Tag: Personal

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Personal Improvement – Books That Have Influenced Me Recently

BookList
Books That Influenced Me

 

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Welcome back to another installment of Things I Think About! This week I am going to go over a few books that I have read recently that have had an impact. While some of them cover a mix of topics, to me, they mostly fall into one topic. Because of this, I will break them out by topic and detail the crossover topics, and why I feel that way, for each book I also have them listed separately on my Recommended Books page, HERE.

 

Business

The E Myth Revisited by Michael Gerber

This book speaks to my soul! I “read” the Audible version, (as I do most books due to my 3-hour plus daily commute), recorded by Michael Gerber himself. This book details why a lot of “Entrepreneurs” find themselves overworked, underpaid, and without the ability to grow. It is an interleaved mix of example stories with lessons explaining about each story. The main focus of the book is to explain why developing processes and systems for operating your business will allow you to employ other people to work IN the business so you can work ON the business.

 

The 4-Hour Workweek by Tim Ferriss

A young Tim Ferriss relates how he figured out how to not be locked into common misconception of the American Dream…go to school, get a good job, work like a slave for 20-30-40 years, then retire at an age where there is a good chance that you will have trouble enjoying life. In the 4-Hour Workweek, he details the concepts of mini-retirements, becoming effective and efficient in whatever you do for work, and ideas for small businesses that require little to no maintenance to support you on an ongoing basis.

Granted, as even pointed out in the book, the goal is not to be able to lay on the beach drinking mai tais, it is to free you up to do the things you want to do, including world travel, learning languages, and/or working with non-profit organizations.

This book also qualifies as a personal Improvement book, because a lot of the recommendations for efficiency and effectiveness while working have helped me to reduce a lot of stress at my main job.

 

Rich Dad’s Cash Flow Quadrant by Robert Kyosaki

This book breaks out the different classifications of people earning money. ESBI stands for Employees, someone who works for someone else to make money, Self-Employed, a person working for themselves to make money, Business Owners, owning a business & employing other people, and Investors, those who employ their capital to buy assets. It promotes the idea to be either a business owner or, ultimately, an investor, as this usually provides the best returns on time & money.

 

Personal Improvement

The Obstacle is the Way by Ryan Holiday

Ryan Holiday is a devoted Stoic. He has multiple books and a website dedicated to Stoicism. This book is kind of a manual for achievement. I really enjoy it because it basically lays out my philosophy on life. The short version is “Do what you can to change the things you don’t like in your life…Ignore the things you can’t change.” The Obstacle is the Way takes it a step further in that it guides you to figure out how to change either the situation or your thinking about the “things you can’t change”.

 

Rich Dad, Poor Dad by Robert Kyosaki

Robert Kyosaki tells the story of how he grew up a poor kid, but due to the tutelage of a friend’s father, learned to become a businessman. The book is a simple read but puts forth important concepts…assets are only assets if they will make you money, don’t spend foolishly, and educate yourself to grow. There is also a good bit of advice on real estate investment as a vehicle to become wealthy.

 

Principles by Ray Dalio

Ray Dalio is one of the richest men in the world and got that way by building one of the top hedge fund management companies, Bridgewater Associates. In Principles, he relates his lis life and how he got to where he is, developing his principles for business and personal life as an operating system along the way. This is another Audible entry where the author reads the book to you. It works.

 

Real Estate Investing

Long Distance Real Estate Investing by David Greene

While I don’t invest in real estate outside of my back yard, (for now), this book is incredibly useful as a guide of how to do things. The methodologies and techniques laid out here will work even in a local market. It’s a mix of strategies, tools, and tips to be successful.

 

The Book on Rental Property Investing by Brandon Turner

This book is a thorough primer for anyone wanting to get into rental properties as an investment. It covers everything from finding properties to rehab tips and beyond.

 

The Book on Managing Rental Properties by Brandon Turner and Heather Turner

Hmmm…the title sounds a bit familiar…YES! This is the follow-up book to The Book on Rental Property Investing. It picks up where the previous book left off and takes a deeper dive into what you need to do to manage properties successfully.

 

Loopholes of Real Estate Investing by Garrett Sutton, Rich Dad Advisor

Another Audible author read, Loopholes covers the benefits of and hazards to watch out for when investing in real estate. I have probably listened to this book at least 6 times…right up there with the 4-Hour Workweek and The E Myth revisited. Lots of great advice.

 

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

 

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Holiday Lighting – The Automation Technology Used to Run a Show

CMB-24D-Angled
RGB and AC Controller Boards

Welcome back this week. I would still like to understand what you like about this blog and would appreciate you taking this short survey. You can probably finish it in under two minutes. Just click here to take the survey.

