your breakeven point. I covered what you needed to look at and why it was a good idea to know what your breakeven point was before you get into a business. Now I will apply similar principles to Real Estate Investing.

Today, I am going to go over what I look at when I evaluate a property to add to my portfolio. My strategy for real estate investing is Buy and Hold, meaning that I buy properties and intend to keep them long term, renting them out to tenants.

Cost Assumptions

For cost assumptions, I use the asking price, and an estimated cost of improvements (rehabbing property) & estimated closing costs (approximately 3% of price of property).

Finance Assumptions

Use a mortgage calculator to determine monthly debt service payment. Set the desired term (15 yrs, 20 yrs, 30 yrs, etc.), down payment, and interest rate.

Gross Rents

Gross Rents are the total rents expected to be collected on a monthly basis. This can be rent form a single-family home or a multi-family property such as a duplex, triplex, or larger apartment property.

Vacancy

To account for vacancy and deduct a percentage from your gross rent before deducting expenses. I generally use a conservative vacancy percentage like 10%. While I will more than likely not  have 10% vacancy in a year, accounting for it helps me to ensure the  property will always  cash flow.

 

Expenses

So, once I have a property to analyze, the first thing I do is verify the expenses. For the most part, the costs should be relatively the same, with the exception of property taxes.
I account for the following expenses:

  • Property Taxes
  • Insurance
  • Maintenance & Repairs
  • Utilities
  • Advertising
  • Administrative
  • Variable Cost Property Management
  • Lawn Care / Landscaping
  • CAPEX

Property Taxes can usually be found on the local parish or county assessor’s website. You just have to search for the property address and all of the details for the property are listed. Who owns it, what municipal assessed value is, what the property has sold for, and what the city and parish/county taxes are estimated at for the current year.

Insurance can be estimated by getting a quote from your insurance agent/provider or if you have a similar property, you already have an idea what the cost is.

Maintenance & Repairs covers anything short of replacing major components of the property.
Utilities are what you expect to pay for utilities while doing turnover or when the property is unoccupied between tenants.

Advertising is the costs for paid advertising to attract tenants.

Administrative are the costs for anything administrative to do with operating the property as a rental. This covers book keeping, accounts payable, accounts receivable, etc.

Variable Cost Property Management is a percentage of gross rents paid to a property manager to manage the property. I account for this as an expense even though I manage my own properties so in the event I decide to engage a property manager, I already have that cost covered and don’t have to worry about adding a PM cutting into my cash flow.

Lawn Care/Landscaping covers grass-cutting when the property is not occupied and/or if the property is a multi-family property where the tenants don’t normally take care of the lawn.

CAPEX is an amount put aside to cover major repairs such as replacing the roof, appliances, flooring, plumbing, electrical, etc. That way, you have the money to cover these repairs instead of worrying where to get the money from.

 

 

The Analysis

Once I have gross rents, vacancy, cost assumptions, and expense values collected, then the analysis of the property can begin. I use a spreadsheet to conduct my analysis and it is set up to tell me what I need to know. There are inputs for all of the items listed so far.
I enter the asking price, my desired finance terms, estimated gross rents, and estimated expenses.
I then evaluate whether or not my targets are met at the property’s asking price. If it does not, I then start adjusting the price downward until I reach my target numbers.
For me to consider a property a good deal, it must meet the following criteria:
Cash flow >$100 per door and have >12% Cash on Cash Return, if financed
Cash flow >$400 per door and have >6% Cash on Cash Return, if purchased cash
Be in a decent neighborhood

Cash Flow
Cash Flow is the amount of money from gross rents (revenue) remaining after expenses and debt service are covered.
Cash on Cash Return 
Cash on Cash Return is the annual amount of return you get compared to the amount of cash you spent to acquire the property.



By comparing gross rents, total costs, expenses, debt service, and returns I am able to decide if a property will be a money-making addition to my portfolio. By continuing to add properties to my portfolio that cash flow, I get closer to my “Freedom Number”. Where my passive rental income covers my personal costs and expenses, so I don’t have to worry about needing a job.

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

If you like my posts, please share them with others and subscribe to this blog.

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REI: Kick Yourself in the Ass Gotchas

Image from US Patent #6,293,874…”User-operated amusement apparatus for kicking the user’s buttocks”

Today I am going to cover some things that we experienced last year while rehabbing a house acquired to become a rental.

