How to go full time into real estate!

I really love real estate and I've been brainstorming up ways to go into real estate full time. By full time, I mean doing nothing but rentals or flips, which in my opinion, both are required. After opening my new computer store and staring at the walls most of my day, I realized I really miss working on my rental property. The feeling of building equity, creating positive cash flow and the reward of improving a property and getting the praise from neighbors, etc is all stuff that makes me tick. Then to see the money come in over and over again is reassurance that you did the right thing.

Now bear in mind my method here is not personally tested, and my market is different than your market, that I can assure you. But I think the theory is sound. Here it is: You find deals where the houses need quite a lot of work, and the kind of work that you have expertise in. Essentially houses that are semi trashed out, but structurally solid. Then you borrow enough money to pay yourself a frugal salary and enough to cover the repair materials. This gives you a salary allowing yourself to work on a property full time and get it done, and get it cash flowing.

Around here you can find abandoned or near condemed houses all over the place. Find the owner, ask them if they would be interested in selling. An unrented house is just a liablity not an asset. And most people have intentions but not the will or desire to take action on it and turn a liability into an asset. Here is your golden egg waiting. So you buy dumps for basically LAND value if not less, and then put your hard work into it the key here, is that your loan still cash flows in the end.

If your credit is not so good, then you'll have to find sellers who will finance your deal on a land contract. Essentially you will make the payments right to them each month, and will act as owner of the property. Legally you will be the owner as long as you make your payments on time. Not everyone will do a land contract, but this is where you stress the value. You will turn something from negative cash flow for them into positive cash flow. If the place is trashed and you are improving it, they really have nothing to lose and everything to gain.

To avoid ever increasing debt, you'll need to sell every 2nd or third one you buy and repair, and then pay down your loans. This reduces your risk and will hopefully put some cash in your hand, allowing you to borrow less on the next deal, and eventually be operating mostly from your own cash.

Now here's how my market is different than your market. Cost of living here is cheap, and you can buy distressed houses from 5000 to 15000 dollars here. In this example I would buy a house for 10k, that needs 3 months of work, which would I would pay myself a frugal salary of 2500 a month, which totals 7500, and then that leaves 2500 for dywall, paint, carpets, etc. As long as I hit my deadline of 3 months, I can then move on to the next deal and keep going. On a 20k loan for 15 years the payment is about 175 dollars a month, and around here tax and insurance will be about 50 a month, and most houses rent for 400-550. So this method would allow for you to cash flow at least 200-250 and get paid to do the work.

Remember the key here is to not get in over your head and buy a house that needs too much work or money spent on it. If you haven't renovated a few places yet, keep your day job and maybe pay yourself a little using my method. Its nothing new either, I know others who flip houses this way, but I'm taking into the rental market, and my method is geared towards people without a lot of financing power but who are willing to work their way up the ladder.

Diversification for the win!

I'll be the first to admit, I was scared shitless opening a new computer business. I should have done it when I had solid contract work earlier this year, and by now I'm sure it would have been rolling along fine. But who can forsee a layoff?

Anyhow I seem to be getting more customers all the time, nowhere near enough to make ends meet, but I must have seen at least 6+ different people come in this week, sometimes two a day.

I do plan on doing more real estate as fast as humanly possible. Hopefully I can do a flip this winter and borrow enough cash to fund my work on the home. Talk about simply creating your own job! As long as it sells for a profit that is.

I applied at a good 10 places yesterday in the game industry. If I can land some contract work I'd be set.

I guess my main point to this post is I've been sitting in my basement for about 3 years now, doing games and I am thinking about all the money I left on the table, had I simply had an office with a computer repair sign on the window. Sure it would have detracted from my goals to have a rockin game studio, but I think I could have built a steady solid business in that time as well. But hind sight always bugs me. I am learning to ACT NOW. Its one thing to have a great idea, but its another to act on it.

I'm just hoping I can pull this all off without having to take some dumb job as an employee somehwere. Not that I'm against jobs completely... but around here the wages and jobs are junk, so it would be a complete waste of my time and I'd hate it, so I pray every night for some success to come my way.

If I had the bank credit I'd just be doing flips and buying rentals, etc. So I ask people to invest with me but most are too scared, etc.

