Project updates

An angel investor gave me a sizable chunk of change to take to the upcoming tax sale; I decided to celebrate by stopping in to Starbucks for a grande chai.  My angel investor not only gave me money to invest, but he also offered to help in any way in the future.

I misunderstood the definition of ‘busy as a bee’, until this past month.  Because a family unexpectedly moved out, my time has been spent either working on HBS (usually during daylight hours), 2-hrs of family life daily (usually dinner and after dinner story time – Wilson Podpie the Pileated Woodpecker anyone?), and 3+ hours of school work between the hours of 8.30pm and 11pm and again from 5am until 8am.  The beautiful weekends have helped keep everything perspective.

In addition to the kitchen renovation, our recent purchase is being reconstructed.  The demolition is mostly complete and new parts are being added.

Kitchen pictures:

IMG_20150919_171839697 IMG_20150920_140129032 IMG_20150920_174520155_HDR IMG_20150920_140143718_HDR IMG_20150912_160113023

Contractor Rehab (footer for the new wall):

IMG_20150912_163545534

Flip/Life/?? Update

Hey all,  Sorry for the lack of posts for the past month.  It’s been a crazy month since my last post.

Woooahhhh

 

Here’s a quick recap:

May 5, Meet with my friend who just graduated from the local MBA program
May 8, PSU re-opens the application process for Fall 2014; open period closes June 1
May 5-15, Consult with my significant other regarding going back to school in 2015
May 15, I learn about the MBA opening
May 15, (After learning of the opening) consult significant other regarding starting school in 2014
May 20, Sign up for GMATs on May 25
May 20 – May 24, Cram for GMATs
May 25, Take GMATs, Receive 660, 10 pts higher than average entering student’s GMATs (Minor party in my head)
May 29, Submit final application
June 1, Wait to hear about my application
June 1 (afternoon), Feel like I’ve come off a two week bender
June 2, Receive an invitation for an interview on June 6th
June 2-5, Panic realizing that I had sent my last white collared shirt to Goodwill.
June 5, Purchase ‘business’ clothes and ask to borrow Brother-in-Law’s shoes and tie (See below)

Yes, I didn't recognize myself

Yes, I didn’t recognize myself either

June 6, Interview; Told to expect to hear something “Definitely by June 30, maybe within two weeks.  First contact will be by email.”
June 7, Send a ‘Thank-you’ note for the interview, admitting I was nervous.
June  8, Wonder what I said wrong during the interview, remind myself that I could wait until June 30, so continue the nose-to-the-grindstone routine
June 10, Decide to go for a run in my favorite place in PA (Rothrock).  Upon returning to my car, see that I missed a phone call…call was from a University extension number.  I listened to the message.  It was from my interviewer advising that I “check my email as early as possible.”
June 10, 30 minutes past last entry, Check email using Sheetz free internet connection.  I received an invitation to attend school in the fall

-pause-

June 10, 1 minute past previous entry, Hoot and holler (to no one as my car windows are closed).  Decide to splurge and get two milkshakes (one for myself, one for my wife).  Drive home to deliver good news to her.
June 11, Inform day-job that I’ve been accepted; promptly told that my entire division would be shut down
June 12, Informed that my division wouldn’t be shut down but rather put on 12-months notice: Generate significant revenue or else…
June 13, Received an email from my investors to schedule a visit to the site (mild panic); Scheduled for June 21
June 14 – June 20, Try to pack as many hours at the flip as possible
June 21, Investors arrive to view the flip.

This takes us up to the present.  I was incredibly concerned/nervous/scared about the investor visit today.  I have done my best to pack my days with as many hours at the flip as possible.  We started the day with lunch.  We discussed business, my daughter, business, and more business.

I had scheduled a tour of some area homes that may fit a profile for the investors.  After touring five homes, none really stoked the investor’s interests, so we headed to the flip.

