BiggerPockets

Things I learned this week

Saturday, May 21

May 21, 2011

Hi,

So I've spent the week going through different websites, catching up on my e-mail, and I started a real estate investment course.  Here are the top things I learned this week:

1.  Time blocking is a great tool, but don't fill in every block in your day.  I love having a plan so I know what I'm supposed to be working on but something always comes up so leave some flexibility in your schedule.  I'm one of those people who likes to succeed and filling every minute of every day sets me up for failure. I should leave some holes in my schedule because success breeds success.

2.  The MLS is a retail market place.  I'm a Realtor, this one should be obvious to me but the lesson only sunk in after listening to a module in my investing course.  I will very rarely make money buying property listed on the MLS because it's not enough of a bargain.  This probably explains why my deals up to know have been less than successful.  This lesson also reminded me that I should identify the tunnels I'm looking through because I'm probably missing a lot of what's happening in the world.

3.  Never stop marketing.  I learned that I should schedule 85% of my block time (see above) on marketing, and 15% on managing my business.  This should never change.  When I'm actively working a deal or a project I should add that time to my work week, not take the time from my block time schedule.

4.  Direct mail is more expensive than I thought it was.  You have to contact a lot of people to get a deal, about 3,000 pieces of mail need to go out to generate 1 deal.  Now compound that by the fact that people will need to see your name 7 to 8 times to connect with you it will take about 24,000 pieces of mail to get 8 deals, and this is if the people on your mailing list circumstances don't change during the period it takes to get in touch with them 8 times.  Not including the cost of the postcard, a postcard mailing will cost $6,720 and 4 - 8 months to generate 8 deals.  Not the worst cost per deal if you consider that the average cost per deal is $4,000, however, this is definitely a long term income producing strategy, probably not the best one to start out with.  It has definite possibilities for my remodeling business though so I need to ramp that part up.

That's it for now.  Stay tuned for future updates.

Tamara

Not-so-Newbie Comes Clean

Thursday, May 19

May 19, 2011

Hi Everyone,

Or at least I hope there will be an "everyone" this is my first blog post here on BiggerPockets.  I hope this blog will help me meet some people, entertain, and help motivate me to stay on my journey to financial independence.  Here's the quick and dirty biography:

I started investing in real estate as a fix and flipper in August 2008, just about the worst time ever, I finished my first project in March of 2009 and didn't make much money, I did sell the property though and as part of the deal I picked up my 2nd project in August of 2009 and sold it in January of 2010, again without stellar results, we bought our most recent project in February of 2010 and it is currently under contract.  This project took longer than anticipated because we kept taking remodeling jobs, including one out of state, to keep the lights on.  I love the work, but I realized that I was doing something fundamentally wrong and I needed to make some major changes if I was going to stay in this business.  So what did I do?

I started looking around for people who seemed to be successful doing what I wanted to do and who were willing to teach me how to do it too.  I also took a hard look at my financial situation and what I needed in terms of income to continue to do what I love to do.  One of my main motivations is to avoid going back to a desk job.

One of the pieces of advice I stumbled upon was that I needed to have a plan and I needed to be accountable for my plan.  So I figured, what better way to be held accountable than to post a blog for the whole world or at least everyone on this forum to see.

So on that note my current total debt load, including the heloc on my private residence is $135,086.87.  I'm expecting to net about 38,900 from the sale of my current project which will leave me with a debt load of $96,250.  My goal is to net $7,000 a month to pay off my bills, cover my current living expenses, and build a nest egg of $360,000 in cash in the next 8 years.  I would also like to amass a real estate portfolio that consists of 8 rental properties in that time frame to generate passive income as well as assets that can be sold off to finance another 40 years of living expenses.  

How do I plan to do that?  I plan to net $1,200 a month from my remodeling company after expenses, this works out to roughly $10,500 in jobs per month.  The remaining $5,800 a month I want to come from real estate investing.  

In order to reach those goals I needed some advice.  I purchased an investing program, which I'm a little skeptical about but I don't really have much to lose.  In this blog, I will take you through the steps that I'm taking and how things are working out.  I'm not going to name the program that I'm using and I'm not going to give specifics because I don't want to infringe on anyone's copyrights or intellectual property.  Mostly I'm going to give you the high level tasks I'm working on and the psychological ups and downs as well as financial ups and downs of my journey.

Please keep reading and post your comments.  It should be an interesting ride.

Tamara