Personal Finance Resources

No doubt about it, now is the time to make preparations to invest in real estate, especially rental properties. With the mortgage market plummeting and buyers going into foreclosure, there has been a shift in demand. More people are going to be looking to rent, and more houses are going to be coming up for sale. Further, mortgage rates are decreasing. My prediction is that over the next 1-2 years there will be more easy deals than many years past. So the problem is not going to be finding good deals, it is going to be buying into them. But hopefully, these few pointers will get you going in the right direction.

Stopped being Scared and Take Action!

This is the single biggest reason why people don’t ever become more than average. Everyone is afraid of losing money, or being destroyed financially, and just won’t take the risk. You have to just decide that you are going to make a bold move and step out there to make something happen. As I said before, the next year or two is going to be the perfect opportunity to begin buying rental property. Stop over-researching and mulling over the what-ifs and start taking steps to making it happen.

Shoot for 1%

In any deal you are looking at, be sure that however much you put into it initially, that the rent will equal at least 1% of that amount. I don’t just mean the purchase price, I mean all up front fees to purchase, close, and make any repairs to the property. You will find with vacancy, maintenance and hassle it just won’t be worth it to do a deal for any less.

Start Small when Buying Rental Property

Small house always rent easier than large houses. Look for 2/1 houses in good neighborhoods. Small houses plus the right location and price equals rental profits. I own and/or manage several houses, and the small ones are always easier over all. And you tend to make similar money. Maybe not quite as much as the larger houses, but compared to the risk, it is a much better deal.

Buy Rental Properties One by One 

I’m not suggesting that you don’t buy a two property deal if it is really sweet, but don’t use all your time looking for the next deal when you have one in front of you already. This is especially true when you are just starting out. Real estate investing is risky, and you need to take it slow in the beginning, while you are learning the ropes. Often the people you are buying from or renting to will attempt to take advantage of you, and you need to be cautious. Going slow is the best option when you are starting out to learn, and see just what it takes to get a deal off the ground and producing.

Establish Industry Relationships

This one is huge. You really, really need a quality real estate agent and banker for starters. You need them to make sure your property fits the rental model you are looking for, how good the neighborhood is that you are looking to invest in, and securing the best deals. I highly recommend taking these professionals to lunch, to show them you are serious and want to to have a relationship with them, not just get the best deal possible and then go with someone else that shows a slightly better rate or terms. These relationships will pay off with referrals, and deals you didn’t even know were on the market down the road. Also, join the local real estate investor club in your area. You may learn something you didn’t know, but more importantly, you will meet people that can help you down the road.

Establish Tenant Relationships

Doing right by your tenants can get you in position to extend contracts, and even get referrals for new tenants in other properties you may have. I just recently had a call where one of my tenants asked me if I had housing for a friend of theirs. Relationships, relationships, relationships. They pay off in the long run.

Don’t Get Emotional

This can really cause serious damage to your business. If you let angry, grief, or any other emotion sway your decision making, you are in for a long, hard ride to poorville. Sometimes tenants can be so aggravating, but stop and ask yourself, “Will it really do any good for me to get mad and yell at them?” In almost every case, it just makes matters worse. Work with the tenant as much as possible, and if worse comes worse, write the eviction letter. But do your best not to burn bridges.

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I am irate at the governing bodies as to how licensed individuals are being treated. We are being treated like criminals. Not only does a new licensee have to get 60 hours of SAE training before being allowed to renew their license after the first year, but I just recently found out that I have to provide fingerprints so that the FBI can do a criminal investigation on me! And what’s more, I have to pay additional money for the education, the fingerprints, as well as a renewal fee to TREC! What has our country come to! Even though I have completed my education and paid the TREC renewal fee, I am probably going to miss my renewal date of 2/29/08, and have to pay a late renewal fee in addition to the ridiculous fees I have already paid. But let me just give you a quick rundown (be sure to check TREC’s website for the current requirements) of the new licensing requirements. These requirements apply to anyone renewing or applying for a salesperson or broker’s license after January 1, 2008:

