Market 2, Update 02, Famine over!

Market 2 Update 02

Here is an interior shot of the bathroom. On the right is the inside of a new closet off the dining room, which you can see in the bathroom. I also got the wiring done and installed a new light switch and an outlet down below.

Famine Over!

On another more personal note, last night I went to walmart, and was able to buy everything I needed, and even treat myself to some dunkin donuts coffee. I didn't even really get much food, but all the stuff I'd put off for ages, the expensive supplies kind of stuff. In a nutshell, I've been driving on fumes, eating chicken noodle soup beefed up with some instant mashed potatos, and on extreme budget for the last 4 months. So being able to finally just buy what I needed, and to have all my utility bills paid and not delinquent, even before I got my paycheck felt incredible. I walked out of there feeling a sense of pride and gratitude. I've lived this up and down life now for 12 years, but something was different this time. I felt like it was actually THE LAST TIME I have to feel this way.

By that I mean I think I'm coming up, and staying up. I've had ups and downs, but I don't think I'll ever go down that low again. Not to say that there isn't going to be challenges and some struggles ahead, but I hope I'm never down to just 250 a month income again, lol. All I had was the positive cash flow of my one rental the last for months and hope and prayers to keep me going. Now I have a base salary for fixing houses, three rental incomes, and my computer business is finally profiting. It broke even the first few months, just paying the utilities and rent, but now its been doing pretty good for a part time biz. So barring any more disasters, I think I'm set now to build my rental profile and have a consistently growing income each year as long as I keep adding rentals and work hard. But first I need to pay off all my bad debts. Good debts are debts which make you money, bad debts are ones that cost you money.

Market 2, update 01

Well I don't plan on doing daily updates, but we made pretty good progress today and I love the look of the new doors and feel of the new bathroom we're putting together. It's very spacious. And another thing, if you want to update the feel of your house, you can buy 10 packs of electrical outlets for under 5 bucks, 10 packs of light switch/ electrical outlet covers for 1.99 and a 10 pack of light switches for about 4.99 as well. So for under 10 bucks you can get rid of those old stained or ugly ivory light switch covers with brand new ones. Normally I don't do that on my rentals, but since these were covered with bug crap from a previous infestation, I can't afford to scrub it all off nor have the conscious to just throw them back on. Plus I love white trim and white light switch covers really add to the newer modern feel.

All in all I'm having a blast on this job. The first few weeks were daunting. I always hate starting a new project though. Usually theres lots of repairs and fixes which don't show much for visible progress you have to do, like repair foundations, raise sunken floors, fix wiring and heaters, repair broken floor boards, haul out garbage, etc. But now that all that stuff is done and we're framing, adding new doors, and soon to be drywalling, I'm pretty stoked. I've figured out the reason for this is the feeling of the house is actually changing. So as old ugly carpets and surfaces go away, suddenly I take pride in my new creation, and it only gets better and better as I go as the excitement builds. Then the culmination of it is complete as you clean it up, remove your tools and put the for rent sign up, and then finally exchange the keys for a rent check and some signed rental contracts.

Its a little scary handing your baby over to a tenant, but thats the name of the game. You can only hope that you did a good enough job on it that they will take a little pride in the home and take good care of it.

Market 2

Well I haven't really posted much about this new house we bought. We initially bought it to flip, but after digging in, this house is rough and would probably cost too much money to flip properly. But as a rental we can cut some corners and make some sweet cash flow, I hope. Its quite the beast. I figure if I can get this house done and make money, I'll be king. I new it was going to be a challenge at first, but not this bad. My mentor warned me I'd burn out on this beast.

But I got the place for next to nothing, the land is worth more than we paid for the house. And it has a LOT of potential. Anyhow, the biggest surprise so far is that all the walls are crooked. It had plaster originally, and apparently they didn't waste time with levels back in the day, so re-drywalling this beast is going to be just that... a beast. I haven't even got any drywall up yet, just putting some pre-hung door frames up has shown me how wonderful this house is, lol.

Anyhow its been off to a rough start, but we're really starting to make some progress. The first three weeks were mostly hauling trash out, covering windows with plastic, getting the furnace going, and demoing walls out and filling a huge dumpster full of all this gunk. Not a lot of fun, but all needed to start working.