I just look forward to the day where I can consistently flip houses for good profits, have rebuilt my credit, my computer store is making good money, and I can make some games of my own I'm proud of, and then be able to hire some good people.

HIRE ME!

If you are looking for a hard working, passionate contract artist, I'm your man. Check out my updated gallery. If you know of anyone looking for some help, give me an email: joel@4drulers.com

http://www.4drulers.com/gallery.html

My true calling?

Don't get me wrong, I love games. I loved cars too at one point, loved many girls, loved all kinds of things, but the fact is, unless you feel like you are progressing, you will not love it forever. I had my own auto body shop and did alright with it back in the early and mid 90's but it seemed like I was peaked out, and after enough shitty customers who complain about the dent in the right back door when the car was hit in the front left bumper you start to wonder why the hell you are here.

So I got into games. I loved games. My love for games was undying, invincible. I'd make games the rest of my life I thought. Until massive stress from working 16 hour days, nearly 7 days a week for 8 years straight rewarded me with divorce, bankruptcy and many heartaches. Even then I plodded on another 4 years, and still have some waning dreams of running a successful game biz. But for the LIFE of me, I cannot invest a single mouse stroke into a piece of art, or a playable demo, or a sweet design document, all the things needed to get published. I just can't do it. I FEEL like it would be a waste of time because it takes a monumental effort to get a marginal deal.

Early August I got laid off. I had just bought a rental property that needed a lot of renovations, so I just worked on it full time as fast as I could to get it done and get it cash flowing. I actually really enjoyed the whole process. Is it because I really enjoyed eating drywall dust, crawling in a 120 degree attic to do wiring, or getting slivers and cutting my fingers or scraping my leg pretty much daily? No. Was it because I felt some kind of reward for making some rotted house look sweet again? Maybe a little, but No. Was it because I felt like I was finally on the path to financial freedom? BINGO!

Why am I obsessed with being financially free? I've had boatloads of money in the bank before but it didn't feel that great because I knew the game industry would fall through again, leaving me broke eventually. Its more of a feeling of being stacked, and being able to stay stacked that makes me feel good. Its that feeling of security, and control, and most of all IMO, the feeling of PROGRESS which compells me to get up and do construction work, wiring, plumbing, whatever it takes, I will do it. I don't care.

Bodybuilding taught me to do things wether I felt like it or not, in order to succeed. Yet with games, I applied that discipline, and it didn't pay off for me. Projects fail, people get laid off, I guess that is the nature of the business. I guess I don't like that nature. I want to build something that lasts, and I believe that my true calling is real estate. I want to make good money, and I think I can do it with real estate.

I know for a fact I can flip houses, even in this down market for some good profits. This would help fund my dream of building a lot of rentals, which would ultimately give me the ability to do whatever I want, which might just be making games again. But only after I can afford to hire 10 people full time to work on a demo that kicks ass. Anything less is just insanity and won't have it.

So I think my true calling is going to be real estate. I like making deals, and I do enjoy fixing things. I'm good at it. Eventually I want to be making games, but I think I need a lot of passive income to do it right, so to me its more logical to focus on real estate to get rich, THEN try games again. Or at least get to the point where I don't have to worry about money and could work on some game projects.

Building your real estate portfolio with nothing down

No Money Down?
A lot of you real estate wanna be's who keep saying or thinking you can't get into real estate because you have no money, or have heard about these "no money down" deals but don't know how to do them, well listen up. I've got a treat for you tonight.

Creative Financing
Creative financing is simply this: You make an offer that simply gets the deal done, doing whatever it takes to make it happen. You trade, wheel and deal, offer them deferred payments until it's cash flowing, you can offer your trade service to cover the down payment, maybe even trade the whole thing out in services. This lowers the cost of the house, and thus reduces capital gains for the seller, which can be attractive, provided your services are of high value.

For example, if you are a handyman, go find a landlord who has a lot of houses. Chances are they need some work done on their homes, and they might be willing to sell some of their properties on contract. So you trade out the down payment in sweat equity or hard work for them, and then buy the house from them and they act as the bank. You make payments to them directly just like a bank.