This was our first acquisition, so I wanted to be thorough in analysis, planning, and execution. I had a home inspector check for problems with the house. He checked the electrical, cooling, foundation, plumbing, water heater, and roof. Issues were pointed out with the electrical, gas valves, air conditioner ductwork, and a couple of other minor things.

I brought in the following for estimates:

  • An electrician to fix the issues pointed out by the inspector and to add GFCI outlets near the sinks.
  • A plumber to replace supply valves & faucets in the kitchen and bathroom, gas supply valves for the stove and water heater, and to re-route the overflow drain for the water heater.
  • A HVAC contractor to replace the ductwork.
  • Multiple contractors to bid on the rest of the rehab stuff.

I thought I had things well covered. I was wrong. The first shock was that we had to replace the whole interior HVAC system. The furnace part was rusted through and a fire hazard. That wasn’t too bad, as we had a buffer in our budget for overages and $4,200 wasn’t going to kill it. (That price did include replacing the duct work.)

The next surprise was after the first tenants moved in, they attempted to wash clothes and the washer drain overflowed into the utility room. A phone call to the plumber and a day of trying to unclog the drain, it was determined that years ago, when the neighborhood was converted over to municipal sewerage, the original owners never bothered to tie in the utility room drain to the main drain line and just left it connected to the main field drain in the back yard, which had since collapsed, thus restricting flow and backing up into the utility room. Add another day for the plumber to route a drain through the wall and across the back patio (most likely the condemned septic tank) and tie it into the main drain line at a total cost of approximately $700.

Caveat: We will have to eventually add a full drain line underground tied into the main system. 

#SilverLining: We will now have the drain necessary to convert part of the utility room to a half bath at some point, increasing the value and desirability of the property.


At one point, the original owners of the house upgraded the windows to vinyl double-paned glass. In doing so, there were gaps in between the windows and the sill in some rooms. I notice them, but in triaging everything that needed to be done, they kept falling to the bottom of the priority list. And, they never got done. Additionally, we kept finding wasps in the room where the gaps were the biggest. It seemed unrelated. The tenants actually correlated the gaps with the wasps continuously appearing in that room and asked for me to fix it. It didn’t take more than some expanding foam and caulk, but, like the other items listed here, I should have recognized the issues and fixed them prior to the tenants moving in.  Total cost for the fix: about $25.

So, for the next property we purchase, I will make sure that we check all drains for restrictions, ensure all trim are sealed, and plan to continue to have the HVAC contractor evaluate the heating & cooling system. This will help to save extra work that we did not budget for and aggravation for us and the tenant in getting the issues mitigated.

If you have rental property, have you run into things like this? Let me know in the comments below.

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

If you like my posts, please share them with others and subscribe to this blog.

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Real Estate Investing: Getting Scammed by a Contractor

Actual picture from one of our properties.

One of the last things you want to do is to get scammed as a real estate investor. It will happen if you are not prepared and do not have systems and processes in place to keep you from getting scammed.

Story Time

When we decided to turn my in-laws house into a rental, we started to look for contractors to do the rehab on it because I was too busy with work to do it myself (and I wasn’t that great at what was needed anyway).
We asked around on Facebook, but didn’t get a whole lot of suggestions. A friend of a relative could do some of it, but we wanted to get someone to do all of the work.

My wife heard an advertisement on a local radio station for a home improvement contractor, so we called him to get a bid. He gave us a fairly cheap bid and said he could start working immediately. We decided to use him. (Mistaken Thinking #1: Since he was advertising on the radio, he must have been a legitimate contractor.) He told us he was licensed and insured, so we believed him (See mistaken Thinking #1). He then asked for a 30% down payment to be able to purchase materials, so we paid him the down payment. (Mistaken Thinking #2: It’s OK to pay a down payment before work starts.) After six weeks of no work being done except removing the one piece of baseboard and shoe molding in the picture above, in addition to him coming to us for additional material draws (that we paid), we finally realized that he wasn’t going to do the work.

We suspected something was up after four weeks, but didn’t want to believe it. Thankfully our state has a contractor Fraud law and between our complaints and complaints of other victims from surrounding area, there was enough to arrest him. He made a plea deal and has paid back almost half of the money he owes us.

