If you can't grow, maximize what you have

Its amazing what a difference optimizing everything you have can make. For example, I had a duplex only half done all year long. The one tenant was basically making the mortgage payment, improvement payment, and covering the insurance and taxes. In essence, I was breaking even on that property.

Well I took out another small loan and renovated the other side for about 4k. That gave me an extra $475 a month! Now I'm finishing a laundry room which will get me another $20 a month from one tenant, which will put me to $495. Then I rented out some unused space in my office building for another $75 a month + part of the utilities, which if the utilities are $100, it will gain me $125 a month. Finally, I plan on upgrading another unit I have which will gain another $25 a month. So in just a few months I've gained 645 a month in passive income, with a 182 a month payment on the renovation budget, giving me a total net gain of 463 per month. Not bad for about 5 weeks of work (which I got paid to do out of my 4k budget).

Next on my list is to pay off some operating loans, a mortgage, and a credit card I have, which will give me another nice monthly increase. Remember, paying off debts is still an increase in positive cash flow, and is the safest investment you can make.

After I wipe out my debt I'll do it all over again, (buy more rental houses, go into debt, but increase my cash flow further), then fix up some houses, sell them and pay off the debt.

Our current flip project is going fantastic. Just six weeks into it, we've replaced the entire roof, I've got siding about done on two sides, I replaced all the plumbing, built a 46' deck, rebuilt many rotted rafters in the roof, painted all the exterior trim white, rebuilt the back porch, demo'd the bath room, put a new front door in. At my first major house renovation I barely had a toilet working after two months and a couple walls built. So I feel pretty good to have this place about 50% finished just six weeks into it.

But that is what happens when you buy right. This house was much better than the last one, for just a little more money. We'll have much less into it, and it will be worth much more. Gotta love that. If it doens't sell, we'll rent it for excellent cash flow, so its a win win situation the way I see it.

This business works!

Well I've turned the corner. All year long it was a struggle, always a light bill or gas bill to pay, constantly using parts money for personal use to keep bills paid. Always having negative cash flow or some other collection phone call. But now all my bills are paid and I'm looking at a stack of checks to deposit into my bank account, which has around 4k in it. Sure most all of that is parts money, but I have another paycheck and a bunch more rent coming in just two weeks.

I'm not rich yet, but hey, having turned the corner with positive cash flow now, I'm paying off little credit cards and starting to dig myself out of debt now. Rather than hanging on for life and having that feeling that you are out of control, I'm now feeling in control. Its such a great feeling. I've had it many times before, but now I feel like this is a permanent thing. Its not a temporary contract where once my game deal is over, I'm broke again. This is the real deal, and I'm now seeing how and why the real estate business has made more millionaires than any other industry. Its just a damn safe business to get into.

But I think I was uniquely qualified to get into this business. I started my career fixing cars, and learned how to paint, replace parts, swing a hammer, scrape things with putty knives, weld, repair frames (similar to foundation work and framing actually), etc. That made fixing houses very easy for me, having all those finely tuned repair skills, and a tool box full full of useful equipment.

Then I learned a lot about geometry, angles, and design from making games. I had to build houses, buildings, condos etc in 3D for games. So I learned a lot about designing homes, furniture, etc all from games. I studied a lot of architecture to get realistic feeling levels, and believe it or not, that all helped me when I got into fixing up rentals.

Finally, I had a lot of people skills from runing my own businesses the last 18 years, so reading contracts, hiring contractors, and just knowing a bum or liar when I see one is another skill set I had acquired over the years.

So really all I had to learn to do this business was some construction techniques which I picked up from books, you tube, and my mentor, and the rest I had learned from rich dad books/games and my previous experiences.

But I plan on putting all of everything I know, into a course to offer people down the road. Sure I had some advantages, but I had some disadvantages too, like crappy credit from going bankrupt twice now. I had to learn to buy houses with very little to no money down, and how to find funding, etc. So down the road I want to share all my knowledge in a monthly forum or something, for a low monthly membership fee, like 9.99 a month or something. It will be an ebook with a forum so people can share their experiences, and success stories online with other real estate investors.

But thats probably a ways out yet. I want to try house flipping and be 100% debt free, then I will devote a few months to writing my book. I think I will be debt free by middle of 2010, with probably 2500 a month in passive NET income at that point, and a six figure income from house flipping. We'll see, I've got a lot of ambitious goals, but so far I have pulled everything off, and the future is looking brighter all the time, and my area has an abundance of decrepid old houses noone is crazy enough to fix but me :)

All my rentals are full!

Well I had never planned on buying more houses than I could fix, but I bought a duplex last november and ran out of time and money to finish it. I did the market street 2 house with an investor, so once I finished it I was able to fix the other side of my duplex. Currently I have 4 tenants now, which is pretty good, plus I sub lease some other space. So all my places are full, so its nice.

Originally I had planned on real estate being a slow retirement plan, not a full time job. My goal was to acquire two rentals a year and in 10 years I'd have 20 rentals, and then in another 10 years or so, they would all be paid for so by the time I was 62 I'd be able to retire in comfort and have the equity of 20 houses paid for to either cash out, or live on the rental income.

So in my first year I've doubled the amount of rentals I would acquire, and if flipping goes as well as I think it will, I'll have everything except one unit completely paid off by the end of this year. Right now its still a struggle, but its nice to see growth every few months. A raise with each new rental I add is nice. You don't go up to your boss and say, hey I want a $200 to $300 a month raise, and I want it every 3 months. But with real estate you can do that if you do it right.

So even though my base pay is still a lot less than what I used to make, the growing rental income, plus equity is all making me feel like I'm on track. As far as I'm concerned, making games is a game, where real estate is the real deal. I know for sure next year will match my best year in the game industry, and then after that I'll be doing better than ever. Its a great business, if you can handle the people and like fixing houses. I don't mind the work at all. It was culture shock at first, going from having clean fingernails and dressing nice to wearing scab clothes and getting cuts, slivers, and dirty every day. But hey, its an honest decent living and at least no publisher can rob me of my dreams. No jerk is going to tell me when its done. Its done when I say so, and to me that's worth millions right there. Do it my way, or the high way.