• Take a least 60 hours of SAE education (I used AbsoluteCE for mine, which was the cheapest I could find, however it still cost me $199)
• Pay a renewal fee to TREC (I paid $51)
• Find an IBT location and setup an appointment to get your fingerprints taken (this is the worst one, they are forcing me to give them fingerprints, which is against the constitution as I have committed no crime, nor have I been charged with a crime, as well as charging me $44.20)

One more thing, make sure to get all this done 10 days before your renewal date, or you could risk getting slapped with additional fees. Can you believe it? I can’t, these agencies are absolutely criminals! Our forefathers would be completely ashamed. I go in tomorrow to get my fingerprints done, and my renewal date is tomorrow. We will see if I get slapped with more ridiculous fees. Please leave your feedback at the bottom of the page.

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I was looking around online today, and found a great article on debt. This article will help you to re-align your thinking so that you can escape the snare of debt. What you have to realize is that getting out of debt is not only hard work, but it also takes a change in your mentality. So check it out and let me know what you think.

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If you want to learn some things you can do to reduce cooling costs, you have found the right page. I am going to show you several things you can do to get those electric bills down. But first, you need to understand why you have a high electric bill. Many people think that if they can put high R-value insulation in a home that effectively drive down the cost of heating a cooling. While a higher R-value insulation is rating to insulate better than lower R-value insulation, it still may not reduce your bill considerably. Why?

Most of the energy efficiency that is lost in the home is lost through the doors, windows and ceiling. This is especially true in older homes. Years ago, energy was very cheap, and there was no demand for energy efficiency. So, windows were built without insulation. Also, many older homes have cracks in the walls and ceilings, and generally weren’t optimized for energy efficiency. Even in newer homes, most of the energy is lost in the doors, windows and ceilings, and therefore your focus should be on maximizing the efficiency from those items. Further, most of the energy consumption is used by your air conditioning system. So here is quick list of things you can do to increase the efficiency in your home, and decrease cooling costs.

• Cut out and re-caulk all your exterior doors and windows.
• Replace your exterior windows with new, low energy doors and windows.
• Replace your spray in insulation in the ceiling with foil backed insulation.
• Replace your air conditioning system with a heat pump system.
• Replace your water heater with an instant heat system.
• Buy a programmable thermostat and automate your temperatures when you will be gone, etc.
• Replace all your light bulbs with energy efficient light bulbs.
• Hang dry some or all of your clothes instead of using the dryer.
• Hand wash dishes instead of using the dishwasher.
• Replace that old clunker refrigerator with a new, energy efficient refrigerator.
• Turn lights, TV, etc off when gone or not using them (I know this one is simple, but think about it, how often do you exit a room and leave the light on?)

Some of these are costly, and some are not. But if you can focus on just a few of them, you should start to see you energy costs decreasing. Also, if available, consider shopping around for low cost energy providers. Here in Texas, you can visit powertochoose.org, and get a list of all the available providers in your area, and compare costs, terms, and fees. There are ways to get your energy bill down, go after them!

Find out another step to take to reduce cooling costs…

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There are only two ways to increase your net finances, saving money and making money. I want to give you a few simple tips on both fronts. Now, you may have to adapt your thinking some, as getting ahead means that you have to do things differently than the people around you. You have to learn that a big part of saving money is not finding deals, it is negotiation. You see we have been conditioned in America to accept the price that has been offered by the companies we want to do business with. But in many cases, if you would apply a little negotiation, you would be amazed at the discounted merchandise you can purchase. With that in mind, let’s look at some of these personal finance tips:

