About time for an update!

Sorry I haven't been posting. After dabbling in the flipping market, I've decided to flip off the flipping market! Rentals are where its at in my book. So we rented out this house I was going to flip because even at a very low asking price I never got any real offers. But in the dead of winter, I rented it for 700 bucks no problem.

Gotta love that. Everyone tells me its hard to rent in the winter, and I see for rent signs everywhere and I rented two of my places very quickly. Luck? I don't think so. Luck only comes along once in a while. I have a history now of renting quickly in the winter. In my opinion, its quality homes rent fast regardless of price. (as long as the price is semi reasonable) Also advertising pays. Be a cheapskate and just stick a sign in the yard, and lose 1400 bucks rent, plus enormous heating bills to keep your pipes from freezing, and electric bills. Or pay for advertising and WIN.

Next update I'll post some before/after videos of the last project, and we bought our first one bedroom. Its coming along nicely.

Year end results

Well I'm happy to say that Joel Huenink Rentals has increased $2,250 per month in passive income in 2009. That is Gross, not net, but I am very happy with it. I have an exciting plan for 2010 to increase about $4000 per month and invest less than HALF of what we did in 2009 to get that, and work a LOT less too. So nearly double the return for half the money. Thats 4X better results if I'm correct.

I also have several other passive income streams incubating right now. One is in game advertising, some is web advertising, and a few other web based money makers I hope work out.

If things work out, by the end of 2010 I will be able to stop working and survive. I don't want to stop working, but the thought of having enough passive income to survive after pursuing it for a couple of years is mind boggling. The idea of financial security nearly in my grasp is very soothing. I worked my ass off for 20 years only to be broke most the time and go bankrupt twice. Working for earned income is the dumbest thing you can do if you don't reinvest it. Working for passive income is smart, provided you don't get over leveraged. There is a fine balance you have to maintain, and I am ramping up my earned income this year, but to me its only to further fuel my investments and increase my cash flow by paying off loans.

Wish me luck everyone. At times I feel invincible, and other times like I'm headed for another bankruptcy, but all in all its just the nature of things. There's vacancies, bad tenants, maintenance and unexpected twists, turns and expenses, but its been a fun ride for the most part. I am excited to work smarter in 2010 and make the most of each second of the day.

Happy new year everyone! See you in 2010!

Want a 15% annual return on 54k?

I've decided to sell one of my rentals for 54k so we can keep acquiring more properties. The rent is $675 a month or $8100 annually, which will give you a 15% annual return on your money.

The property comes with a brand new black fridge and stove, and a great tenant and had a head to toe restoration just last summer.

Here is a video from about six months ago when we first finished the renovations.

10 rules to hiring contractors

I like to do about everything myself on my homes. That way I can ensure the job is done right and to my satisfaction. But some things just take too long for one or even two people, and some things take acquired skill to get fast at, etc. The two things I like to sub contract are roofing and drywall work. Roofing is outright dangerous if you would fall, and drywall is just annoying filling in all the imperfections and getting it hung without gaps and other issues these 100+ year old houses have.

When you add it all up, holding costs, heat and electric bills during the renovation, taxes, and your own salary, it would take one person months to tear off and roof a whole house and drywall many rooms, etc. Those months can bury you in static expenses so its smart to hire them so you finish the house sooner. Plus there is the dreaded burn out of working on a house for too long, so its nice to get a house done faster by hiring extra help for the things you don't want to do. So slowly I'm finding good contractors who have good prices and this has been a godsend.

I've hired some horrible contractors in the past. One guy who did drywall work I had to pencil all the errors in his work where there was slopped mud that wasn't even scraped off, let alone sanded on the walls yet. Pits and pinholes, rough edges of drywall that was applied sloppy. It took about 3 or 4 days of pointing out flaws in each room. Each day he'd come back, sand and put more drywall mud on, and each day I'd mark more and more problems. I ended up paying the guy and doing it myself and it still wasn't as good as it should have been because I really didn't have the time to redo it properly. And I wasted hours and hours of my own time trying to show him all the problems.

So what I've learned from all this is:
1.) Ask for references so you can view their work. Not just call this person and ask them, but show me a site you did so I can see your work first hand.
2.) Never give them advances on any unfinished work. There is nothing wrong with milestones where they get paid when the milestones are completed if its a big job, but advancing money is always a bad idea.

3.) If they can start right away, they are fired. If they are desperate to start immediately, then that is also a red flag. Good contractors are busy and will set a date and be worth waiting for. Now this isn't always true, but if some guy comes knocking on your door wanting to do work and is available right away send him packing.

