The power of two makes three

The Power of Two Makes Three
I read one time in one of the many success books or audio courses I have that when you brainstorm with another person, a third invisible entity is formed which creates ideas that neither two could come up with on their own. I've seen this first hand, and the other day I had a guy help me do some work on my duplex, and in one 5 hour day, we accomplished what it would take me in three days, so it was like the invisible entity principal demonstrated in physical labor.

I've done a lot of different types of jobs in my day, computer games, auto body work, and a lot of times two guys working on the same thing just slows it down or isn't efficient. But with construction it was pretty cool, we seemed to get tons done. Not a big secret or anything, but I was impressed with having a good helper for a few hours, so impressed that I will be hiring this guy for some more projects.

Not only will holding costs be reduced, but its just a lot more exciting to see projects get done faster, and of course I learned from working out a long time ago that if you have someone to work out with, you become accountable, thus you are likely to make your workouts. While I've never skipped a work day, I think one is going to work harder and faster if someone is counting on them. So even though I can't really afford to hire someone full time, I will use him as much as possible, just because some jobs go so much better with two people.

Duplex Update
Well the weather went from -8 to the mid sixties! We cleaned up the whole yard the other day, hauling off loads of bricks, old furniture, brush and garbage. Today I got the last porch on the front started with vinyl siding. Its amazing what vinyl siding does to these old houses. It makes them look brand new, I just love the finished effect. Curb appeal is starting to kick in, hopefully I can get the north unit rented sometime in January. The whole house is basically redone. I've repainted nearly every room, new plumbing, new siding on the front of the house, redid most the bathroom, new toilet parts, new seal, new faucet, new upper shower boards, caulking, paint etc. The drywall needed a lot of love in the living/kitchen area, plus I fixed the floor, it was weak and rotted from a leaking fridge. I raised up the floor in the bathroom by pouring concrete and jacking the whole foundation up and setting a 4x4 in there. I did the same to both porches outside, they had sunk into the ground about 4" or more, now they are level with the roofs level as well. I also replaced a ceiling in one room. Not bad for a little over a months worth of work. I've left off about two dozen smaller tasks not worth mentioning. I'll get some pics once its all done. I'm really impressed with how nice it has turned out.

The Next Project...
My new partner in real estate and I are going to close escrow on a flip in the next couple of days. I'm very excited about this house, because it has so much potential and it will be my first real flip. I've renovated for renting several homes now, but you always have limited budgets on those, so I'm really excited to have a decent budget for this house, plus I just love the layout (in my mind) after we renovate it, and the materials I will choose for the hard wood floors, crown mouldings, etc. This house is going to look like a sweet HGTV home when I'm done with it, and the before/after shots will be astounding. I'm totally psyched up to do this house. I'm a huge fan of the show flipping out, a tv show about a guy in LA who buys and flips homes, and this will be a mini version of the kind of stuff he does. Granted I won't sink 700k into a house, but still, I love his style and flow changes, and he has a lot of great design ideas that can be incorporated on a budget. So finally being able to redo a full house will be a great challenge, and I KNOW we're going to make good profits on this house!

Here's to 2009!
Until 2009... Its been great sharing my ideas here. I want to thank everyone for reading. I'll be sharing a big list of goals with everyone come January, and start adding more real value here, rather than make this just be a big diary dump, lol. Cya!

So Excited about 2009!

Well I've done it. A friend and I are going to be flipping real estate full time. Even with my basic frugal salary I will get, with all my passive income from my 3 rentals, and if I can even profit 500 a month from my computer repair biz, I'll be making about what I was before when I got laid off from the game industry. Thats not counting any profits from the home flips, which I anticipate will be good, even in this down market. If the profits are even small, I'll make more than I did at games.

Now I might be counting some chickens before they hatch, but it is looking really good. I absolutely love the real estate industry so far. To me the hard work is just part of the fun. I mean, I just get totally excited about being able to buy more properties and watch my income increase. Where can you put down about 5 grand and turn it into 400 a month positive cash flow?

Being able to plan my income over the next few years is an amazing feeling. With the game industry its feast and then famine, usually the latter. I've had it with that. The feeling of being successful and watching my investments perform is 1000 times better than being a starving artist in an industry that is just insane. I mean, it takes a few million dollars to make a B game these days, and years of work, the gamble and stress are just not worth it. Finally I can see a few of my dreams in reach, and its such a fantasic feeling to be able to create the life that you want.

