Friday, May 11, 2018

Keep your eyes on the prize!

I came to the conclusion that I was starting to think I was too big for my own britches.  I was starting to think I could do anything I put my mind to.  

For example, I went to the Minnesota Cup entrepreneurial competition info night to pursue some ideas I had about an off-the-wall business for rental equipment vending machines.  I thought my idea was so good.  I thought that my idea was hard to execute but doable.  Then I talked about it.  Out loud.  To other people.  That's when I felt like I was full of BS.   I mean, yes, I could probably see this through.  Yes, I could probably make a lot of money at this.  But the realization that I probably wouldn't want to swept over me at this MN Cup info night.  I suddenly got the feeling that I was out of my mind.  I know self-storage and railroad construction.  Why am I trying to go in another direction when I haven't tapped out the things I have real knowledge and expertise in?  Why?  I think it had to do with the idea in the back of my head that by venturing off on my own, the storage and/or railroad business would not happen fast enough to really ramp up.  Ironically, I thought something that I had no real knowledge in would move faster or equally fast.  Again, I realized that I was REALLY wrong.  

With that, I decided I need to concentrate on maximizing profits on my current projects and network.  I was hoping that if I networked more, I might be able to find more funding and potential partners for future projects.  So that's what I set out to do.  Within 3 weeks I have about 6 more leads on projects and 3-4 potential project partners and I can feel the momentum starting to snowball.  I just need to keep my head down, continue to meet and learn from other investors and this thing WILL happen for me.  I can see in my progress over just the past 3 weeks that this IS going to work the way I loosely envisioned when I gave my 2-week notice to leave my job.  

And maybe, when I get very comfortable with my current financial position, THEN I can start chasing other opportunities outside my expertise.  But not until my current expertise has run it's course.  

I need to FOCUS because I'm not as good as I think I am.  I have a long way to go before I get there.  

Tuesday, May 8, 2018

What to do with a windfall?

We received a windfall with the sale of our construction business in 2014.  We started to think of all the stuff we needed.  We "needed" a new car, redo our bathroom, redo the carpet in our house, redo the deck, redo the driveway, finish the basement, and so on and so forth.  After doing the math, we would have been left with about $25K for 3 years of sacrificing life to chase the dream of starting a business.  And you know what would have happened to the last $25K had we went this route, right?  Yup, it would have been frittered away too.  We came to the quick conclusion that trading 3 years of life for some material things was just plain stupid. 

We decided to buy a couple of rental properties (mini and maxi storage buildings) to preserve our principal at the very minimum.  We didn't know what we were doing other than not spending our capital and maybe making a few bucks every month to grow our next egg.  At the time, our thoughts revolved around paying off the mortgages in 10 years and being able to retire (whatever that means). 

Then I started researching how to become a millionaire and came across Robert Kiyosaki and the "Rich Dad, Poor Dad" series of investment/self-help books.  It started with a YouTube video of Robert or Oprah.  His philosophy on rich people spending their money on assets rather than liabilities was earth shattering for me.  I read everything in the Rich Dad, Poor Dad series and then decided to go after more properties.  This time with an emphasis on cash flow.  I also started listening to Bigger Pockets Podcast and Jason Hartman's Podcasts and I went down the rabbit hole. 

After that I was on the hunt for anything worth buying.  I found a 2000 SF retail property on a busy corner in Green Bay by Lambeau Field and rehabbed that with the help of a cousin.  We did a great job but got a lousy tenant.  Upon evicting the tenant and putting the building up for rent, we got an offer to sell from our neighbor.  We settled on a price that was good for both of us and we were able to sell with a nice profit.  It was a buy and hold property but realized it was a handful owning a property so far away.  Frankly, that was my fault for not turning it over to a property manager, but live and learn. 

About a year after we bought the GB property, we tried buying a self-storage in Houlton, WI which we got outbid for.  The silver lining was that we ended up buying the vacant property next door.  We tried a few things before landing on developing the property into large storage units that were big enough to accommodate businesses and the big stuff they have.  So with cash-flow in mind, we refinanced the first two properties to take out equity to develop the new property.  This was all done while holding down a day job. 

And on and on.  The interesting thing about all of this is that if we spent that money in year one, our life wouldn't be any different than prior to starting and selling our business.  But because we bought an asset rather than liabilities, our life has been changed.  We aren't exactly Paris Hilton, sipping champagne and hanging out on Yachts in the Mediterranean Sea, but we've gotten to the point where we might not need another regular job again.  That's the ultimate freedom. 

So next time you get a windfall, don't buy stuff, invest in your freedom.  It'll come sooner than you think. 

The beauty of Meetups

I've been reading books and listening to Podcasts for a long time now.  They give me a ton of energy and get me all excited about real estate and investing in general.  I highly recommend this to everyone looking to get into a certain field or just learn more about something.  It's pretty safe to assume that there is a podcast about what you're interested in.  If not, maybe you should start one! 

At the beginning, podcasts and books (audio books included) filled 100% of my needs.  But now that I'm becoming more experienced, these shows only fulfill about 75% of my needs as an real estate investor/developer/professional.  Why, you ask?  It seems there are two main reasons for this: 1.) These podcasts or books only go so deep and it seems I'm getting to the same level of learning each and every time, and 2.) you can't ask that follow-up question when you're listening to a podcast or book. 

That's where Meetups come in.  I've been using Meetup.com with great success.  I've mostly done some local meetups here in the Twin Cities but I've also explored other cities in this manner too.  I'll get into that below.  Regarding real estate meetups, it's been so much fun.  It's refreshing to know that there are other people out there with LESS experience than you.  It's great to meet some people out there with MORE experience than you.  It's an ability to meet people you can help meet their goals.  Remember karma works in both directions.  I've also met people from banks and investment funds, people who syndicate deals, realtors who are also investors, etc.  It's also interesting to know that people are out there willing to pay commissions for you to find them deals.  There are also people out there who just look for deals for you (wholesalers). 

My biggest suggestion is to not be shy at these meetups.  I always feel like I'm putting myself WAY too far out there, but so far it's worked out well.  I've found an alternate lender for my deals, I've found a person who is, along with a few friends, looking for passive investments to invest in.  I've also listened to mortgage brokers talk about financing that I thought were only fairy tales.  I've also heard about a syndicator who brings deals to people who have money to invest. 

I've also attended a real estate meetup in Memphis, TN while on vacation and a running meetup in Madison, WI while in town on business.  I had been interested in learning about the Memphis market and this meetup was so helpful in understanding the market.  There were people with deals everywhere but in the end, I just didn't feel comfortable with the area in general.  There is no doubt money can be made in Memphis, I just had a hard time envisioning where I would invest.  Therefore, I've put it on the back burner.  Had I just jumped in and invested without visit the area and visiting with local folks, I probably would have made an investment I wasn't comfortable with.  I believe you can invest from afar, but you need to be comfortable with your decision. 

I'd say meetups are super valuable and if you are mildly interested in something, get out there and try a meetup.  I think you'll know pretty quickly whether this is your "thing" or not.  But if you don't try it, how are you going to know?