1. Doctor’s Bills
   If you don’t know, I used to work for a hospital. While I was there I learned that the yearly collection rate of that hospital was somewhere around 46-48 cents on the dollar. That means that the hospital got a little less than 50% on average for every single bill that was sent out. This is the trend in the health care industry. So what does that mean for you? Basically, it means that you can negotiate with your doctor(s) to drop the price of your care. You don’t have to be bullish about it, just simply call them and ask them to lower their prices for you. Tell them you know the average collection rate, and you are convinced that another doctor would discount their prices if he didn’t want to.
2. Buy Used Cars, not New Ones
   I have preached this before, but it is a fact that new cars depreciate some 25-30% in their first year. So instead of looking at a brand new Acura Integra (I drive an older one of these by the way, and they are great cars), get you a 5 or 10 year Honda Civic, or something like that. Honda and Toyota are some of the most reliable cars on the road these, and with increasing gas prices, their high gas mileage comes in handy.
3. Donate to Charity
   This one is close to my heart. I believe in donating to the local church, and supporting foreign missionaries through the local church as well. But not only does it bring a benefit to other people, you are also able to take 100% of the donations as a tax deduction. Now, most people know this, but I will throw in a little twist. If you own stock, you can donate that to the church or other organization. This way, you avoid the taxes paid on any earnings the stock may have gained, and you get to take the full stock price as your deduction.
4. Negotiate with Creditors
   Many credit card companies have ridiculous fees like annual fees, minimum finance charges, etc. If you negotiate with them, often you can relieve these fees. I had a credit card once that I didn’t think had an annual fee, but they tried to charge it. When I saw it on my bill, I called them, talked to them about it, and they removed the fee. You can negotiate.
5. Buy an Automatic Thermostat
   There are too many things to worry about these days. Try to put some of this stuff on autopilot. With a programmable thermostat, you can set the temperatures during the day and at night to dramatically lower the costs of heating and cooling. With these units only costing $100-150, it is a very smart decision. One of these units could pay for itself in a matter of a couple of months.

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If you operate a property management company and/or invest in real estate like I do, you need to be able to work with contractors and subcontractors to get the best deals possible. However, more than just finding the cheapest price, you need to be able to trust the people doing the work for you. This week, I had a battle that I wanted to share with you, hopefully to give you some help when shopping and working with contractors and subcontractors.

First, you want to build relationships with people, not with businesses. I am a firm believer in the good ole boy system, and let me tell you it works. But the problem I had this week was, my typical plumber who I know and have done business with in the past, was not able to complete the work on a job I had. So rather than going to the phone book, I took his recommendation of another plumber in the area. Normally, this is a great idea; however, I made a mistake.

My mistake was that I assumed that the terms, conditions, etc would be the same as with my typical plumber. They were not. I was assuming that I would be billed for the service by mail, and then would have 10-30 days to pay, as this is the typical deal with my usual plumber. But this plumber wanted to be paid immediately. The problem was, neither of us talked about this ahead of time. We found out our difference after the job had been completed. This made the situation an ugly one.

The problem we had is this - he was afraid of being stiffed, and I was afraid of his work failing shortly after completion. And, in fact there was a problem that surfaced after he completed the work. But he was not willing to go back to the property and check out the problem. He simply wanted to get his money and move on. The job was completed on Wednesday, and by Friday he had called me some 6-8 times looking for his money. Terrible, terrible customer service.

I was able to call my usual plumber in to check out the problem, and he identified that it was not the fault of the other plumber. So in the end, I wrote the check and paid the other plumber, just to get the monkey off my back. The contract price was only $400, so I guess it was a lesson learned for me.

Bottom line, whoever you deal with, make sure that you have the scope work, price, terms and conditions all worked out before you agree and they start the work. It just makes sure that everybody involved is on the same page and that nothing sneaks up on anyone else. In this case, if either party had made the other aware of his expectations through job, it would have gone much smoother.

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If you read my last post on Career Advice - Interviewing, than hopefully you have gotten some good tips to mastering the entry level interview. Today I am going to be going into some interviewing tips when you have experience, and are looking to up your dollars. Now, this information assumes that you already have a job, and you are looking to move up in the private or corporate world. If you are fresh out of college, or have minimal experience, check the link above for good interviewing tips targeted for you. Alright, so you have won an interview with a company that is hiring for an upper level position that is in your field. Now what?

