Biggest bet ever!

Hello World.

I made the biggest bet I’ve ever done with my brother this week.  Its on like donkey kong.  The bet is that I will work on business for 5 hours per week and if I don’t have it done by Saturday at midnight then I owe that sucka…..$500.  Yup.  In one week if I don’t follow through this chump will get my hard earned dough.  This post is to do an update.  The other day I was looking into doing this bet on stick.com that my other brother showed me, which I really liked because on it they have a space where the individual can do a journal update.  Hence why I’m doing this post.  I’ll just do my journaling here.

$500 is going well.  I'm at 2 hours and 59 minutes and 56 seconds out of 5 hours.  I haven't made any money yet, but I think I've saved myself some time.  I can't quite discern how great asking w/o selling will be for me, but so far it is working out great.  Example.  I was thinking maybe instead of buying an eBay business I'd just contact realtors and ask them to ask their clients to list stuff to sell with me.  Turns out realtors can't accept commissions/kickbacks for stuff like that.  Plus I was thinking that isn't a home based business and would be a drag to have to go to someone's house and take pictures and then list and then coordinate shipping and and and...too much!  So I nixed that idea. 

Two days ago I read through the Utah state fair guidebook to see what is up with being a vendor there.  Then I looked up costs for buying stuff to do that.

I'm also onto to seeing if making eBooks could be a thing I could do or not.  I figured I could list my barter skills/items that I posted to udemy.com as an eBook to get the feel for it.  Turns out I deleted the text of it once I posted the video and I can't find it anywhere.  Only way I think I could get it, w/o having to transcribe the videos that is, is to ask my friend Tyler Warnick if he perhaps has that one copy I sent him that one time.  That'd be a bit of work and would have to search his emails for attachments I've sent him and then resend it back to me.  If not no worries.  I think the eBook thing though could be a good idea.  Ashlee bought some children’s temple book for like $9 and I’m just thinking that is dumb cause it is a big book and it'd be much better to have that and a billion other books on a tablet or something to save on weight and preserve colors and what not.  So I think I'll try and make that happen.  It'd be something I could do from home and ideally something I could outsource and automate 4-hour workweek style.

Another idea I think I may try and loop back around to as well would be selling people/companies on making apps for them like restaurants and small businesses.  So we'll see.  I figure I'll just keep going on this process of working on business 5 hours per week and eventually I'll land somewhere that makes sense. 

I've been listening to this podcast.  http://automatemysmallbusiness.com/   It's been interesting to listen to the different things they've got going and how they're doing it.  Listening to them makes me think I need to keep going with pursuing business ideas that I can automate for sure.  Its just the way to go and is way cheaper/efficient.  I definitely envy how they're able to work the 4-hour workweek life.  

One thing I really like about their podcast is the ease with which they're able to start new businesses because they have experience in automating their own existing businesses.  I also really like product based businesses.  I think I really want to transition eventually to digital products and ideally subscription based digital products.

One thing they recommend doing is hiring a VA (virtual assistant) to do some task for you.  It doesn't even have to be for business.  It can be for anything.  One thing I'm thinking I'd have a VA do for me is research the most reliable and cheapest solar panel unit to power small things like a laptop, ipod, phone, etc.  Tyler wrote me telling me where he's living that they had an ice storm that knocked out power for a whole day and it was cold.  Fortunate for them they had food and were able to stay at the in-laws who had a wood burning stove and so they were a toasty 75 degrees.  They didn't have anything as far as batteries and flashlights though.  So I think that may be something I work on business wise this week is hire a VA to do that for me so I get experience hiring someone and interviewing them and I can do it for cheap.  Exciting!

I figure I've just got to continue to surround myself with business ideas/success and then take out the option of not doing something and work on business each week.  On my way home from work I’m listening to the biography of Warren Buffet that my dad highly recommended.  Guy just kept trying to figure it out and was a little schemer since he was a kid.  He even wrote off his bike and helmet I think for his paper route to lower his taxable income on his newspaper delivery business ha ha....sigh.  That’ll be me.  I actually liked one thing a lot from the super bowl, specifically Russell Wilson.  His dad would tell him when he was growing up, "Russell, why not you?"  For whatever reason that really resonated with me.  Why not me?  I deserve it just like anybody else.

Pipe vs platform, control chokepoints, don’t diversify.

