Working with People…

I struggle to understand people.  I don’t know why exactly, but it can be difficult.  Thus, I am weary to enter into partnerships with other people because I second-guess myself, and I don’t trust my ability to judge a person’s true character.  I think this is because I’ve misjudged some people in the past.  This is why I found Pamela Slim’s post on Escape from Cubicle Nation so intruiging today.

The post is entitled “The delicate are of business partnering.”  In it, Pam has a lot of interesting points about the personality traits to beware of when considering a business partnership as well as some of the various legal structures that can be employed, and their related pitfalls.

Her list of items to consider when choosing a partner is:
1.  Legal structure
2.  Money matters
3.  Market reputation matters
4.  Communication style
5.  Shared values

If you and your partner’s views align, more or less, in these 5 categories, your chances of success will be elevated.

Personally, I am struggling with this right now as I have two potential partners for REI.  My wife, and a close friend.  However, there is so much to determine before entering a partnership, that I will certainly take this advice to-heart, and make careful considerations before making a final decision that could affect my business and success for years to come.

Escape from Cubicle Nation was featured here before.  I recommend it for anyone looking for advice on entrepreneurship.

Net Worth – October 2006

Well, my NW has not increased substantially this-month. Part of the problem is my poor bookkeeping. I had used quick estimates in my Sept. NW calculation, and I also calculated it mid-month, so it didn’t accurately reflect the monthly situation. From now on, I’ll calculate my NW at the end of each month to keep things consistent.

Anyway, here’s the graph from NetWorthIQ showing my $3500 increase.

We had a few extraneous transactions last month. One, my wife went to Vancouver for a conference (flight $800, hotel $460), these expenses will be reimbursed, but for now it shows red on our NW. We also took a trip to Niagara-on-the-Lake to visit some wineries and spent about $400 stocking up our wine rack. The wine will probably last 4-6 months, and has already served as gifts for a couple of people.

If all goes well, next-month we’ll see a good increase in NW due to these reimbursments. Also, we had some rental expenses which will hopefully be reduced next month…. there’s a possibility we may need a new roof though….ouch.

Review: “I Will Teach You to be Rich”

Author: Ramit

Subject: Financial advice, interviews, etc.

Verdict: Good site, fun to read, sarcastic and synical.

Details: Ramit has a good sense of humour, likes pens, and thinks he’s better than everyone else (not that there’s anything wrong with that). This interesting mix makes for an interesting read, and the fact that Ramit is indeed knowledgeable in terms of becoming financially successful means you can learn something at the same time.

The best part of Ramit’s site are his weekly features. Every Friday he interviews a successful entrepreneur. These interviews have been very enlightening as the inverviewees run the gambit from owners of a small specialty pen distribution company, to Pam Slim of Escape from Cubicle Nation who blogs about how to successfully start your own business. Every Monday he will also be posting a new way to renegotiate one of your service contracts to save money (the first post showed us how to save on automobile insurance). We’re still waiting for the next installment which is due today.

Anyway, I strongly recommend checking out Ramit’s site. His site was a major contributor to my desire to start blogging about real estate, so it must be good. There is a wealth of useful information in the archives, so be sure to surf around.

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John T. Reed vs. Robert Kyosaki

I found this website was fairly honest and consistent. The real estate advice he gives in his articles section is fairly basic, but it gives a prospective real estate investor some basic fundamental understanding of what is required for the job, how to make sound financial decisions using ratios, etc.

One segment that I enjoyed was his complete disdain for Robert Kyosaki that culminates in a 185kB plain text document outlining inconsistencies in his book Rich Dad, Poor Dad, his life, and other musings. It really is quite scathing, I’m sure Ken over at ARRDPD would disapprove.  However, it is consistent, and reads well.  It is actually quite amusing to look at how JTR’s research disproves many of the careless comments in Rich Dad, Poor Dad.

I do see JTR’s point though. When reading RDPD, one gets the feeling that everything is exceedingly vague. I think Kyosaki, if anything is a fantastic salesperson who has managed to find a key niche of selling real estate investment advice to people who will probably never get involved in real estate investing.  The book is dumbed down, and mostly amounts to a bunch of flag waving like you see at a highschool pep rally. 