Tips for dealing with contractors:

  • ALWAYS VERIFY their state-issued contractor’s license! Your state’s Contractor Licensing Board or a similar entity should have a way for you to verify that the contractor’s license is still active via a website.
  • ALWAYS VERIFY their Insurance Certificate! Call the insurance company and/or agent to verify. These days, anyone can create counterfeit insurance certificates online. Their insurance protects you if one of their employees gets hurt on the job.
  • Check references. You usually will be referred to contractors by other friends or investors who have used them before and can vouch for their work.
  • Sign a contract that details the following: (Disclaimer-I am not a lawyer & I don’t play one on the internet…always check with your own attorney!)
    • Scope of work to be performed
    • When the work will start
    • How long the work is expected to take
    • What milestones need to be achieved, satisfactorily, to qualify for a draw
    • Check on the contractor’s work frequently to ensure timely completion

We eventually found a really good contractor who came in and rehabbed everything in the house for us in about a month for a really good price. And we have been renting out the property ever since.

Let me know what you think in the comments. Ask questions, tell your story.

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Online Workflow Automation

Left: Manual Process; Multiple queries to multiple parties.
Right: Workflow Automation directs processes smoothly.

A couple of weeks ago, I was looking into tools to help automate workflows, preferably online tools. My initial premise was that I wanted to be able to track steps, tasks, and procedures in our real estate investing.

Some of the tasks can be accomplished by the popular IFTTT service. But what I have figured out is that the majority of what you are able to do with IFTTT is geared towards personal convenience and not business processes.
Initially, I was looking at Microsoft Flow, an online workflow automation tool, but while investigating some the connectors for it, I found some built-in integration capabilities already exist in services like Trello and Slack. So, deeper down the rabbit hole I went.
I was able to set up a Slack workspace and that in itself is a pretty cool tool for facilitating and capturing communications, documents, and other business-related information,in addition to being able to tie in to my G-suite Docs.
I mentioned Trello above. I had looked at them in the past, but had not really found it useful for what I was wanting to do, at initial glance. I also remembered that the manufacturing business we invested in uses it to track orders and everything related to the orders. I contacted the investment partner who had set it up and asked him to explain how they were using it.
It is set up like a Kanban board and as each task or set of tasks is accomplished, it is moved to the next stage in the order process. What I don’t like is that it is not automated. Each “card” (where the order information and communications are captured) is moved manually from one column to the next when someone accomplishes a milestone in the process.
A similar service called Pipefy appears to provide the same Kanban-style setup, but it looks like you can set triggers for the cards to automatically advance from one column to the other. Since I just found it as I am writing this post, I don’t have time to investigate yet, but it looks pretty powerful. I think it has the potential to claim a spot in my workflow automation toolbox.
Anyway, I can visualize building out steps the process across the columns and have each card contain the tasks needing to be completed before it moves to the next column.

The more I thought about this, I realized that by combining Slack with something like Trello for the manufacturing business, we could achieve a few long-term goals. Trello actions could be reported into a Slack channel, giving us, (investment partners), a simulacrum of a real time dashboard of what is going on with orders in the manufacturing business. A similar setup could be made for product quotes. Slack channels could be used for communication between employees, management, and investors, respectively. Other channels could be used for Knowledge Management (KM)…a living archive of answers, best practices,documents, etc. I think I will call that channel #stunt_brain!

There are other options for automation and integrating various online applications like Podio, Zapier, and Zoho CRM. I haven’t played with them much, so I can’t really say a whole lot about them other than they exist.

Hopefully this has given you some insight into what I thought to be cool tools to bring efficiency to your workflow.

Let me know what you think in the comments. Ask questions, tell your story.

If you like my posts, please share them with others and subscribe to this blog.

 

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Real Estate Investing: How We Started Out

Like the game Monopoly, you can grow your money with Real Estate.

This week, we are going to talk about how we started investing in real estate. It wasn’t an overnight decision, or result, for that matter.

My first foray into real estate investing (REI) was to partner with one my uncles and my cousin (his son) to develop an RV park in the Port Fourchon area. It seemed like a great idea…lots of potential for revenue and extended development. And I knew nothing about evaluating the deal to see if it was going to be a money maker or not. I put up the money to initiate the lease of the land ($20,000) and we proceeded to get a loan from a local bank to develop the park. We had to get permits, evaluations, inspections, etc.  The total amount from the bank came to $150,000. Just as the park was about to open, the BP Macondo/Deepwater Horizon oil spill happened and shut down the oil & gas industry in the Gulf of Mexico. The space was leased to a catering company as a staging area for feeding spill cleanup workers and to facilitate a training space.