Anyhow, I'm really excited about everything, and I can't wait to get started on this next project. I'm going to change the floor plan a little to make it flow better and make the upstairs a master suite instead of two dinky rooms and a hallway. I make my rentals pretty nice, but being able to go all out on a flip gets me excited, because we're going to redo the whole house and really make it sweet.

The home stretch...

The home stretch
I'm on the home stretch right now on my duplex. I think if all goes well, I'll have the for rent sign up by next weekend. Really all that is left on the north unit is to paint the living room and kitchen area, and possibly one bedroom & then cleanup. Bear in mind by paint, I mean repaint all the trims from a very dark ugly brown to white (2 coats primer, 2 coats paint, plus holes filled/sanded), and then all the drywall fixed. Theres some cracks and lots of little pin holes, etc. Then the ceiling in one room has lowered ceilings which look horrible. Overall it should look pretty good.

How will I fix the south unit?
The south unit is worse, but I don't think it will take me any more time to redo it, since there were major plumbing and siding work I've done already that were included in the time it took to redo the north unit. So hopefully 3-4 weeks or so and I'll have that side done. What I'm wondering is how I'll come up with the cash to fix it, things are already very tight and I haven't done much christmas shopping. Hoepfully I can get 1st months rent and damage deposit in, which would be 850-900 dollars depending on how much I decide to rent it for, and that will give me plenty of budget to finish the south unit.

Overall things are looking up
Although I'm never at my computer store, (working on rentals all the time) my business is increasing. If the phone rings I drop what I'm doing and meet people at the store, and can be there in a minute and 15 seconds. So it feels pretty cool to be working on my passive income and then if there is business, I'll go down there and take care of it. The good thing is I'm not sitting there going crazy waiting for customers, and I feel like every single moment is productive now. There is never any dead time where I'm not making money or working on something which will make me money.

The flip side of things
I have a couple of partners interested in flipping houses with me, so as long as one of them moves ahead it looks like I'll be going into real estate full time; at least for a few months anyway. When I cut my teeth in the real estate business just 6 months ago, I never dreamed that I'd be doing this full time quite so fast. I mean, I had some ideas that after I had 20 rentals that maybe I could quit my day job/business and just focus on real estate... but getting thrown in head first this fast was a bit shocking, but frankly it feels natural already.

Go with what you are good at
One thing I'm learning is that you have to run with your strengths. To me, I've always been great at fixing things and working with my hands. So real estate using my mentors business model has been an ideal fit for me. With my auto body and car repair background, Its really easy to paint, do plumbing, electrical, roof, whatever. I've basically done a little of everything now (framing and concrete work, plus the aforementioned items), so I am starting to feel pretty confident. Sure theres a lot I haven't done, but I feel like I could buy any old house and A-Z it myself with very little help from any professional contractors. That is a cool feeling really, to be in control of my costs and production schedule. But my point is that life doesn't have to be this resistant path to success. If it is, perhaps you are doing something wrong or in the wrong business. I struggled like hell in the game industry, only for a lot of let downs. Barely getting going at real estate, and I'm making money and building equity right away. So I'm just going to run with it and see where it takes me. So far its been an awesome ride!

The four hour work week

I've been listening to the audio version of "The Four Hour Work Week" and its very interesting. While often the guy sounds like a spoiled brat who lucked out with one business venture, a lot of his ideas are challenging me and putting in motion some powerful concepts. Like "What am I working so hard for"? I work seven days a week and usually at least 8-12 hours of work every day. He talks about lifestyle design, creating enough income to live the life you want. He talks about how the system is flawed where people work 9-5 their whole lives hoping for some fun at retirement, but by then who cares? Your old and broken down from 45 years of hard work. I want it NOW. He talks about setting up automated businesses that make you money 24 hours a day. I have some of these, but they don't make me much money. He talks about the 80/20 rule and I've heard of it before, but never considered it in all areas of all things, which is an interesting concept to say the least. A great book, I can't wait to finish it and see if it can work for me. Right now I'd be happy for just a 40 hour work week that actually puts 4k a month or more in my pocket again. I miss my old contracts. I was making 7k a month for a while, that is my goal. Life was good at that time, new anything I wanted, banked loads of cash, and I was empowered creating games.

I think I'm really close actually. I got to thinking the other day, and I'm barely surviving after not working for four months. Once I DO start working... the passive income + earned income should equal a FAT BANK account!

