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Wednesday, August 29, 2007

Neglected Properties = Big Bucks (a case study)

The signs of neglect like bad paint, stinky carpet, holes in the walls or (heaven forbid) termites will turn off 95% of prospective buyers. All of these inflictions on a once beautiful home are purely superficial, and if you have the foresight to see beyond them, you can build wealth fast in real estate.

Put in a few thousand dollars, and this house will be a beautiful home again; your investment will increase in appraised value many times more than what you put into the repairs. Unlike "reality TV" shows like Flip That House, this I know from personal experience. Trust me.

Have a look at the following example.

I purchased this house as a bank pre-foreclosure at $35,000 below market value. Many of the houses in this neighborhood are built as cottages, and I saw tremendous rental potential for the property once it was fixed up. I knew it would be a cute rental home for a small family or couple, especially given its proximity to employers, retail shopping and restaurants.

The "Before" Images:

Ugly baby blue walls, stained carpet, damp smelling.





Termite and water damage. Sunlight is actually visible through the wall.







Termite damage on an interior door going into utility closet.



The backdoor, with rot and termite damage.

The "after" images:

Looks (and smells) much better!






Is this the same corner? No more sunlight.


No more termites, or damage.






The backdoor, much improved...






BEHOLD! The finished product.
{Now equipped with a tenant.}

Thursday, August 23, 2007

Flipping Houses for Profit

My true love is real estate. While I have enjoyed working in IT for many years, nothing gives me thrills quite like real estate. Finding the right investment property is like winning at poker or blackjack, and the adrenaline rush is just the same.

I have bought and sold both residential and commercial properties, and I am constantly looking for the next "diamond in the rough". Most people when looking at houses are evaluating them based on if they would live there. BIG MISTAKE! You want to find a house in a good location with good curb appeal and structural layout, but one that has been horribly neglected. Find this house, and you will make thousands (in any real estate market). However, you must buy it at the right price to do so...

In my next few posts, I will focus on how to find undervalued homes and turn them into personal wealth.

Friday, August 17, 2007

We Don't Need no Stinkin' Corporation

If you are starting a business endeavor for the first time, or if you have started a company but have yet to incorporate, you need to consider the following. After getting into a debate with an acquaintance who has been working as an independent contractor for years, and who has never incorporated, I felt it necessary to share the reasons why you should.

A corporation is essentially a legal entity that is separate from its members. It can hold assets, hire employees or agents, it can sue (or be sued) and pass laws governing its own affairs (see wikipedia). The primary reasons for incorporating are limitations to your personal liabilities and tax advantages.

Reduced Liability
If you get sued for your business practices through the corporation, you are generally shielded from losing personal assets (like your home), provided you truly work as an agent of the corporation. Should you use your corporate checking account to pay personal bills like liposuction for your wife, this is known as "piercing the corporate veil". Doing so would compromise your protection from the corporation should it be proven in a court of law. However, certain personal expenses (like automobiles or cell phones) can sometimes be paid by the company. Check with an accountant and attorney in your area for specifics.

Reduced Taxes
Your goal with the new corporate structure should be to pay as many expenses as legally possible through the corporation, and to pay yourself a salary that is within reason for someone doing what you do. The amount paid to you by the corporation in addition to your salary is a dividend, and is taxed at a much lower rate (at least in the US).

There are advantages in most countries for forming a corporate structure, based on local laws. Of course, always consult a local expert. As for my colleague, I suppose he's not too concerned about building his personal wealth, or protecting it from lawsuits and The Taxman.

Saturday, August 11, 2007

Great Deals for Small Business

Constantly on the lookout for great small business deals, I have recently discovered the following opportunities to make your money (and mine!) stretch even further:

The ING Direct Business Savings Account
This account links to your existing Business Checking Account (with any bank). You transfer money in and out of the ING account online as you need funds. This account earns 5% interest with no balance minimums, and no fees or service charges. http://www.ingdirect.com/ Click "Open an Account", then "Orange for Business".