Did I mention the floors? The floors are all sagged and we have pretty much leveled all of the house now. There are two corners left but pretty minor compared to what we've fixed so far. I'll probably build a nice html page with thumbnails and pics showing our journey, but for now here is random shot of the day, leveling the floor in the new walk in closet.

This is the most ambitious project for me so far, I'm re-arranging walls and the floor plan. The bathroom was off a parlor/bedroom, which had no door. That is now a walk in closet and a small child bedroom is now the bathroom and laundry room. A silly closet was removed from the living room and these two huge arches. Long story short, the house has a much more usable floor space, flow, and will have a killer bathroom instead of taking a shower under the stairs, lol. I also added a closet right off the dining room, before you accessed it through the kids bedroom which is now the bath. Today we also removed all most all of the old plumbing. So while there hasn't been a lot of visible progress, we're making excellent ground on this old house. I'm hoping to get the bathroom done over the next couple of weeks, then the rest is just drywall, paint, and wiring and lots of little details after that.

Credit is King

Next to cash that is. At one time I was able to borrow millions of dollars, and I did. I made our first video game with a huge line of credit we had built from working hard building years of trust with our bank, only to have the plug pulled before we finished the game, thus or investment went bad. Long story short, I miss the good old days of being able to walk into the bank and get a loan for whatever we needed. Operating loan, equipment loan, etc.

In 2007 I planned on getting into real estate. I had read about it for a whole year. I played the game cash flow 101 and 102 every night, dreaming of creating cash flow and getting out of the rat race. I was waiting to get out of bankruptcy. I had talked to my bank, and they said if I had 25% down, it would be no problem. So I had my down payment saved and a house picked out for months ahead of time. I completed my bankruptcy, and go to get the loan, and get denied. My credit score was too low. I didn't earn enough money either. Wow, they basically lied to me, or left out some important details. I figured the house deed would be enough collateral but later found out that banks don't really like loans under 50k for homes. So getting loans on rental properties suddenly had all these hurdles.

I didn't give up though, I kept saving my money and sold some things to get more cash. I talked to various banks and got shot down. It was very humbling and discouraging. I finally got a friend to loan me 9 grand and did the deal. Roughly 9 months later! Better late than never though. I learned a lot on my first deal. I researched a lot about credit repair, but its a slow and painful process. Cleaning up your credit report is not very easy. I sure missed the good guy handshake loans of the past I was able to get. So for my second house, I really had to pull some strings. I got a co signer for a loan and secured it with the title of my vehicle, and that gave me enough money for the down payment and some money to repair it. I also got owner financing. So it took a LOT of effort to put that deal together.

My next house was bought cash with a partner. We gave next to nothing for it but its a basket case. Needs everything, but still will cash flow really well when done.

Today was monumental. Not only was the house we bought probably the best house out of all of them, but I talked the owner (a privately owned bank) into writing up a loan for part of the balance. From what I've learned of the bank, its a private owned bank that has the power of my old bank. They can give handshake loans essentially, so my top priority is to build a relationship with this bank. Maybe they only loaned me money to get this foreclosed house performing again... but I am praying I've found a good guy bank to deal with again. Most importantly, I want to honor all my debts perfectly, to rebuild my credit, or at least, be able to get loans without a credit score getting in the way.

Whats amazing is real estate has put me on the fast track to becoming a very successful businessman, again. I feel like I'm home, doing something I'm naturally good at. Its like I'm a good deal magnet, and real estate has done nothing but improve my life. Its hard work, but I like it. I like working with my hands and buying materials, moving mountains. Fixing a house someone else would bull doze, and then cash flowing excellent on it, because I made all the right choices. Real estate has helped me get credit, helped my relationship with my kids; I used to yell at them to be quiet so I could concentrate on the computer game work, now I put them to work painting or sweeping, and we are much closer. I feel like I'll soon be able to buy a home for me and my girl friend to live in together again at last. All my dreams are coming true rapidly!