Just remember to have positive cash flow
The rule to every deal is positive cash flow. I've read all these formulas in various books, where you add up the net operating income after PITI and calculate vacancies and all this other mumbo jumbo. To me, a good deal will cash flow at least 50%. So if your total rent is $500, you'd better be making at least $250 a month after all expenses. Otherwise its just not worth it in my book.

Creative loan structuring
Lets say a deal only cash flows 25%. There are ways to restructure a loan so that it can cash flow better. Either go longer on the term, or have a balloon payment at the end, or throw in sweat equity payments along the way. Trading is good because you don't have to pay income tax on trades, and the seller doesn't have to pay capital gains on trades.

Why would anyone sell a house on contract?
There are a lot of reasons some people will. For one, capital gains taxes. If they don't have a 1031 exchange lined up, they might have to pay a ton of income tax. If however, the payments come in montly installments over 10 years or so, they don't have to pay much taxes. If they sell and make a big profit, they might have to give up a huge chunk of it. For someone retiring or just wanting more monthly cash flow, selling on contract is a big plus.

Another reason people sell on contract is often they might be overpriced. No offers came in to buy with a bank, etc. So selling on contract is a way to get out from a burden for them. If the buyer flakes out, they get their property back, and in many cases they don't have a lot to lose.

Not every seller will be in a position to sell on contract, in fact probably only a few will. But it never hurts to ask. You just might find some good deals that didn't work for anyone else by doing it this way. I've read you can even sometimes make an overpriced deal work by offering 0% interest. They get their asking price, but since you aren't paying interest it could be worth it in the long run for you to buy a property this way.

Residual income to the rescue!

The more I work for money the more I want to work for residual income. Today I got my first direct deposit rent payment, and it was totally awesome! I mean how can you beat logging on to your bank account and seeing passive income desposits you didn't even have to make? I love real estate, and if I had my way I'd just do rentals but it takes money to pay the bills and to save up down payments to buy more houses.

I just can't wait until the day where my rent checks could cover my bills and then I could go do it full time. Or even flipping houses would be great too. But that is pretty risky with the current market and economy.

I'm thinking of buying a new house that would be half the cost of my house now, simply because its 3x bigger and I'd move in with my girl friend, and with her kicking in for part of the expenses, my monthly cash flow would probably go up about 500 a month. Thats a new house every 10 months right there, assuming 5k down will get me another rental. Not to mention I think I can sell my current house (after remodeling is finished) for a solid 25k of profit. So that would buy a few more and pay some loans down and put me a lot closer to my real estate goals.

Honestly thats all I think about, building passive income. I think I'll start ebaying crap I've had forever just to get more down payment cash :)

First day of new business better than expected

Well today I started up my new service business "That Computer Guy". I got two customers and made nearly 100 dollars. I'm pretty happy considering I've done nothing but get a vinyl sign on the window, and I'm not even set up yet.

Winners are the ones that do the things losers are uncomfortable doing...
The day started off feeling weird. I guess whatever you are used to, anything other feels alien. Like when I started working on my fence earlier this year, it felt really weird because I was used to doing NOTHING but game development. I remember feeling a little overwhelmed at first, like what am I doing, this is nuts building 200' of 6' privacy fence with no power auger and no real experience, lol. But after a few days it felt normal. Then I rolled into my rental house, and it felt a little overwhelming too the first day. But once I got my hands dirty and stuck with it, it soon became the new norm... What got me through it all is the saying I read somewhere that winners are the ones that do the things losers are uncomfortable doing. Winners are uncomfortable too, but they simply do it and stick through it.

Then today I'm in my new/old shop and its a disaster, with stuff everywhere and nothing organized. So I felt a little overwhelmed, but remember how that's normal and I picked up a saw and some lumber and put together a nice wall mount bench table to work on systems. Then a customer came in and I went to her house and fixed up her computer, and then pretty much was crazy busy the rest of the day working on organizing and painting my new shelf, and dealing with another customer. My point is that I guess its normal to feel a little wierd doing things you aren't used to, but as long as you just stick with them before you know it everything feels normal.