I figure I'm on the right path. I mean, passive income is well worth the time spent. Yes, right now its like 2 months of hard work for 250 positive cash flow on a rental unit, but over time its paying my loan, building equity, and in two years its 6 grand. Thats a fair trade for two months of work in my area. In fact most people in this area don't make anything close to that much for two months of work. Over twenty years, my two months of work will earn me 60 grand, if rents do not go up one cent. So I have to consider the snowball effect this will have as well.

I love the feeling...

One thing I've noticed when I buy a property that needs renovated is that at first, there is a certain feeling associated with working on it that isn't particularly rewarding or positive. Maybe its because my initial focus is always core issues which I view as "critical repairs", and not cosmetic changes. But really what I did today wasn't exactly beautiful cosmetic improvements, all I was doing was installing new shower board in a tub filled with old ceiling debris and sanding drywall repairs in the bathroom. Theres tape holding the shower board on and the entire place is cluttered with tools and materials. So its not like its looking up or anything. But, I got this feeling which I remember I had on my other rental house after working on it...

I love the feeling when a place starts to come together and I can see the end in sight. Its like your little plan has begun unfolding and your changes are starting to manifest. Its like this sense of pride, joy, confidence, and maybe even a little bit of optimism knowing that you are doing what is right by making a place that was "good enough" way better. Maybe its just a matter of working on something for a few weeks is all, but today I felt that magical feeling of knowing my investment is going to work and that my house is going to be better than the competitions, because I go through them and make sure everything is clean and up to par. I care about my properties.

Today I picked out some paint, a real nice tan for the walls. I'm so in love with it I think I will use it for my place too. While I was there I ran into a guy who was semi interested in renting my other place, but I don't think he was quite ready then. He lives with his parents but is a great guy and I think he'll be an excellent tenant, basically a dream tenant. So when he said he was really interested it made me feel even better knowing I have a good chance of finding a great tenant before the place is even done! That makes you know you are on the right track when things fall together like that.

Anyhow, I'm looking forward to getting this first side done and rented out, then tearing into the 2nd half. Hopefully by end of December I'll have one side rented out, and by the end of January the other one will be done.

Lots of work done, lots more to go...

Well I've been really busy working on my new duplex. I've got one porch wrapped with new siding, I've rebuilt a floor that had water damage from a leaky fridge and reinstalled the tile where the fix went, I've replaced the plumbing under the kitchen sink and some of the pvc pipes in the basement, only to find a MAJOR plumbing problem in the basement. I was running out the nasty smelly water out of the hot water heater (it stinks if it sits for a while), and I noticed my basement was semi flooded; water was coming out of the wall.

So I got my mentor over there and we figured out that the main old cast metal drain pipe which was for the most part cemented into the wall, had broke off due to some foundation settling, etc. So I had to chisel out all the concrete and bricks that encased this huge pipe. If you have an auto body air hammer, it will make short work of bricks and concrete, I highly recommend buying one if you ever have to knock out any mortar or bricks, etc. I had hammered and chiseled until I had a huge blister and made hardly any progress, so I got the air compressor over there and my air hammer and within 30 minutes I had a nice clean cut hole around the plumbing. Right at the end I tore my knuckles off on the concrete, ouch.

A couple days later I got all the parts, roughly about 70 dollars in pcv pipe, and two fernco rubber connectors. These are basic rubber boots with hose clamps that let you adapt from old non standard size freakshow pipes to standard pcv pipe which is used today and 100x easier to work with. When it was all done it looked like this:
http://www.joelhuenink.com/uploaded_images/plumbing.jpg

It doesn't look like much, but trust me that would have been 500 bucks if not more to have a plumber come fix it. So being able to do it myself for around 70 saved me a lot of money. I learned a lot too which was cool.

I've started tearing apart the bathroom. It needs some new shelving made, light fixtures updated, a coat of paint & random drywall fixes, and probably some new tile and trim. Basically a little less than the last bathroom I did, I'm hoping to have it done by the end of this week and to get the for rent sign up soon, maybe in a week or two. I'm sure there will be a lot more small odds and ends before I'm done, and I'm still wondering if I should repaint the trim and walls in the living area because I don't really care for it a whole lot. We'll see.

Anyhow I'm excited all the major stuff is done on one side, and its down to minor stuff and cosmetics. Thats when it starts to get fun for me.