           Where do I start with this post?  I definitely think my businessfail.com idea would be a good one.  I was thinking of whether it would be text or maybe doing a youtube channel for it would be better and I’m not sure so I’ll have to think further on that.  What I’m thinking I would do though when I start it up is to have it just be a weekly post or something.  With that post I’d just do the best fails/things learned from those fails as some weeks may have many to post.

            Last night I made my first call for my ad posting business idea.  It wasn’t really nerve wracking.  I did say to myself that my goal would be 5 calls.  I only made one.  That was all I needed to easily blow through my hour session of working on my business.  The call was a total disaster ha ha…sigh.  Tis ok though cause I have permission to suck at first.

            I looked up the company name and called.  The company name has the person’s name in it.  So when I called she answered, “Hello.”  I said, “Hi my name is Brock.  Is this Barbara?”  She said, “Yes”.  Again the lady’s name is in the business name.  I said, “Are you the business owner?”  It was one of those moments where you know you shouldn’t say what you’re about to say, but for whatever reason, mine being anxiousness/nervousness, you uncontrollably blurt out what you didn’t want to say anyways.  From there on the conversation lasted about 5 seconds longer.  I got halfway through my second sentence.  She cut me off.  I asked a question and she just hung up on me.

            Lesson learned is that I had to change my wording up a little bit to get even quicker to the point and not really ask for permission to at least get two words in. 

            Later that night I was reading my “Winning through Intimidation” book and it talks extensively about operating from a position of power and authority and that there are several ways to do this with many jobs/businesses that don’t normally command power/respect.  I’ll do a post on the notes I took from the book once I’m finished with it.

            I also read a summary of a biography of John D. Rockefeller recently.  He focused on a couple things.  Hiring geniuses to do the heavy lifting.  Another thing I gleamed from that summary was that he controlled checkpoints in the shipping industry so that he forced his competitors to do his will else he’d crush them and then buy them out.  One other thing I got from the summary was that Billionaires don’t really diversify.  They stick to just one or two revenue streams, but become masters at that one revenue stream, whereas the average millionaire has multiple streams of income from different industries.  The middle class focuses on credentialing up via degrees/job titles.  The poor just expect people to take care of them.

            Another thing I read just yesterday was a Harvard Business Review Blog that chronicled the institutionalizing of failure into PBS, the public broadcasting station.  They made it mandatory for their employees to purposely take risks and fail and make mistakes and see what worked and then move on from those things.  Start to finish has created a powerhouse of a company and change in traffic from their audience in a drastically positive way.

            Another thing I came across was a Wired magazine article talking about how there are two business models now.  One is a pipeline type, i.e. producers produce and ram product/services down consumers throats.  The other type is the platform type.  Platform would be the internet broadly, or more specifically things like youtube and twitter and facebook where producers can produce value and then consumers can then consume that value.

So I started thinking, “How do I position myself for the collapse that is coming?  What business do I need to start that will control in Rockefeller chokepoint fashion, that I could start/take over via my commanding position via proper intimidation, and that is a platform?”

One idea I had was to buy up an app building business like Appsmoment.com or something like that where it is cutting edge, platform based, can grow in capital appreciation, but also have monthly cashflow revenues.  I also thought of education sites like udemy.com or kahnacademy.com.  Buying up those types of companies and then merging them together.  Anywho there will definitely be more on this later as I do more introspection, but I wanted to put it all on paper before I couldn’t articulate it what I wanted to do.  Feel free to drop some bomb ideas in the comment section below on how to achieve business greatness.

Itchy itchy snitchy witchy bit...

So I had the itch the other day.  The itch to employ my "employees", i.e. excess funds beyond weekly, monthly, 6 month buffer, needs, into income producing assets.  So I started looking around.  Stocks.  Interesting to own a part of a real business that generates you passive income.  REITs seem cool and similar to what I like, i.e. real estate.  What about lending club?  What about something going up to the bakken oil fields?  What about something something something?  

Mainly my focus/interest though leans to real estate.  I've looked at mobile homes too.  No go on the real estate/stock thing for me though after thinking about one main thing.  

Interest rates. 

When they go up, prices, when all else is equal (which isn’t ever the case and in fact I think “all else” is going to get a lot worse as far as effecting house prices going up, but for simplicity sake this time we’ll let it be), must come down.  How much must they come down?

For a property/home that is 100k with a 3.5% interest rate, which we just finished visiting on the historical interest train just about a month ago, on a 30 year mortgage has a payment of $449.04. 

I happen to know through a tiny bit of research that the AVERAGE 30 year interest rate on a mortgage is 6.97%, or basically double the first rate. 