Body Language and Attitude

How you pose and conduct yourself during the first few minutes of the interview sets the tone, and possibly the decision to hire you or not. You want to have a careless attitude about you. Not an attitude that you don’t care about the job or working hard, but an attitude of not caring if you get the job or not. Be slightly reluctant when answering questions like “When would you be able to start?” and “What do you think about our company?”, etc. You want to give the impression that you are only looking for the best fit for you and the new company you choose to work for, not just for more money. When I was in this position, I asked them questions about the company, and what they were looking to accomplish by hiring me, etc. I was extremely calm in the interview, and did not really promote myself. In fact, I didn’t even have all of the qualifications that they wanted for the job. I was honest, and told them simply that I knew the theory behind the systems they were using, but did not have experience in those particular systems. This brings up my next point…

Be Honest

Don’t hype yourself up with nothing to back it up, it isn’t necessary nor will it be taken well by the interviewer(s). Typically, these are going to be your new managers, and they have a good idea of how to spot a phony. Keep in mind, you already have a job that pays fair to well, and you do not need this job. You are in the power position. When I was looking to move up, I simply told them I was looking for a good fit for them, as well as for myself. They knew that I was looking for more money (it isn’t that hard to figure out).

Ask Many Questions

You need to get a good feel for what the job environment is at the new company. You need to have a comfort level with the new managers, your daily tasks, expectations for overtime, office facilities, everything. The point is, find out as much as you can. You need to know if it really will be a good fit for you, as well as for them. Also, when you ask questions, you put the focus on them, and put yourself in the driver’s seat. This can also be some great fuel for your negotiations. If it is a longer drive, more crowded parking, worse office conditions, etc. than you have good ammunition to use to drive your dollars up.

Negotiating for the New Position

This is my favorite part. If possible, get them to offer something to you first. This is one of the most power tools in negotiating any deal. Regardless of the number you had in mind, their first number may be more than you were expecting. In my deal, they wanted to know what I wanted before they made the offer. In this case, you want to provide a range. I told them I was looking for something in the low to mid 50’s. Always provide a first number that is higher than what you actually want, and never provide an exact number, because you won’t get it (in most cases, anyway). So when they made me the offer, of course, it was $50,000. Another important point here, never take the first offer. So I told them I really wanted more (fishing to see if they would go up without a counter offer), they didn’t, so I countered at $52,000, and we settled at $51,000. Now, I probably could have gotten more, but I did want the job, and it was still almost a 30% raise from the previous job.

Again, be reluctant when negotiating, and use the ammunition you collected in the interview to justify your proposed higher wage. If you can, don’t wrap up the negotiations all in one day. Come up with an excuse to talk to them the next day. Don’t lie to them, but maybe say something like, “I need to talk to my wife about this before we make a decision.” or “I need to pray/think about this and let you know.” All these bring a sense of loss to the other side. You may be able to squeeze some extra dollars out of them with this technique, and to be honest, you should take some time before you make a final decision.

So good luck, and let me know how it goes by leaving comments at the bottom of the page. Also, sign up for my RSS feed to get automatic updates to all the new information that becomes available on this personal finance blog.

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Everyone wants to find that dream job. We get so discouraged when we look, and look, and look for an opening, only to be turned after the interview. Well I have had successful interviews in my job days, and ultimately I know what employers are really looking for. This is going to be a two part series, with today’s lesson being solely for the unexperienced professional. If you are just out of college, or have not had an entry level position, then this is for you. Tomorrow, I will give tips and career advice in interviewing for the experienced professional, and how to negotiate up your dollar amounts. But there are some basics that apply to both categories outlined.

Interviewing Anxiety and Eagerness

This is the most important DON’T of interviewing. Employers are looking for people that want to work, but they are suspicious when someone is overly anxious. When you show a lot of nervousness, you tend to either talk too slow or too fast, your thoughts are not orderly, and you can end up making a fool of yourself. This is an easy way for the potential employer to scratch your name off the list. Be relaxed, take deep breaths, try to think about other things that are relaxing before you are called in for the interview.

Another tip from personal experience, it is good to show up early, but you need to preoccupy yourself before you go in to the interview. Think about when you were a child and in trouble with your parents, but you had to wait until Dad got home before the punishment would take place. The waiting often is much worse than the punishment. Same applies when waiting to be called in for an interview. So take something to read, or a crossword puzzle, or something to keep your mind from stressing over the upcoming interview. Bottom line, if you are relaxed, yet professional, you will stand out over your competitors.

