Personal Finance Resources

Although basic in its approach, this article does serve to hit on some solid pointers to help you in saving money on your groceries. Like most things (other than gasoline) you can easily decrease the amount of spending in any particular month. This article helps you understand some of the more elementary tips for achieving this feat. It comes down to changing your mindset and putting a priority on saving money; in this case with your groceries, and you can achieve significant savings in your personal budget.

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For the last couple of years, my wife had been running a business on Amazon. This was a very simple business concept, anyone can do, and just takes a little bit of time (depending on how much money you want to make). The process is very simple, and goes like this:

1. Shop garage sales, estate sales, bulk listings on eBay, or start relationships with book stores and libraries to buy their old books when they are ready to get rid of them.
   If you are shopping the sales, make sure you are the first, or almost the first one to get to the sale. The old saying “the early bird gets the worm” applies here. Always buy in bulk. Buying individual books just won’t work as a long term strategy, unless you know how to find antique books that have great value and then negotiate for a substantial discount. By our calculations, as long as your average price per book is around 10 cents, you should be able to make some good money.
2. Sign up with a free account with Amazon.
   In order to list your books, use the “Sell Your Stuff” link. They will ask for bank account / credit card information, but you will not be charge anything to list the books. They just need the information in order to know how to send you your money, and for refund purposes.
3. List your books for sale.
   The quickest and easiest method to do so is to enter the ISBN and look up the book. If there is no ISBN, you will have to search by title or author. Now, make sure that the book you list is the book you have; this may sound simple, but we have run into problems where we thought we had the right book, but later found out it was wrong and took the hit on the refund.
4. Wait for the “Sold, ship now…” emails to come in.
   That’s really all there is to it.

Now above I mentioned that it does not cost anything to list with Amazon. This is true, however they do make money. They get a commission on every sale, but the nice thing is, they only charge you a commission if you sell something. So the listing is free, and you only pay them out of your profits. Pretty good deal, don’t you think? Feel free to leave any comments or questions you have at the bottom of the page, and I will answer them as best I can.

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When I last posted about how to ask for a raise, I put some tough concepts out there. Some concepts that probably are offensive to a lot of people who work hard and just want to make a little more money. So I felt compelled to explain a little further some of the concepts on the business side, so that you can understand where your employer is coming from. It has been said of war, “know thy enemy”. The same is true in working any business relationship. It isn’t a war/hate relationship, but if you know what your employer is thinking, then you can structure your approach to cater to that line of thinking.

Why Businesses Pay Low

Businesses don’t like to pay their employees for several different reasons. The first is that they only make a certain amount of money, so if they pay their employees more, then they get to keep less. When looking at it from your side, you continue to work harder, getting more done for the company, and therefore expect to get a raise. Another reason companies don’t want to give raises is the fact that if they give you a raise, you might tell others, and then they could have many employees wanting to get the same raise. You might not ever tell anyone, but the employer can’t bank on that. On the same note, if the employer gives in to your request for a raise, they might think you will just come back in a few months and ask for another raise.

Understanding the Need for the Company to Get a Return on Investment

Just like you investing in the stock market, your employer is looking for a return on investment. That is true of its employees as well. The company needs to make money from the work that you do. If you are not generating more money than they are paying you, you are in the danger zone. Think about this simple example:

If you run an ice cream truck, and you are making enough sales to run a second ice cream truck, and you hire someone else to run the other truck, will you pay them more than they are generating in profits? Absolutely not. You aren’t going to lose money on running the second truck, it would be better just to run one truck than to lose money running a second truck. Simple business principle.

The same is true of a company that employs you. They must get a return on your work, otherwise it is better for them not to have you on staff.

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Yes, you have been working for a while at your current job. Yes, you have been working hard. Yes, you have made some definite positive changes for the company. Now it is time for you to make some more money. But the question is, why won’t the boss give it to me? The answer is simple, they are already getting great work out of you, why should they pay you more? Also, if they pay you more, then that means they will make less in profit. I know when you read this that you are thinking your employer either doesn’t think this way, or if they do that it is very evil, but at the end of the day, it’s just business.