How much is the payment on that 100k house now at 6.97%?  $663.29.  That is a 47% increase in mortgage payment amounts made each month!!!! 

Now this is very important so pay attention…BROCK! Lol.  Remember I’m itchy… 

Now lets continue to assume that indeed “all else” stayed the exaaaact same as it was when the house sold for 100k at 3.5%, but now we’re facing 6.97% interest rates.  Would anyone in his or her right mind buy that house? 

Now to “all else”.  To me “all else” would be that employment didn’t improve or worsen, incomes didn’t go up or down, the population stayed the exact same, supply of houses stayed the exact same.

Hopefully the answer is abundantly clear.  The answer is that nobody in his or her right mind would buy that property or even goes look at it as clearly it was overpriced by 47%, which is the realization I finally came to. 

To flush out my thoughts. 

We’re as a people up to our nostrils in debt. 

www.usdebtclock.org/ if you haven’t already been there.  CRAZY site.  We’ve never been in worse debt and it is growing exponentially.  If “we” came to me or you and asked to borrow more money then AND you HAD to give it to them, but you could change the amount of interest they must pay would I/you set it lower or higher knowing the trend of debt accumulation?  Now that is another easy lob for you to knock out of the park.  Higher.  Way higher is where you’d set the rate.  Much higher than the current record low amount that is currently being charged to “we”.

So now that that is established and we know that things tend to revert to the mean/average over time that means that we’re going to, as it relates to house mortgage interest rates, greatly surpass 6.97%.  That means all those REITs and stocks (those stocks are indeed businesses that get charged interest rates too for the loans they have and are apart of the “we”) and mobile homes and trucks (car loans) to go to the bakken oil fields will be much more affordable and likely by a discounted amount of 50% plus.  This is just interest rates.

Demographics are changing and in a way here in the US that fewer and fewer people will be buying homes in the future.

So while I could buy a healthy amount of passive income currently, by protecting my assets in inflation-protected assets like food, fuel, protection, and other hard assets.  I’ll be able to buy even MORE of those assets once rates have normalized and lowered prices to even more favorable levels.

Ahhh…itch is more bearable now…..

How we made $17,090.10 selling our first house

My wife and I got married in July 2011.  We bought and moved her into the house in June of 2011 and I moved in once we were married.  We originally thought we’d keep the thing forever either for ourselves or as a rental later on as we both would like cash flowing assets to retire on one day.  Then came the late summer and fall of 2011 where I started…learning. 

I learned how much trouble our global economy is in trouble and how dangerous the next few years are going to be.  I figured that our house then wouldn’t really ever appreciate in value, and especially not anytime soon.  And when the economy does collapse I thought that I’d lose the equity (and purchasing power of that equity) I had and be ok with it cause then I had a place to garden and have my chickens and raise my family and store my crap.  Then things changed.

My parents ended up selling their home to help them downsize and they had a bunch of cash and so one time on the phone jokingly I told my mom she should just pay off our home and then I’d just pay her cause she’d be getting paid better than what the bank would be paying them in interest.  Gotta love banks btw…sheesh…lil shysters. 

Anywho my dear ‘ol ma, after me mentioning that my old realtor had actually done something similar with his grandma and his home, suggested I get in touch with him to just see how that all worked out and then if it was something that could happen in our situation then maybe we’d move forward.  So I emailed my guy and broke the ice with “So Conor is my house worth a million bucks yet and I should sell?”  I also asked more about his gma sitch and if he couldn’t shed some light on it.  He responded and said that my house wasn’t worth a million, but ballpark about 20-30k more than I bought it for, which 1) shocked me and 2) made me a little skeptical.  I thought how could it be when I just bought the thing less than 2 years ago?!  I was pretty excited though cause quick/easy math is that closing costs these days are about 10% of the sales price and with what my mortgage was I knew I’d clear about 15-20k at that point.  That is a lot of purchasing power!!!! 

So the whole “have the parents pay off the mortgage and then pay them” idea went right out the window and we moved on to “Lets get dat equity/purchasing power while we still can!”  I asked Conor to come over and show us comps and realistically what we’d list the house at.  He came over and then Ashlee and I discussed what he was projecting and our bottom line for selling and decided to sign with him and get the thing done.  A short time later I broke the news to my mom and she said we should look into selling it ourselves and save on the seller commission costs.  When you sell a home you as the seller pay 3% of the sales price to both the buyer/seller’s agents on top of any other concessions you make, which for us 3% of the sales price was about $3,500.  I kinda had a sick feeling to my stomach for a few reasons.