The road to success should be easy

While some of you may scoff at such brash comment, as everything you've probably heard in the past contradicts my headline, let me shed some light on the subject matter at hand. First of all, everyone has their own definition of success. To me, success in a chosen career path means that you at least (a) make a living at what you are doing, and (b) you are making more and more money to keep up with inflation and to show growth. If you are not growing, you are dying. Therefore, to stay still or maintain something is borderline death in my book.

Most people say that it is hard to succeed, or it takes a lot of hard work to make it, I disagree. First of all, if it is so hard to succeed, then I say you are doing it wrong. If your product is competitive then selling it should be no problem. And secondly, if it FEELS like hard work, then maybe you are in the wrong business. Don't get me wrong, I bust my ass working on these old houses, getting them ready to rent out. I'm often wore out and tired after a day of work, but it doesn't feel like hard work. It feels like everything is done for a noble cause. It feels like I'm taking needed steps to succeed. I think bodybuilding toughened me up for the construction work needed in the rental business, and my background in auto body. But then again, I think its the fact that I enjoy what I am doing, so it doesn't feel like hard work.

Therefore, in my opinion, if you are on track, creating quality products will create easy sales. And if you like what you are doing, it won't feel like hard work. When I was doing my first rental house, all I could think of was $250 dollars positive cash flow after PITI, basically getting paid for the next 20 years for that two months of work I did. That kept me motivated. And so far its worked out beautiful.

Goals for 2009

Well I made a goal list for 2009. I'll share a few relevant ones here.

Passive income goal:
My passive income goal is to reach $1500 by the end of the year. In order to do that, all I will have to do is complete my duplex, the house I'm working on right now with a partner, and a house we have scouted, (all which will be done and rented by summer) and then add one more rental or pay off a couple of loans.

Realistically, I could probably do two more in the second half of 2009 and add another $500 and break $2000 passive positive cash flow by the end of 2009, but we'll cross that bridge when we get there. I don't like making goals which are unattainable, and my current goals I think can easily be met working reasonable hours and maintaining a decent balance in my life.

Strentgh goal:
My strength goal for 2009 is a 900 pound leg press. Last year I acheived 800 and then went into a maintenance routine. I'd like to regain that and then crush a 900 pound leg press this year, and 1000 pounds in 2010. I don't really set upper body strentgh goals because I've had too many injuries, I can't bench press heavy any more without paying the price in shoulder pain afterwards, so I just stick to lower body personal records. If my shoulder improves, I'd like to set some new personal records in upper body, but its unlikely, its been this way for two years now.

Vacation goal:
I haven't taken a vacation since 2006! Even then it was hardly a vacation, my brother got married and we really didn't get much time to see anything or do much besides the wedding. Before that the last vacation I had was a business trip to E3 in 2002, hardly a vacation either. So this year I want to go somewhere, warm and sunny at least for 4-7 days.

Home goal:
I want to finish remodeling my own personal house, (get started is closer to the truth) either to live there and enjoy it, or to sell it and buy a bigger home. Probably the latter.

Online Schmonline

Ok while I might sound like a jaded skeptical old school burnt out, I will have to say that consistent success in the real world is by far superior to the occasional feast and usual famine in the online business realm. You see, from 1998 to 2008 I earned about 99% of my income online, from behind a computer screen, developing games, selling products, and even begging for money. I was constantly struggling in one way or another. Either struggling to find work, or struggling to get the work done and book another job. I even looked at affiliate marketing, and had the help of a mentor, but quickly that business failed, due to google shutting down my adwords account. After countless years of ups and downs, it had taken its toll on me.

Now within 6 months, I've got 3 rentals, a flip house purchased, and another rental that we could close on in the next few weeks. I've got a full time employee now, and each day is filled with new challenges that are exciting. I feel like I've left the rat race behind me. Everyone else can have the online schmonline BS, I'm done with digital dollars. Ideally, I'd like to build a good online business that doesn't take much time to run. I'm sure there is a lot of good possibilites, but right now its too enjoyable doing real estate deals and working on houses. Watching things grow in a positive direction. I seem to be a good deal magnet, I can find whatever I need. It seems too easy, if you are willing to do the labor.

Anyhow, I feel like if I can pull this off, in a crap economy, I can't wait to see how good it gets once things are good! Next post will be my 2009 goals.