To prolong my agony, the investors asked that we look at some additional potential flip-able homes.  I obliged.  We came up with a list of five properties to pursue and see what kind of business we can drum up.  I did my best to prolong this period of time before heading to the flip.

After driving through town for as long as possible, I had to head to the flip.  We’re behind schedule (original schedule had us relisting on May 1), we’re over budget (but not too bad…I think????), and I’m hoping to keep the investors happy.  We showed up at the flip, turned off the car, and headed for the door.  Once inside, I immediately began to point out the flaws in the house.  I figured that I should show what’s wrong with it and let them jump on me.  We walked through the entire home, tested the new bathrooms, discussed paint colors (apparently I have a California sense of style as the entire house isn’t beige) and I laid out the schedule until the house would be back on market.

We discussed my successes (good purchase price, locating good contractors), and my failures (timing to get back on market, insistence to handle as much of the project as I’ve decided to handle (too much), the hiring of my first contractor).  I was expecting to be told that my investors were finished with this experiment, that they had bigger fish to fry and that I was small fry (pun intended).

As I expected, we discussed my failures to quickly turn this flip.  My labor savings have eliminated the return of a quick sale.  My investors did admit that they’re not happy with the length of time the flip has taken.  I was OK with that assessment.

I was unprepared for the next statement from the investors:

“We’re really happy with how you’ve handled this investment and we’re happy that you’ve learned from your mistakes.  We expected mistakes and it seems that you’re aware of the mistakes you’ve made.  We want to move forward with additional investments with you.  We’ve got $X to move forward with you.”

[I had to pick up my jaw from the floor; both for the size of the investment as well as the fact that they didn’t immediately end our agreement because of the timing if the flip.]

Needless to say, it’s been a crazy month: I’m getting ready to leave my day job to head back to school; I’m in the middle of a house flip; my investors aren’t angry, they want to do more work with me; probably the craziest thing is that I feel good about all the changes, I’m not fearful of the future at all.  I’m not even six full months into 2014 and I’ve blown all of my goals out of the water.  Yet I’m OK with that.  I sincerely feel that I’ll come out in a better place now than when I originally set those goals.

This past month has shown me that these next two years will be incredibly crazy, but will be worth it.  I know I can design, frame, wire, plumb, insulate and paint homes.  Even if I fall flat on my face after these next two years, I can still fall back on these hard skills that I have.  Even if the ‘business’ world doesn’t see my abilities, I know I can attract investors, I can deliver on my promises (maybe a few days late..), and I have the drive to see the craziest ideas through to their culmination.  However, I plan to use the next two years to learn the hard ‘business’ skills to allow me to skillfully lead any company in the future.

Warren Buffett, Elon Musk, Ashish Thakkar, Jeff Bezos, Richard Branson…here I come.  Who’s along for the ride?

 

A Lesson from the Past (#2)

As much as young whipper snappers like to think they are smarter, faster, better prepared, have it all figured out, etc, etc etc, history really does repeat itself.  The older you get, the less you feel like a young whipper snapper and that’s probably for the best.  Every time I think I have something unique figured out, I stumble across wisdom like this:

“…Others are less kind.  They say America’s economy is falling apart.  Big labor has lost its ability to protect the rank and file.  Japan and Korea are changing the way we think and work, and the British-style Fleet Street hype has taken over TV and most of the press.  Huge numbers of college students struggle to read and write.  They graduate without having learned to think or decide.  Product quality is an impossible dream in many industries, and the focus on current earnings per share plagues even the most farsighted planners.  All that’s left, it seems, is to work hard and make money.”

If I had left in the original first sentence to this quote, which reads “Some say America is changing from a smokestack to a service economy,” the quote would have shown it’s age.  With a few minor tweaks that quote is apt for life today.  Reread the quote but substitute “China” for “Japan and Korea”, and while I actually had to look up what “British-style Fleet Street” means, my local NPR station does play a variety of BBC type broadcasts throughout the day.