Today, I am going to discuss the automation technology that I use to run our holiday light shows. I am using this as motivation to get moving on building additional props for my Halloween show because I have to get it built, then add sequencing to cover the new element in addition to trying to add a new song or two.

SequencingPumpkins
Sequencing View

There are quite a few options for making lights go “blinky-blinky”, but the one I have settled on to start out with is manufactured by a company called Light-O-Rama.  They have lots of options to choose from, so no matter if you are a beginner or an experienced enthusiast, they have products to get you going.

Controller-AC
16 ch. AC Controller

Controllers

There are various things you can do to make your holiday light decorations blink. The first thing I experienced was the “blinker bulb”. It was a special bulb that, when inserted into a string of Christmas lights, made them blink.

The next option that came along was lights with a special controller built into the string that gave you options blinking and shimmering. Other products were a box pre-programmed with songs and they blinked the lights in time with the music but was in no way synchronized with the music as a show. There are also LED bulb strings that change from white to multicolor to blinking multi-color depending on the number of times you press the button on the wireless remote control.

These are all options we have incorporated into our holiday lighting display along the years, with the exception of the preprogrammed music box prior to getting started with the animated light show synchronized to music.

Our first controller was a sixteen channel AC controller. This allowed us to have 16 different light show elements or sets of elements turning on and off, synchronized with music. It is able to handle incandescent and/or LED light strings.

We next added a second AC controller and a twenty-four channel RGB controller. RGB stands for Red, Green, Blue, the three primary color components of a RGB light. By varying the intensity of each component, it changes the color that the RGB element puts out. This is also known as a “Dumb RGB” controller. Since each channel controls a single color in an RGB element, twenty-four channels can control eight RGB elements.

We then added a third sixteen channel AC controller to our setup, giving us a total of forty-eight AC channels and a grand total of seventy-two channels with the RGB controller.

This year, in the off season, we added a second twenty-four channel RGB controller. The plan is to use it to control a  dancing skeleton, my above-mentioned prop I need to build.

Lights

We use a mix of incandescent, LED, and RGB lights (flood lights and RGB strips) in our show. LEDs work out great due to the low power consumption.

We go shopping on the day after Christmas each year to pick up new and backup lights for the show at a 70%-90% discount off of retail pricing. It helps to keep the cost of putting on the show down.

Cables

We initially used extension cords to hook everything up, but it started getting expensive as we added more channels, not to mention that they are bulky and heavy.

SPT1WirePlugs

We now mainly use SPT-1 wire (16-gauge speaker wire) along with vampire plugs to run power to each string of lights.

Automating the Show

Our goal, once we started using the light controllers, was that the show would be totally automated…meaning we would not need to turn it on and off every day. We also wanted to be able to have visitors be able to hear the music, but not have the music bother my neighbors.

So we added a standalone “miniDirector” to run the show and a FM transmitter.

The miniDirector has the sequences and songs saved on a SD card. When the power is turned on by the timer, the miniDirector starts running the show in a loop. It outputs the audio to the FM transmitter so viewers can hear the music right in their cars and it outputs the sequencing signals to the controller via serial connection using cat-5 cable. All the controllers are linked together in this way.

Now the show runs at the programmed time with no need to keep a separate computer running to drive it.

Well that about wraps it up for what we use to automate our holiday light show. Below are videos of some of the sequences:

Videos

This is Halloween – Full

[youtube https://www.youtube.com/watch?v=6tpE76pop3o]

Carol of the Bells – Full

[youtube https://www.youtube.com/watch?v=zzFTO-pTNug]

Dragula – Full

[youtube https://www.youtube.com/watch?v=H9ig8tNIxUc]

This is Halloween – Clip

[youtube https://www.youtube.com/watch?v=l06qcycc648?start=166]

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

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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.

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Personal Improvement – How Do You Spend Your Time?

This week I am going to talk about how you send you time and how it affects progress towards goals. This is a topic that keeps coming up (for me) from various sources and every time it does, I get more of an urge to discuss this topic here. So…here we go.
“How do you spend your time?”
Ask that question of a hundred different people and you are likely to get a hundred different answers. Some people may list every detail, others may just give a twenty-thousand-foot overview.
  • Successful people have goals.
  • Successful people have a plan to reach those goals.
  • Successful people follow a process and their processes are habits.

 

Observations of Others
In a recent blog post, Dave Van Horn talks about a speaker at a recent investing summit who asked the question “What would you do if you were a billionaire?”
The answers were some form of the three below:
  • “I would travel more.”
  • “I would focus on my passion.”
  • “I would give to charity.”