We eventually opened up the park and began operating. My cousin and his wife managed the operations.

I began traveling around the world a good bit for work and realized that I could not be deeply  involved in the deal in addition to my wife not being happy with me involving us in it in the first place. My cousin offered to buy us out for $30,000, paid over time. This worked for us as it got our  money back, along with about a 17% total ROI.

While the deal made us money, the stress and aggravation of not being in control left us with a bad taste in our mouths.

Fast forward a couple of years and we decided to remodel my in-laws’ home to set up as a rental. My father-in-law passed away the preceding year, leaving the home to my wife. We got it remodeled after a few false starts and bumps in the road. And started renting it out.

I mostly stayed hands-off of the operations and mainly just helped handle repairs & stuff, since it was my wife’s house (via inheritance).

Towards the end of 2015, I started to get aggravated with my job, (for the nth time), and started a more serious search for something else that I could rely on for income. In January of 2016, I found Bigger Pockets, an online forum/educational platform for real estate investors. It was then that I realized that REI was something that I could do. In fact, in a way, we were already doing it. The thing that appealed to me about it was that successful investors rely on systems and processes to make their businesses run well. WOW! I am a “Systems & Processes” type of guy! It was an epiphany, of sorts.

I started listening to podcasts, devouring forum posts related to my topics of interest, attending real estate investor association meetings, and reading books to learn about how to reach my financial goals through  REI. I put together a 30,000 foot overview of what I would like to do and how I could do it. When I discussed my idea with my wife, she was initially skeptical because I repeatedly come up with plans to make money and either never initiate them or follow through on them.

I continued to learn about buying and managing rental properties, along with operating a business. I became more involved in the operation of the existing rental, more or less making it my responsibility.

So, that is how we got started in REI.

Let me know what you think in the comments. Ask questions, tell your story.

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On Achieving Goals or How Much Is Enough

“Everything we see hides another thing, we always want to see what is hidden by what we see.” -René Magritte

What is your goal with regards to financial stability? Do you want to be “a millionaire”? Do you want to be considered one of the richest people in the world? Do you want to retire early and follow a passion, such as world travel or support a volunteer organization?

Or do you just want to get to the point of being able to live comfortably and not have to worry about worrying? (FYI, these are not rhetorical questions. I really would like to know your goals)

There seem to be several ways of looking at this and all seem to contradict each other in some way, shape, or form.

Having the goal of becoming “a millionaire” is either not a good idea (according to CNBC) or highly dependant on your goals and specific situation (according to Kiplingers). TL;DR – Lot’s of factors to consider.

If becoming one of the richest people in the world is your goal, there is a pretty good chance that you already are there. If you make more than $34, 200 per year in income, you are already in the top 1% of the world’s wealthy. If you are looking at Net Worth, you need to have a Net Worth of  $770,000 or better to be in the  top one percent of the wealthiest people in the world.

For those of you who want to retire early for travel or whatever, it is possible with a little effort and strategic thinking. Or, better yet, take the Tim Ferriss approach and set yourself up to take multiple mini-retirements starting now.

I kind of like the Tim Ferris approach and want to achieve that one day. And we are working towards that goal. In fact, I would venture to say that we are almost there.

I have worked most of my life with the goal of getting to this goal or that goal, then everything will be: easier, gravy, much simpler. But  this past year, we had a revelation…over the last 15 years or so, every change in situation at work or uncomfortable conditions to be endured were rationalized by saying “this is only temporary and when I achieve “X”, things will be much better!” The revelation was that every time “X” was achieved, a new “X” would take it’s place. It’s a continual cycle of expanding goals.

Not long after realizing that this was continually happening in my work life, a speaker at a REIA (Real Estate Investment Association) that I attend in Lafayette, Louisiana covered the topic “Freedom Number?…Check! Now What? Albert Pellissier basically pointed out that you don’t need to be on a continuous roller coaster of “Striving for ‘X'” and spend more time with your family, enjoying your life.

That is what I intend to do. I also want to share tips, tricks, and ideas, through this blog, with all of you, to help you achieve your goals.

Let me know what you think in the comments. Ask questions, tell your story.

If you like my posts, please share them with others and subscribe to this  blog.

 

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