Do what it takes... face the truth
Whats is happening here is simply amazing. I'm starting to think that the do what it takes to make it mindset is king. I mean, I have sat and thought about doing this for years, but now I finally do it and its just too easy. I guess I wanted to just work on games, but getting work in the game industry is pretty tough... or is it? I wanted it to be easier, I felt I deserved it, but honestly life or nature has a way of sorting out who deserves what. Deep down I know my portfolio sucks, my attitude about the game industry sucks, and I let some bad things give me a bad attitude. I'm starting to believe that once I rock out a sweet portfolio, and do what I KNOW in my heart needs to happen, I'll have all the game work I could want. I guess its difficult facing the truth sometimes, but once you do it sure is empowering.

The reason why you succeed

Wow, I'm not even open yet at my new store "That Computer Guy" and I've already done two paying jobs. Craigslist comes with some spam and crap, but generally it delivers! I'm beginning to wonder if maybe the secret really works, but you have to completely believe, basically like the bible says about faith. I'm talking about my struggle in the game industry here. I have the golden touch to service businesses. I can rent a place, throw a sign up and be making a good living over night. I've done it countless times. Thats how I got the money to make Gore and start 4D Rulers. I had multiple successful businesses and the bank believed we could do it. I believed we could do it.

Whenever I believe something, it generally will happen. Like the time I believed I could leg press 800 pounds. I never really beleived I could do it though, until I hit 790! Then I knew 800 was possible and believed I could do it, and did it. When you disbelieve, you are automatically defeated. So generally if a man thinks he can or can't do something, he is right. Deep down I don't believe I can make a successful game unless I have funding and a team. I never doubted real estate, and I am still relatively new to it, but my first deal went flawless and its now making me money. I don't doubt my ability to fix computers and provide multiple services and do it better than anyone else in town, so I am confident that my new store will be a complete success.

So why can't I get that attitude about games? Its because of my beliefs. I had more power 12 years ago than I do now. Its because I believed. The only reason Gore didn't make us all our money back was because the bank pulled the cash flow plug before we were done. That immediately forced us to get a deal, and then that deal forced us to ship before it was "ideally done" and then thinks just didn't pan out from then on. We were constantly shafted because we never really believed we could do anything cool after that. We knew when we signed on to do SS2 that it was going to suck because you can't make anything good with brand new tech in 5 months. It was suicide but it bought us some meals. Ultimately though, that decision and a few others cause a lot of grief.

I am starting to change my attitude about games. I am starting to believe again. Its all because of other areas in my life being successful again. My new investments and new businesses are going to rock and grow. That stability will then give me new posture at the helm of 4D Rulers, and I'll never NEED a deal again. Then I think I can carefully make the right moves which puts us back on track and turns 4D into a growing company again, that produces its own titles. If not, at least I'll most likely be a member of the 6 figure income club again if I continue investing in real estate and build a successful service business and retail store.

Ick, I'm sick

Well what the hell. Just Sunday I think it was 90 degrees and humid. Yesterday before I went to bed the temp was down to 43 degrees. I don't get it, but that is Nebraska for you. I think the abrupt change of weather has made me sick. I've got a runny nose and cough. Mostly its the runny nose causing the cough, but whatever. I went and worked on my rental house today regardless. Hauled the fridge and stove out, the tenant had their own. I also am nearly finished with the siding project, and I should be completely done with one more day's work on the place.

It will be nice to get all done and put the tools away. My next project is probably going to be overhauling my new office at work. I want to re drywall everything and put in recessed lighting, paint, crown mouldings and then wood floors, but I don't think I can afford it ATM, so it will have to wait until I crank out some work and start making some money.

The power of passive income. Wow, I love this stuff. The thought of working for money pretty much makes me vomit any more. Well not really but I get excited building things and watching them grow. The more passive income I make, the more I want. I'm only going to work, in order to further my passive income. In other words, I will work to pay the bills and make more money to re-invest into real estate. When you think about it, I worked for roughly 2 months full time on this last rental house. I make about 250 a month after PITI. Over the next 10 years it will generate 30k. Minus my down payment & repair costs I put into it, that leaves about 24k of profit. That means I basically made 12k a month for my two months work. Not bad at all. Impressive TBH. Then in 10 years the place is paid for, and my profits will rise to 350 a month and over the next 10 years it will make 42k. Thats if I don't raise the rent, and if there are no repair costs. Of course there will be some, but overall I think the potential here is insane. I didn't mention the tenant building me equity, since their money pays back the bank.