 

Dave then goes on to point out that “billionaire” status is not needed to achieve these goals, as evidenced by the speaker, (not a billionaire), only that you budget your time as you do your money to its best possible use. Don’t waste your time doing things that won’t move you forward. You can pay someone to take care of that for you if your time would be better spent being effective.
He then relates how Tony Robbins asks similar questions:
  • What is an extraordinary life for you? – Hopefully this is something that you can achieve in the next six to twelve months.
  • What is preventing this from happening already? – What story do you give as an excuse for not having achieved it already?
  • What needs to change now? – This brings it back to taking action.

 

This may sound familiar. It is similar to what I outlined in how to resolve overspending.

 

Once you have set a goal, identified what is stopping you from achieving that goal, and put a plan in place to change things your goal, things may still not happen perfectly.

Life will always throw you curveballs. Our initial reaction is to get emotional and point to all the reasons why we are failures. We can come up with lots of feelings on the subject, but in reality, over the long term, they don’t make much of a difference in the long run. Life goes on.
The way we can get through this is to put it in perspective. Learn from failure. Defeat your emotions with logic. What important things are you missing because you choose to worry versus logically evaluating the facts? Just because you are in control of your emotions does not mean you don’t feel them, just that you are taking care of business so you can deal with your emotions at an appropriate time.
By thinking clearly rather than getting caught up in emotions, General Eisenhower, in WW2, was able to determine a way to defeat the German Blitzkrieg, a battlefield strategy that involved throwing everything they had at the allied forces in a single attack. It was scary and worked in lots of battles, with allied forces so surprised, shocked, and overwhelmed by the speed and ferocity of the attack, that they just gave up.
General Eisenhower realized that the Germans were putting everything they had into the attack, leaving their flanks and rear unprotected. His approach let the Germans attack, but held groups back to flank the German attack, thus surrounding & defeating them.
Here are some quotes that reflect this approach that I find helpful:

“What doesn’t kill you, only makes you stronger!” – Jean-Baptiste Emmanuel Zorg (Antagonist from The Fifth Element)

 He wasn’t the originator but is as good an attribution as any. This means that you learn from your mistakes. Dealing with difficulty helps you to become more resilient, more anti-fragile.

“I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when it has gone past I will turn the inner eye to see its path. Where the fear has gone there will be nothing. Only I will remain.” – Frank Herbert, from the book Dune. 

 It is OK to be scared, but don’t run from it. Face your fears. Once you face your fears, they have little power over you.

“Our actions may be impeded, but there can be no impeding our intentions or dispositions. Because we can accommodate and adapt. The mind adapts and converts to its own purposes the obstacle to our acting. The impediment to action advances action. What stands in the way becomes the way. – Marcus Aurelius – Holiday, Ryan. The Obstacle Is the Way: The Timeless Art of Turning Trials into Triumph (p. 1). Penguin Publishing Group. Kindle Edition.


This is similar to the “What doesn’t kill you” quote but goes a little deeper and touches on something that doesn’t seem common these days…the idea that by facing hardship, you grow. In fact, it is the reason for the title of Ryan’s book, “The Obstacle is the way”.

Do the uncomfortable things, if it will further your goals.
Grow from those experiences, so that next time, you either know how to handle it already, or if it is a big issue, avoid it altogether.
Learn from mistakes.
Budget your time.
Budget your money.
Grow, as a person and as a leader.
And, as always, let me know what you think in the comments. Ask questions, tell your story.
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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 Improvement – Accountability to Yourself

 

This week I am going to discuss Accountability. I feel that understanding accountability is very important for succeeding in life. My grandfather told me that I have to be accountable for my actions and words when I was about 10 years old. I have tried to be true to that principle throughout my life.

After he passed away, a few years later, I figured out another lesson…that you should not rely on anyone else to guarantee your success.

The expectation was that we would all, (the grandchildren), continue in the family seafood business. I soon realized that I couldn’t depend on people’s promises to get ahead. That if I wanted something, I had to make it happen myself.

Because of my decision to take control of our future in the last few years, I started a journey of self-improvement. I have learned a good bit and implemented many of the things I have learned. Some things I was already doing, others were revelations. Below is a brief, non-exhaustive summary of what I have learned.

Be Accountable to Yourself!

Decide to Change

Nothing you want to change will change until you decide to change it. Griping and complaining about how bad a situation is will do nothing about it. Saying you will change or want to change will do nothing about it. Until. You. DECIDE. To. CHANGE.

Set Goals

Set goals you want to achieve. Things you want to accomplish. Places to visit. There are a couple of different ways to approach this. One is to take the bucket list approach. Detail everything you want to do. Tim Ferris suggests writing daily goals on a quarter-folded sheet of paper. This way, the list stays small and achievable. Whatever approach you take, remember this:

“Alice: Would you tell me, please, which way I ought to go from here?
The Cheshire Cat: That depends a good deal on where you want to get to.
Alice: I don’t much care where.
The Cheshire Cat: Then it doesn’t much matter which way you go.
Alice: …So long as I get somewhere.
The Cheshire Cat: Oh, you’re sure to do that, if only you walk long enough.”