Just as history repeats itself, I’ve got a whipper snapper at home.

Whipper Snapper feet

 

PS.  The above quote is from “Cashing in on the American Dream”, written by Paul Terhorst.  Copyright: 1988

One Thing per Day

As I get older, I begin to better understand my parents (maybe we all do).  I find that the rules my parents had while I was growing up are generally good rules, although some rules need slight tweaking!

My dad has a rule that I heard at least once a month: “One thing at a time”.  As a kid, I heard the words he was speaking, but didn’t understand what he was saying.  I normally try to get everything done at once, which causes headaches for myself and usually a few others.  Since I’ve been working on UFUO #2, I’ve begun to learn the wisdom of my dad’s words.

Just like any good system though, I’ve tweaked the saying to better fit my life.  I have a day job that occupies at least 40 hours per week.  At the same time, I am trying to build my real estate portfolio while not giving myself a headache (and not working 100+ hours per week).  So, I tweaked my dad’s rule to the following: “One thing per day”.

For me, one thing can be as simple as one phone call or one email.  “One thing per day” may seem trivial, but I’m amazed at how much can get accomplished if you stick to it.  My Realtor remarked that I must work 24/7 to get everything accomplished.  I told her my rule and that a long slow burn will accomplish a lot more than getting burned out early on.

Real estate investing is a long term game, so “One thing per day” is a perfect rule to follow.

Mentors

Luke Yoda

If you Google “Mentorship”, one of the first images to appear is Yoda mentoring Luke Skywalker from “Empire Strikes Back”.  [Side note: it could simply be Google’s spyware adjusting the search results based on my favorite sci-fi movie…sorry Trekkies]  Yoda’s picture is apt for a mentor.  Luke wanted to learn more about the Force.  He had the abilities, he just needed to be pointed in the right direction, the path to Jedi Mastery illuminated.

Mentors have first hand experience.  They have lived what they are teaching.  Yoda fought in many wars, most recently, we saw him fight in the Clone Wars.  He did lose a battle and banished himself to Dagobah, only to further hone his skills.

When Luke Skywalker came along, Yoda did not simply say “This is what you need to do,” but rather illuminated the path Luke needed to take to learn the ways of the force.  Luke still needed to follow the path by himself.

Modern day mentors are very similar to Yoda.  They have made mistakes, they have won victories and also suffered defeats (although not generally at the hands of Dark Jedi).  Mentors do not do the work for you, they illuminate your path.  You still have to do the work.

Over the past couple of years, I’ve begun to understand the importance of mentors.  Why struggle to reinvent the wheel when someone has already created a great wheel?  Ask them to share their wheel and build on their invention.  I’ve been purchasing and managing rental properties for a little over a year at this point.  I’ve read a lot on the subject, I follow the BiggerPockets.com blog, and I am always curious how other local investors look at their investments.  However, I had never asked someone to be a mentor.

For roughly a year, I’ve had real casual conversations with a friend of mine about rental properties and entrepreneurship in general.  I knew my friend owns quite a few rental properties, he had also created a variety of businesses in the past, and his goals and general outlook on life roughly parallel my views.  He and I were on a trip to Memphis recently and we talked more deeply about business.

As he and I were talking, my mind began to connect the dots.  The first dot: My friend has a healthy view of life.  The second dot: My friend owns a bunch of local rental properties.  The third dot: My friend has created a variety of businesses over the years.  At some point on our trip to Memphis, it hit me “This guy should be my mentor.”

About a week after we returned, I approached my friend and explained what I was looking for, what I hoped to gain and how I thought his experiences could help me.  He agreed.

I plan to meet with him on a relatively frequent basis (once a month or so) to review progress over the past month and plans for the next month and next quarter.  I will be sharing my long term goals along with my intermediate and long term goals.  I’m really looking forward to working with my friend in this capacity.

Who can you ask to be your mentor?