For some readers, Kyosaki makes them feel smarter by giving them ‘insider’ information like how to calculate your net income.  For other readers he makes you feel superior to the rest of the world by constantly putting down people as not being able to figure out the most basic foundations of accounting.

The article entitled
“Suggested sequence for starting a real
estate investment program” has some good information.  Its more of a
pre-questionairre to see if you have the right-stuff for investing in
real estate.  It is a simlar approach to that used by Robert Griswold in “Property Management for Dummies.”

Either way, there is some good information on John’s site that is worth a look and skimming the Rich Dad, Poor Dad book review is good for some amusement on a Friday afternoon.


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More on Mr. Foreclosure AKA Casey on GRS

This post is actually in response to the comments found at GRS. The community at GRS is simply amazing, almost every post has a knowledgeable discussion that is worth checking out!

Its all about perspective. The way Casey attempted to “get rich” was by knowingly breaking the law. Along the way, he made a lot of bad decisions, and took on way more than he could possibly handle on his own. To do 10 properties he would probably need a team of 20 people and some very good business contacts (contractors, agents, lawyer, accountant, etc.).

There are ways to get rich in the real estate business, but it requires careful planning and good timing. It is possible, for instance, to flip a property for a profit. However, it requires the right property, lucky timing, and careful research. You have to determine your target market, renovate the house to suit their needs, and keep in mind your projected selling price, cost of renovations, and therefore how much profit to expect.  To profit, this must be completed to a very strict, tight schedule.  Otherwise, the monthly upkeep costs get out of control and slowly destroy your potential profits.

If done correctly, a fair amount of capital can be generated. However, its not easy… I hope to attempt my first one in the next year, but it all depends on financing, finding the right property and making sure the market is still warm enough.  (Not to mention finding a partner and convincing my wife it’s a good idea).

Once you’ve earned that capital, let’s say $30,000, it is possible to then roll it over into other investments. Perhaps flip another, more expensive house, then invest in some commercial properties.

In my current situation, I’m renting 13 bedrooms already, so I have some significant passive income. Once the mortgages are paid off, I would be earning $5000/month.  Thus, I am already fairly close to being able to live off of my passive income.  If I had 5 or 6 properties paid off and generating the same ballpark income as my current properties, I would be able to live comfortably on passive income alone.  From here, this would require an additional investment of 25% downpayment + 5% closing costs * 3 properties = roughly $120,000.  Hopefully I can come up with some of this through a flip or two, and through attracting investors.

As in my previous post “The Market“, however, this all depends on the real estate market in your area. I live in a small town with more than 10% of the population being students. Furthermore, we have a vibrant downtown core where people are willing to spend more on rents. So, in my opinion, there are many opportunities for real estate investments.
Obviously I’ll need some luck and a lot of hard work, but I think it is possible to make a good living off of the real estate business without putting in full-time hours.

Follow-up “The Market”

Earlier I posted about my rental market as justification for investing in real estate in my town because returns are high due to the percentage of university students in the area.  Now, 2Million has found a wonderful article on Yahoo! that seems to support the theory.

The article interviews one Michael Zaransky who is co-CEO of a REI company in Northbrook, Ill.  His company specializes in university dorm housing.  The university leases them land on which to build.  Zaransky then charges a fee to gather financing, oversee construction, and then manages the properties.  The company is invested in 15 dormatories on 5 campuses, and one of his competitors in Texas “manages 53 on- and off-campus properties with 32,000 beds.”  Yowza!

My favourite quote from the article:

“About 80 million echo boomers born between 1982 and 1995 will turn 18 over the next 10 years. These children of the best educated and most affluent generation in America’s history will be attending universities whose obsolete dormitories, on average, have beds for only 30% of today’s enrollment.”

This bodes well for my ideas, current ventures, and future plans!  I think I might have to pick up Zaranski’s book.

PS:  Sweet!  Categories are fixed!

Blog Review: EscapeFromCubicleNation

I have been a regular reader of Pam Slim’s EscapeFromCubicleNation since it was featured on

Her most recent post/podcast reviews two books that discuss negative self-talk.  Since Pam’s website focuses on helping entrepreneurs to succeed and make the jump from the shackles of the cubicle to the freedom of self-employment, her focus in this article is how negative self-talk affects a new entrepreneur.