Based on the above, unless you have a goal, you can’t really direct what you are doing. Which leads us to the next step…

Make a Plan

Once you have your goals in place, put together a plan on how to achieve them. Figure out what you will need to do, in the most efficient order you can think of. Try to mitigate risk by thinking of all the bad things that could happen along the way and have a plan for dealing with them.

Find an Accountability Partner

A lot of advice I have run across recommend having an accountability partner. Someone to express your goals to, review them on a regular basis, and help to keep you on track to succeed.

Grow! Achieve! Succeed!

All that is left to do now is to proceed…OK, it’s not that easy, but, the thing to remember is that you will run into setbacks. Things will go sideways every once in a while. Do not let that discourage you. Keep pushing forward and be the YOU you want to be. Like Mike Tyson said, “Everybody has a plan until they get punched in the face.” Learn to be resilient. Take responsibility and move forward, ever forward.

http://www.thatonerule.com/

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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Oilfield Automation: Where Do We Go From Here?

 

I was able to attend a Plenary Panel at the 2018 AADE National Fluids Technical Conference and Exhibition on the topic of Automation and Digital Work Transformations for Drilling and Completions – ‘How Far and How Much in the Low-for-Longer Market Setting?’ this week.
The format was 4 panelists from various segments of the industry, each giving about a 10-minute presentation, then the audience was broken out into groups to discuss the content of the presentations. The panelists moved around the room and listened in to each groups discussion, offering commentary.
Brad Cage, a completions engineer with Devon Energy, reviewed Devon’s path with working towards the digital transformation of their completions process. He shared steps and outcomes for that journey, resulting in a more efficient and lower cost completion.
Alan Rodgerson, a Fluids Advisor with BP, detailed BP’s progress with 2020 plan for automation. The main takeaway was that it wasn’t as clear-cut as it seemed at the outset. There is a difference between Automation and Mechanization.
Amir Bar, with Halliburton, highlighted the need for attention to the “People” side of automation and digital transformation.
Eric Griffith, with PDS Petrotechnical, discussed the need for data format standards adoption among operators and service companies.
Once the presentations were complete, the audience attendees were allowed to break into groups to discuss their thoughts on the panel’s presentations.
Those varied from a group of students recognizing the need for automation, but also concerned about job displacement to the need for accurate sensors to capture accurate data, to concerns on how the implementation of automation will impact certain jobs where there is already a gap between experienced practitioners (read: older hands) who resist technology and novice practitioners who innately understand technology but don’t yet have the experience to equal the other group.
Overall, the whole session was thought-provoking and a great session to attend.
I had many thoughts on the various subjects and concerns brought up. I will probably cover them at some point in other articles, but I wanted to cover this because it is one that I have not seen covered in-depth.
How do we transition to full automation for the jobs involved in drilling?
I have heard it said that we already are starting to transition some of the jobs with things like iron roughnecks and pipe handlers, but fully automated versions of these are not the norm. In most cases, on rigs where they are present, their actions are initiated and controlled by people. I am not sure if the cost of running a fully automated (Level 6, according to Dr.William L. Koederitz, SPE, PE) version has not dropped below the cost of utilizing people to operate them or other factors are at play. Either way, we aren’t there yet.
There are a lot of people that will say that you can never automate this job or that job, but ultimately, it may not be a matter of automating the job. It may be a case of finding a way to get the same results without having to do the job at all. Automating a manual process can be done, but does it make sense for it to be done? You can read about an attempt to do just that in this previous post.
I think, eventually, we will have at least three separate stages for moving to general use full automation in the drilling industry:
Piecemeal Task Automation
 
Specific systems will be automated to reduce risk, improve repeatability, remove the “human error” factor. We are at the beginning stages of this phase. We have auto-drillers, companies working on autonomous drilling advisory systems for geosteering, prototype systems for controlling pipe movement when tripping, based on formation limitations (There may be implementations beyond the prototype stage at this point), and there are probably more than a couple fully-automated pipe-handling equipment providers out there.
More General Automation
 
Most rig systems will be fully automated with oversight by a smaller skilled crew. The domain experts that used to reside on the rig, (relative to this phase), are monitoring operations remotely and tweaking recommendations to optimize performance, assisted by an AI advisor. Service companies will provide technicians who will do rig-up, rig down, and maintenance on equipment.
Full Automation
 
Rig is fully automated and houses no personnel. Potentially operates sub-sea, thousands of feet underwater, or even on another planet/moon/asteroid. Systems are fully autonomous and self-correcting. May not even be in the business of exploring for hydrocarbons. (We might all have backyard nuclear reactors powering everything we need.)
And, as always, let me know what you think in the comments. Ask questions, tell your story.
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