Credentials

If you have made it to the interview, chances are likely that you have passed the employer’s minimal educational and experience requirements for the job. Don’t waste a lot of time talking about your credentials. Remember this about people, they care about themselves, not you. The interviewer is focused on the benefits you will bring to the company, not how many pretty degrees you hold. So focus on the benefits you will be providing, for example, working hard to improve the production of the company, instead of saying that you are a hard worker. Or, saying that you can provide new creativity to help boost sales or drive down costs of the organization, instead of saying that you had a 4.0 average in college. Hopefully you see how this sets the focus on what you can do for the company, not how awesome you are. Be creative, leverage your attributes into something the interviewer can use to push their business to the next level.

Interviewing Attire

This one isn’t too hard. Dress professionally. For guys, a shirt and tie is usually sufficient, for women, a business suit is probably the best idea. I will give you one tip here that may be of use - try not to look too polished. If you are a guy, loosen your tie just a bit before going into the interview, if you are a woman maybe leave a button undone on your suit coat (I am not saying to show anything off here). What I am saying, is that you should look professional, but if there is one or two things that are not quite perfect with your attire, you might send the signal of a hard worker, which is good.

Putting it All Together for the Interview

Utilizing the steps above, if you stay relaxed, keep the conversion light but on topic, focus on the benefits that you will provide to the company, and are dressed professional but with a feeling of a strong work ethic, you will poise yourself for the best possible chance of winning that job. Remember, employer’s don’t hire resumes, they hire people that will benefit their company. The resume just gets you in the door. All of these tips I have given you will help you to connect with the employer, and build a relationship. Bottom line, the person that the company is the most comfortable with, is the one that will get the job. They need to like you, and believe that you will provide the most value to the company.

Check out Part 2 of Career Advice - Interviewing…

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I am going to make this short and sweet today, but I was in talking with a bank Vice President today, and he told me about a way to get a better rate on your house without refinancing the traditional way. Now as a seasoned investor and now real estate agent, you would think I would already know about this, but I didn’t! And since I didn’t know about this, I figured my readers may not know about it either, are you ready for this?!

Negotiate with Your Current Mortgage Home Lender!

What, you ask? I thought that I had signed a 30 year note and the interest rate was set in stone. That is exactly what I thought too. That is why I go to great lengths to ensure that I get the very best rate, sometimes buy points, etc. to obtain the very best deal on a home loan while I am in the process of closing a deal. But you can negotiate.

Think about it from the lender’s point of view. Yes I like that I have a mortgage here that is paying me above the market rate. And I am very happy that I have an owner that is paying faithfully on the loan. I do not want to lose this customer.

So when you call in to the lender, and tell them you are unhappy that you are paying more than the market rate of interest for your loan and are thinking of shopping around for a new lender, you put yourself in an excellent situation to negotiate with your current lender.

So what’s the benefit of negotiating when I can just refinance with someone else?

The benefit is, you may be able to negotiate for the market rate of interest, and if so, all that has to happen is an amendment to the deed of trust and an amendment to the mortgage documentation. So that means that you only have some very minimal document fees to incur, which will probably only amount to a couple hundred bucks, instead of possibly well over $1,000 to refinance the home. Also, it is far less hassle to do it this way, as you will not have to have another appraisal done, another survey, wait for three weeks, and then have to go to the title company and close on the new loan. You save time, money, and hassle. Very nice benefits indeed.

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Check out this post on how one man was able to eat for a whole month on just $30. Now, as a preface, he did not do much initial research and his methods are unhealthy, but it is interesting that he was able to eat for the whole month so cheap. Our budget is around $150 per month, and we were getting a lot of help from HEB’s fresh or free program, but lately, the store has done better with keeping their products in date, and we have had less time to really hunt for the out of date stuff. Give it a read, and come back here to leave your comments and questions. I will be around to answer them.

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