All businesses are in it for the money. They all want to sell as much of their product or service as possible, while spending as little as possible in materials, labor, intellectual property, etc. So, how to ask for a raise? Well let me give you a few pointers to motivate your employer to upping your dollars:

1. Understand that the company is in business to make money, not to pay you.
   This is critical to having the right approach when you walk into the boss’ office.
2. Schedule a time with your boss to discuss your compensation.
   I know this seems like a ‘duh’ thing, but really, how long have you wanted a raise, but not done anything to push the matter? You can’t receive anything, if you don’t ask for it. Being proactive will get you a lot further, a lot faster.
3. Make sure to stay very professional, and keep a low tone of voice when speaking to your boss.
   Facts are a lot more important than opinions. If you can show your boss evidence of being underpaid, and not be offensive when presenting your case, you are much more likely to obtain the raise you are wanting.
4. Instead of protesting how hard you’ve worked, how you are always on time, and very reliable while at work, focus on the benefits the company receives by employing you.
   Explain to the boss how you have helped to increase sales, or how you have worked to lower the company’s costs in particular areas. If you are in customer service, explain how you have worked to appease your customers, and note any repeat business the company has received from those customers. If you are in administration or a technical area, explain how much time you were able to save other employees by the systems you have put into place. If you have saved those employees a lot of time, they are able to do more, and the company will not have to hire additional people, i.e. you are saving the company money.
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   Internal Tags: Career Advice

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I was in one of my rental units that I am managing, and had sort of an epiphany. This unit had gas heat prior to our acquisition of it, and we converted it to electricity, for a couple of different reasons. For one, electricity tends to be safer than gas in a house, and the other reason is that there was only one gas meter servicing to rental units, i.e. gas was provided by the landlord. So we wanted to provide a safer environment, while at the same time cutting our residual costs down. So how does that relate to reducing cooling costs?

Well, this rental unit had two portable air conditioning units, and with the conversion to all electric, we decided to buy a new portable air conditioning unit that was also capable of providing heat. So that means that there is now an extra window unit that is not necessary for the apartment. So my thought was this:

Why not install the window unit in the master bedroom at my house, and not run the central heat and air conditioning at night?

It is well known that window units consume a lot less power than regular central heat and air conditioning. And I have already cleared it with the owner of the property for me to use/own the unit, so it brings no additional cost to my budget. Further, I am having an issue with my central heat and air conditioning system, so this could really help me out. Right now, my electric bill is running somewhere around $150 per month.

So I am going to try this out, and if it works, I will post the results, and let you know how much of a savings I was able to achieve. Check out my reduce cooling costs post for more information on making your home more efficient and saving more money on electricity.

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Well today hasn’t really been a good day in my real estate quest. I own a double wide on the outskirts of town, and had some renters that I just evicted. They had been consistently behind on their rent, and finally only paid for half of last month’s rent, and nothing for this month. So today, we were in the house trying to clean up after them.

The rotten meat in the refrigerator sure was a nice touch. Not to mention the dog feces in the master bedroom. But what really got me was the destruction of my bathroom door, and several pieces of trim in the house, and the bottoms of walls that had been scratched up from the tenant’s pet. You might be thinking, “Well Jeffry, why did you allow them to have a pet in the house?” And the answer to that is that the dog was illegal. The contract did not allow for a pet, nor did they attempt to modify the lease, pay a pet deposit or anything.

I guess I am just venting with this post, but I would like to be able to connect with my readers who invest in real estate, and let them know that I am a real person, and that I have struggle with bad renters just like the rest of us. Anyways, keep your heads up out there, and I will try to keep mine up as well. The rental market here is still strong, so I hope to have it rented out again soon. But I think I am going to put it up for rent or sale, and just see what happens. ‘Til next time…

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There comes a day in every real estate investor / property manager’s life when they have to issue a notice to vacate. Last Monday was my first time. I truly believe that this is the worst part of managing properties; other than perhaps a contractor that does shotty work and still wants to get paid. But truly, in evictions, there are no winners. The tenant loses their residence, and the landlord is typically left with a trashed out unit and an unpaid bill. I am not anyone special, it was the same for me.

This particular tenant was having problems getting their rent to me on time in the past as well. Only one or two months did they pay their rent on time. So, as you probably can guess, they just got further and further behind on their rent, until finally last month they were only able to pay a little over half of what they owed in regular rent, not to mention all of the late fees. The good news is that they did in fact leave without me having to go to court and get the eviction finalized. With just the notice to vacate, they left the property. This is one area that I think my treatment of them through the problems paid off.

Working with Your Tenants

You know, problems happen, and tenants sometimes cannot come up with their rent in a timely fashion. But I believe if you work with them a little bit, and don’t hassle them too much, they will be more likely to make it a priority to pay you. Now don’t get me wrong here, you still charge your fees and you still send letters, but getting nasty and upset with them is not going to get you anywhere. In fact, in some instances, getting upset with them will cost you more, if they think you are tyrannical, they may trash the place before they leave, and drag you through the eviction process to expel them. I think in my case, the tenants were so ashamed about the whole situation, that they just left.