Sick reason 1) I like Conor and felt bad about backing out on him.  2) I wasn’t sure I could do it and would be embarrassed and was embarrassed with thinking about having to go back to him should I suck at it and not get it sold.  3) I felt sick thinking about losing out on 3.5k when my parents just sold their house themselves too.  3.5 takes me a month and half or so after taxes to earn and so that wasn’t something to just leave on the table.

So my mom mentioned and sent me a few websites that they looked at when they were considering selling their home themselves.  The one they went with and the one I went with was owners.com.  It is really nice for a few reasons, which I’ll explain in a sec, but first to finish what happened with Conor.

I decided, w/my wife thinking otherwise, that I wanted to try and sell the place myself.  I’ve sold a lot of things online and know how to do a good presentation and so I figured with a little guidance that I could do this and “make” 3.5k.  So I emailed Conor and said I was gonna try and sell it myself and that if it was a dud I’d come back to him, promise…kinda deal.  He was smart and said he’d already had a lady scheduled to post the ad for the house on Monday, which I think meant I was emailing him on a Thursday or Friday.  I said that I was sorry, but I was gonna do it myself and that was that.

Then came gut check time.  Owners.com will list your property on the local mls site, but to get that you need to pony up $395.  Credit card here I come! Yee haw!  We paid it off no problem, but man if this was a dud I was out $395 AND the sellers commission cost if I went back to Conor so I was nervous about that.  But paid we did.

We had already taken pictures of the house and put it up on a local site and showed it a couple times by the time I signed up for owners.com.  Hindsight is a beautiful thing/great teacher I’d say.  The second day we had it listed on our local site, not the mls, we had a couple come through who loved the house and said they’d pay full price and they didn’t have a realtor.  WHAT?!?!  No commission and no closing costs would’ve meant we’d net out around 30k, which would’ve been amazingly awesome.  Hindsight is, after they were scared away  by a leaky pipe, that we should’ve offered to pay top dollar to have the whole system fixed for a few grand cause then we’d still have made out better with not paying closing costs or buyers commission, one of the two I mean, but who knows maybe that wouldn’t have worked.

So we listed the house and had quite a bit of traffic.  That is one thing I feel bad about with Conor is that he gave us an excellent price point to start with and we ended right where he said he thought we would.

Owners.com was really nice though.  What they do with the $395 is they assign you a local realtor who is in their program/system and they send you ALL the documents you need.  The realtor makes sure you’re doing everything legally and by the books too.  In Utah your title and escrow company will also make sure that you’re good to go and following everything by the books.  When you’re first on owners.com and have paid you basically just set up the listing for the house and I think I also sent my pictures to my realtor so they could list them in the mls listing.  You have to provide them with the little blurb on describing your house, but luckily I still had that or perhaps Conor had it and I just copied his description, which was in all realtor speak so that realtors can understand what is actually being described on the place, plus we added things to the blurb that we’d like to know were we looking at the listing ourselves.

After emailing them the pics I think I also listed it on craigslist.  Doing that I think got a lot of emails generated asking if we wanted to do a rent-to-own basis at all, to which I only responded to like the first one and then realized the rest (and the first one) were all spam and so I just ended up deleting them.  So maybe listing on craigslist doesn’t matter especially if you already have a more popular local site like we do here that people use more than craigslist anyways.

Once we had the listing up on the local MLS we had a constant stream of realtors calling to ask to show the place.  That is one thing that I was worried about, i.e. that we wouldn’t have a sellers agent to “market” the home.  What do they do to market other than put it up there and perhaps tell some of their buddy agents to check out their new listing?  I mean they’re not going to trade shows or going door to door asking people if they want to buy a house in the ghetto of salt lake.  So in case you’re worried about lack of exposure and “marketing”, don’t.  As long as you put it up on the local MLS site you’re going to have people blowing up your phone with calls/texts to ask to see the house.

One caveat is that you will have dooshbag/pushy agents calling to ask to list the home for you.  If they’re a jerk, just hang up.  Otherwise just say no thank you and then hang up lol.  Some gave us grief and were rude saying that we were causing issues and that “this happens all the time with for sale by owners”.  My wife and I just thought we wouldn’t sell to those people even if they did put in an offer just cause of how rude they’d been.  I felt bad for some buyers having to work with those guys cause clearly the agent doesn’t give a rats behind about them and they’re just another payday.