As always, her advice is highly useful, and written in an accessible way that anyone can read and quickly apply in their own life.

She offers up this questionairre from Finding Your Own North Star:  Claiming the life you were meant to live by Martha Beck, to help people determine whether they are in-touch with their true personality.

  1. My life feels like a great adventure
  2. I feel sure I can solve any problems I encounter
  3. I have fun
  4. I laugh out loud
  5. I feel overwhelmed by gratitude
  6. I spend time in comfortable solitude
  7. I am fascinated by things I am learning
  8. I feel deeply understood
  9. Things just seem to work out for me
  10. I get so involved in projects I forget to stop
  11. I use my imagination
  12. I do things I loved when I was a kid
  13. People seem to enjoy being around me
  14. I play
  15. I feel perfectly safe
  16. I get excited when it is time to go to work
  17. I feel mentally sharp and alert
  18. I have really cool ideas
  19. I love my body
  20. I’m flooded with love for other people
  21. I do new things, or old things in new ways
  22. I do what I want to, even if it is scary
  23. I’m completely relaxed with other people
  24. I feel intense physical pleasure
  25. I am very pleased with myself in general

I find that these questions really do make you analyze your current situation in life, and think about whether you are truly satisfied.

Are you?

Personally, I could use a little bit of a makeover in some of these categories.  But, is that just my personality?  Maybe I shouldn’t worry too much about it? 🙂

Housing Bust or Slump?

Over at BiggerPockets, they are linking to a FinancialTimes analysis (subscription required) on the housing boom, and its imminent demise.  The contrasting theories are that the boom will either bust, or slowly slump…

I for one am hoping for a slump.

Does anyone subscribe to the FT that could give us some more insight as to the content and opinions in the article?  I do not.

Thanks.  NG

The Dark Side of Real Estate Investing

I came across this website on Friday via GRS and didn’t have much chance to look over it (actually… my work spam filter blocks this address for some unknown reason). Now that I’ve had a chance to read over the content, I can add some more details.

It appears as though this gentleman invested in about 8 properties in the space of a few months with very little downpayment. The idea was to fix and flip the houses.

The best part about the site are the comments.  They range from the understanding and encouraging to the arrogant and hateful.  There is some really nasty stuf on there.

There are two main reasons for the negative comments.  One, is that some people figure that if the author was actually able to secure high-ratio loans for so much money, he must have done so dishonestly.  A fair judgement since when reading blogs one can never be too sure about the authenticity of what is written.  The other reason is that the author has made several statements that don’t quite add up.  For instance, when talking about possible bankruptcy, he mentions having spoken to some bankruptcy lawyers.  However, some of the details of the bankruptcy as well as the advice he says he’s been given do not sound like something any professional would utter.

Anyway, have a look and you be the judge. 

Emotions vs. Decisions

Today Frugal wrote:

The bottom line is when you find a business that is trying its best effort not to give you any possibility of doing apple-to-apple comparison, you should know what it is up to.

Don’t forget about emotion!  Emotion is the single biggest factor affecting people’s purchase decisions.  The unfortunate thing is that emotions can be hard to get under control because they are instantaneous (since they originate in one of the most primitive parts of the brain).  Basically, your emotions kick in right away, and begin changing your decision making ability.

Take for instance, the standard couple investing in their first home.  They have no idea how the system works.  Furthermore, the banks, lawyers and real estate agents are usually behind schedule, so the documents don’t show up at the lender until the last minute.  Rarely do the lenders explain all their fees before-hand, and so… the couple finds themselves sitting in an office at the bank faced with a pile of service fees that they don’t understand.  And, the deal on their new home closes in a few hours…

They have options, I guess.  They could not sign the papers, but then they would risk losing the house that they’ve been dreaming about living and starting a future in… or they just bend over, take the fees and move on with their lives.

So, often times, the stores, banks, etc have the upper hand in this type of negotiation.  This is a major focus of advertising as well.  1) Develop an emotional attachment in the prospective customer for your product and 2) Develop a feeling of need in the customer (can you say iPod), so they’ll pay almost anything for it.

Of course, keeping yourself out of this trap is easier said than done!