4.) Never give someone an advance for materials. This jerk told me he had a good deal on some shingles for my garage. They just happened to be the right color that was on the house, and just happened to be just enough. I was busy and didn't want to ride with some guy in his beat up vehicle to get parts and he had done some work for me and there was much more he could have got, so I give him money for the parts and he vanished. I had a weird feeling about it too, TRUST YOUR INSTINCTS, NOT SHITBAG CONTRACTORS!

5.) Get several estimates and then sit back and wait. They will call you back and lower their price. Or use one guy against the other. Beware though, this tactic could piss off a good contractor and then they won't work for you any more. So I only use this one against the scabs who I don't care if they never work for me again.

6.) Treat your golden contractors like gold. Ok there's guys out there who do awesome work for very reasonable prices, and they are fast. Treat these guys like gold. Pay them the minute they are done in full, and hell, throw them a bonus for doing a great job. Buy them a case of their favorite beer or whatever. Offer them stuff when they are working. Treat them right so they will be eager to work for you in the future. Recommend them to other people.

7.) Get a written description of the work they are going to do with itemized prices. This will help avoid any discrepancies and if you have to fire them or cancel the job mid way for any reason (cash flow shortage, bad workmanship, they stop working, etc, you can pay them for exactly what you owe them and nobody is arguing.

8.) Learn to do it yourself. This is essential so you can tell them exactly how you want it done, and be savvy on workmanship, methods, etc. If they quit midway through, you can finish it yourself and not have any problems. Plus if they know you can do it, they won't be screwing you around and making up things. Now if its pouring concrete or digging holes, I suspect you won't want to do this yourself, but its good to learn as much as you can and do most of the jobs yourself. If you don't want to get expertise in one area, at least know the basics involved, terms, etc and get educated about it.

9.) Negotiate. If you think a price is high, try negotiating. Or get them to itemize the estimate so you can do some of the work yourself, or hire some temp worker. Like I got an estimate for my garage, and they wanted 500 to tear the shingles off, and 500 to resheet and reshingle it. My daughter and I tore the shingles off in 3 hours. That saved us over $400 dollars by doing that one task ourselves.

10.) Buy the materials yourself. Often these guys just throw a price out there and you never know what quality of materials you might get, or they will inflate the price of the materials. So go buy everything yourself (at least once in a while) so you know what the costs are. Sometimes you can get a better price from a contractor on materials, like if they have left over supplies from another job, but generally you can do better buying your own materials and just have them bid on the labor. Then when you compare contractors prices you are comparing apples to apples.

Where the hell is Jim?

My good friend and employee Jim Thorgesen disappeared three weeks ago. Jim rented a room from me in my office building and worked full time for me doing painting, demo work, drywall, and a million other odd jobs. He left his keys on my desk and all his things (as far as I can tell anyway) and just took off. He had worked part of the day on Tuesday but was already gone when I showed up at the job site. I didn't think anything of it, the toilet was removed so I figured he went to go poop at the gas station or something, and then I got busy working and he never came back. Later that night I stopped at the office to check on him, and he was gone and the keys left on my desk. No note, no nothing. I searched his computer, nothing really. No flight tickets or anything. He told someone in second life he was going to El Salvador, but I don't think he would have the resources to get there, that was just some role playing I think.

Whats strange is the day before, he had asked if it was ok if his ex girlfriend could move in with him. I said it was fine, but I had also tried to be a friend and played devils advocate and asked him how it was going to be different than the last time, etc. So I wonder if he got to thinking about what I had said and got scared and ran off? He ran off for a week one other time, left without saying anything. He went down to Missouri looking for a job, hitch hiked down there with no money, no car, nothing. He ended up in jail for telling off a cop when they questioned him for hitchhiking and spent a few days in jail, lol. Then he takes a taxi home with the money he collected talking to people hitchhiking who felt sorry for him.

Whats weird is in my opinion, things were looking up for Jim. I gave him a raise a couple months back with more promised with each house we got done, plus I promised to buy him a little house next year, provided our house flipping goes well. Plus his girl wanted him back and was coming with some income from disability, etc. So it baffles me why he would take off.

I'm offering a reward for any info leading to contact with Jim. I can't afford much right now but I'll pay $250 if anyone can tell me where he is or how to get ahold of him. Contact me by emailing joel at 4drulers.com
Here is a picture of Jim.

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 :)