Overall I think we had 10 or so showings in the first 10 days.  The young couple that came through came through on a Saturday I want to say and then we got an official offer that following Monday or Tuesday.  This is where not knowing what I was doing was a little embarrassing as I replied to our real estate rep from owners.com that we wanted to counter and that our counter was ___.  She responded saying she doesn’t do that, but that if we upgraded to full service representation, which was like $700 or $750, that she could draw up all the paperwork and negotiate and what not.  I said screw it and started digging through the packet of files they sent me electronically that had all the paperwork we needed and sent her back the counter.  I think they countered one more time to our counter and asked we fix a leaky pipe after their home inspector saw that issue, which we did, and that was that.  House under contract.

The pipe got fixed for $350 and then it backed up and so that cost another $160.  After that the next step was to find a title company to handle our closing process.  I got a call from a guy who said he often worked with the real estate rep we were assigned and quoted me a price of 1% of the purchase price…I recommend shopping around.  We went with the title guy that Conor recommended to us and was several hundred dollars cheaper and even cheaper than the title co, who I also called for a quote, that I used when I bought the house.

So once we got the pipe fixed we just waited for the appraisal next.  Keep in mind most of this time I was anxious that the sale would fall through any second cause I experienced vicariously my older brother selling his house SIX times before it finally went through just last year.  The appraiser came and took some pictures and measurements outside and asked us what the sales price was and any concessions we made and left.  It took a while to hear back on whether or not it came back high enough.  For those of you who are like me and don’t know what the appraiser is all about basically they’re an independent party who verifies that the house is worth what it is worth so the Lender/Bank is not over-lending on a home.  If they are, i.e. the sales price of a house was 100k, but the appraisal was only 80k, then essentially you’ve got to lower the price to 80k or the buyer would pony up cash for the difference.  Our house was a mess when the appraiser came through, but good enough to come in high enough that we didn’t have to lower our price so that was welcome news.

From there it was just anxious waiting till going and signing closing documents at an Artic Circle in the valley.  Then we dropped off the keys on the meter of the house and that was that.  We cashed the check the day after we closed and now we are officially debt free, have quite a bit of purchasing power, a kid on the way, and looking forward to the future.

Pros of selling the house ourselves:

·        No commission to our seller agent, as great as he would’ve been.  He’s not several thousand great.

·        Got to learn how it works as far as paperwork goes.

·        Got to learn the process of listing, showing, and closing on the sale works.

·        Control of when to show the house.

·        Control of what to put in our listing, which was more than our agent would’ve done for sure.

Cons of selling the house ourselves:

·        Basically just managing the scheduling of showing the house

·        Negotiating, but once that was learned/done it was cake really

·        Not knowing what the next step was, but now that that is done it’d be no big deal the next time around

So would I do it again?  Without a question yes.  I don’t think I’ll ever use a seller’s agent after my last experience unless it was like my kid or niece or nephew selling my house and it would go towards helping their family sending a kid to college or a mission or get married or something like that.  Otherwise my time and effort will suffice to compensate me for the work in the form of saved sellers commission. 

I would also say I might not use a buyers agent going forward either, cause lets be honest, we all look at a bajillion houses ourselves online and we could schedule a time to see the houses we really want to see and then…because we wouldn’t have a buyers agent to have the seller pay a commission we could negotiate the price down of the seller approximately 3%.  I know they ALLLLL say, “Ya buying a house is no worry for using an agent cause you as the buyer don’t pay the buyers agent, the seller does.”  In my opinion that is the same sort of crazy flawed and lazy logic many pundits use for economy and housing today.  Well is the seller increasing their price, or is it built into the ENTIRE real estate market at an inflated 3% to compensate for a real estate agent helping buyers get a house?  The answers are yes and yes.  Why wouldn’t it be?  It is just like subsidies and “tax credits” for buying a house.  Remember when the tax credit went away for first time home buyers and then the market got whacked just a little bit more?  That’s because the government wasn’t artificially increasing demand on the low end by X% by offering the tax credit.  My opinion is that if everyone decided to do a little work themselves and not use a seller/buyer agent like the traditional line of thought is right now than housing across the board would be 5-6% less than it currently is.  We could cut out that waste and just have intermediaries like owners.com agents that facilitate when/where needed and the rest is left up to us.  On a 100k home that is 5k less…not enough to change the world.  If the average home in America though is selling for 150k then that is saving 7.5k.  300k home is saving 15k.  That isn’t chump change by any means and guess what?  We don’t need to be paying that lol.

So!…that was my experience.  A good one overall.  I recommend selling your next home yourself.  Good luck!