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As a fellow real estate investor, sometimes deals come along for multiple rental properties, and getting a blanket mortgage for those properties is an ideal situation. I just came over from doing some property rehabbing at one such unit today. The deal involved two duplexes that were several blocks away from each other, that had the same owners. So we negotiated the purchase of these properties (a great deal by the way, some 1% - 1.5% rent to purchase price ratio, after repairs) and set off to our banker to get a loan.

Working with a Great Mortgage Broker / Banker

Again, one of the key fundamentals to doing any legitimate business is having strong relationships with business to business units. Your mortgage broker or banker, any contractors, property managers, etc. must be of very high quality and at the cheapest possible price. I stressed quality first, because in today’s world the best price is often accompanied by some very unscrupulous business practices. Get references, and test your relationships before you do big deals with them. It might be a little more effort, but it is worth it, as you will see in a moment.

Getting the Blanket Mortgage

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Continuing on my article “Small Home Based Side Business Idea Part I“, I would like to demonstrate some ways to convert your newly acquired inventory to cash. Ok, so once you have cleaned out the unit, and concluded your business with the storage unit, then there are four ways I have for you to make money on the unit. These are options that have various time line for recapturing your investment, but the general rule of thumb is that if you can wait a little longer to get your money, you should be able to make more of it. So let’s look at some of these techniques:

1. Running a Garage Sale
   Quick, simple. This is the easiest way to turn around your money quickly. If you price the items low, and focus on larger, more expensive items selling, you should be able to sell most of the unit on a typical Saturday. One Saturday that I did this, I was able to do effectively triple my money spent, and I still had items left over to be able to sell elsewhere.
2. Using Ebay
   If you want to make a little more money, and take a little extra time, you can utilize the internet and local advertising to sell the items. Getting an account with Ebay and listing the items for sale through its online auction system can be a great way to drive up the price you get on a particular item.
3. Utilizing Craig’s List and Local Papers
   Craig’s list and local papers can give you good exposure at a low or no cost base. I would limit my use of these services to larger items that you can get a good price for. Things like lawn mowers, furniture, etc. would be a good fit for these items. Craig’s list is a free service and is available for many, many areas across the country. Check with your local paper for advertising costs and dates.
4. Pawning the Items
   If all else fails, consider just pawning the items at your local pawn shop. This is a great way to sharpen your negotiating skills, as pawn shops are expert negotiators. The easiest way to learn - watch what they do, and mimic it. Always been pessimistic and reluctant to sell your items, as you worst case scenario is going across the street and selling the items to the competition. “No” is the best negotiating word.

So if you take these methods and put them into practice, you should be looking at a few hundred dollars in additional income each month. These auctions happen all the time, especially in bigger cities, thereby providing you a continual stream of inventory to sell. And if you hold a garage sale continually, you should be able to build up a client base, that will check out your garage sale week in and week out. So go out there and make some money, and let me know how you do.

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If you are investing in rental properties like me, you need to make sure you have a rental formula that works for the property of interest and provides positive cash flow. There are several different formulas that you should consider. One is a formula for calculating an offer price based on expected rent, one is a vacancy and maintenance formula, and another is a calculation on net cash flow/income generation on the property.

Simple Offer Price Calculation for a Rental Property

Some experienced investors have a complicated formula for calculating their offer price. While this usually lends itself to a better decision, I like to make a simple calculation first. If the bid price is going to be near this calculation, it might be worth it to continue estimation of repairs, etc. but sometimes you can just ball park the rest. But most investors like to look at a rental property this way:

1% x Offer Price = Expected Rental Price

This is a good rule of thumb to get you started. Now, I have offered on properties where I am looking at 1.5% or greater, in which case I don’t spend too much time estimating repairs. The cash flow is so good, you can absorb a goodly number of repairs and still make quite a bit of money.

Vacancy and Continuing Maintenance Equation

Another thing to consider is the vacancy rate and continuing maintenance that your new rent property will need. Here’s a general rule of thumb:

75% of the Rent is kept by the investor, 25% of the rent is spent in maintenance and vacancy.

Now I have seen the hassle and problems that surround renting properties, and I tend to lean toward 1 year leases, just to try to minimize issues related to vacancy, moving a renter out and advertising for a new one, etc. If you really need to get a property rented you might consider doing a 6 month lease, but I would focus on getting 1 year leases.

Net Cash Flow / Income Generation

I threw in this just for some additional help, but it shouldn’t be that hard to figure out.

Rent - Maintenance - Vacancy + Depreciation (usually 30 straight line depreciation) + Tax Deduction on Maintenance, Office Supplies and Mileage

So my recommendation is to take a part of your house as an office (for tax purposes), that way you can take all of your miles for any trips back and forth from your office (home) to all of your properties. You’ll have to recapture the depreciation on your home office when you sell your home, but its worth it.

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