So if I keep the place 20 years, I estimate the property to be worth 30k today, and with a 1% annual increase in value it will be worth 36.5k in 20 years. So if I keep it 20 years and sell it, I will make 24k + 42k +36k if all my math checks out, which is 102k total revenue earned. Thats amazing for 2 months work and 6k invested. Working 2 months at a job will pay you about 8-16k depending on how much you make for a living.

Then when you consider that this extra cash flow allows you to make more investments faster, or bigger better investments the snow ball effect kicks in and that is how millionaires are made. I mean if 6k can make me 250 a month cash flow, it stands to reason that 60k can produce 2500 a month. The more cash flow you have, the bigger and better investments you can make. So really I have no clue how big and great things can get down the road yet, but I can only imagine.

Long story short is I love real estate. It seems like the best way to become rich. Its a for sure thing, provided you work within certain parameters. I think most people would crumble though, fixing up a trashed house. Its a lot of work, and it can get old after a while, and if you can't keep going despite all things, then you could end up spending a lot of money or losing many months rent because you can't finish it. The other way is to buy places ready to go but you'll pay a premium for them, and won't cash flow. Or if one thing goes wrong your in financial trouble. Or if you lose your tenant, the payments would bury you. Thats why you buy dumps for nearly nothing and bust ass on them. This way you have instant equity when its done, and you get the deals noone else sees.

It would be nice being one of those guys you see on tv who don't get dirty, they just hire contractors and sit back and watch the progress, but TBH I can't see making any money that way. Its too risky and I don't really have the banking power to do it that way. I like fixing these places up. Its like they are your little kids you built from the ground up. Your little soldiers working for you after you trained them and made them sweet. I like to look at it like a game where its Monopoly but everyone can win. I've got my first little baltic avenue up and running and I love it.

Moving forward

Today I looked at my next potential rental property. It's a duplex that needs a bunch of work so I'll get a good price on it. One of the old tenants up and left so there were a bunch of personal belongings left behind. In a closet a book caught my eye, something by Billy Graham with one word that was really big and it said HOPE. Suddenly I felt a huge rush or chill run up and down my spine, but the good kind where you feel the power of God or whatever rush through you.

After 12 years of ups and downs in the game industry, I've turned to real estate and soon a conventional service business to stabilize me through the hard times. After just finishing off my other rental and feeling the power of residual income, then looking at my next property and seeing a book with the word HOPE in the title... I guess it felt very empowering and as if I was meant to do this business. I always wanted to get into rentals but always found obstacles. But now that I'm in it I love it and I'm not looking back. I want to own at least 20 rental properties, and that is my long term goal. So I guess it was pretty ironic (or was it) that this book I find in a rental property completely describes my state of feeling right now. If I didn't have this rental house I think I'd have gone crazy being laid off with nothing to work on. I'm so glad and grateful I invested in this little house because it's really changing my world.

Anyhow, moving forward, I'm about to open my new store called "That Computer Guy". I'm pretty excited really, just in general to see how well it does and to open many new doors in my life. I'm tired of begging the game industry for work, and I honestly I could care less if I ever talk to another publisher or have to ask for work again. I want to be in a position where people come to me. That is the way it always was when I had a service business, and even when I started 4D Rulers, people were coming to me. Its because we had something of value and people wanted it.

Somehow I lost that along the way, and got in a horrible rut where I was always scrambling to make payroll and then bad decisions that were made from a lack and limitation mindset began to take hold, and then of course failures stockpile and pretty soon your self esteem drops, and the spriral continues. I've had some good years here and there, but overall I'm very disappointed with the game industry. I'd like to make some more games, but I want it to be like the old days where I have at least a small team of good guys in house and we're doing something we all love and put our hearts into. Only then will we have value and make it big time IMO.

At this point though, I'm all about stability and cash flow, yet keeping my independance so I can follow my real estate dreams, and have a flexible schedule.