Vista Print's Sizzling Summer Deals
You may know that Vista Print offers great prices on printing (including basic business cards for free), but during their summer promotion, you can get:
  • 250 premium business cards for $1.99
  • 100 standard post cards for FREE
  • 50 over sized post cards for FREE
  • 25 brochures for FREE
  • 25 flyers for FREE
  • 25 small magnets for FREE

  • All items are in full color! Go to www.VistaPrint.com/sizzling

    DELL PCs
    Need a new PC? Dell is discounting their new VOSTRO product line to get it into the marketplace.
    Get a Dell Tower PC with a 19 inch flat panel for $399 (Dell e-value code 65023-brpc2cw)
    Get a Dell notebook with Intel Duo Processor, Windows Vista, and 2 GB RAM for $649 (Dell e-value code 65023-BQPCJBC)

    See: www.dell.com/webelieve

    $$$Wealth Tip:
    Always remember to "save-save" your money. If you budgeted $1000 for a notebook, take the $351 dollars "saved" and move it your 401K, IRA, or savings account!

    Wednesday, August 8, 2007

    The Top 10 Entrepreneurial Countries

    I recently discovered an article in Fortune Small Business (June 2007) discussing the most --and least-- entrepreneurial countries in the world. I found the top 10 particularly interesting, and thought that you might too.

    Rank Country
    1 New Zealand
    2 United States
    3 Canada
    4 Australia
    5 Singapore
    6 Hong Kong
    7 United Kingdom
    8 Ireland
    9 Denmark
    10 Iceland

    Iceland? Whaa? Are there a lot of opportunities in cold storage there?

    If anyone could share knowledge concerning Iceland's business contributions, I would be interested. I am only familiar with geo-thermal spring fed spas, and raving nightlife.

    Saturday, August 4, 2007

    Outsourcing: It's not YOUR job

    Any person who has worked in IT for very long is acutely aware of the term "outsourcing", or the act of contracting with another person or company to perform a particular task. This is often used synonymously with the term "off shoring", which means doing the same but in another country, typically where there are cheaper labor pools.

    This practice not only occurs in IT-related departments or industries, just look at what has happened to the US furniture industry. For that matter, check the label in the shirt that you are wearing at this moment.

    For many years, I was appalled at such a notion. How could a company sell out its employees by sending their jobs overseas? Then, I read a post on a discussion thread by a friend of mine in response to someone who had lost their job to an Indian firm.

    The poor former employee stated how he had been there for 15 years, was a loyal employee, had children to feed, and how shocked and outraged he was. My friend's response:
    "I'm sorry that you're unemployed now, but the job (position) was your company's job, not yours. It never was yours, and the company can give it to whomever it wants."

    The cold, hard truth hit like an iron fist, and my friend was booed and hissed at by other subscribers for his post and he was branded insensitive. A little insensitive? Maybe. Truthful? Definitely. His words could not have been more honest.

    If you take it a layer deeper, the reason for the former employees' misery was his own doing. He had grown complacent, and was not positioned for the sudden abruptness of his job loss. I'm sure he's working now, out of necessity if nothing else.

    The lesson here is to prepare oneself. Should this ever happen to you, I want you to be in a position to shrug it off as you look to your other sources of cash flow for support.

    Wednesday, August 1, 2007

    Corporate Personalities (Humorous)

    It occurred to me to interject more humor into this blog, as I often get side tracked by my serious obsession with growing my (and your) entrepreneurship. Today, as I passed through the halls of my current client (the headquarters of a large retailer), I was reminiscing of the personalities that I've encountered down the Yellow Brick Road of corporatedom.

    Here are some (I'll include others later as there are too many to list now):

    • The Clock Watcher - This is the person who is extremely regimented... "must be in seat at 8, must eat at 11:30, must leave by 4:30 to beat traffic." Current crisis be damned at 4:30; you don't want to get between him and the door 'lest ye be trampled.

    • The Corporate Slug - This person must be working just for benefits and a check, as every time I pass her, she's outside smoking a cigarette and reading a novel.

    • Ms. Thang - She's usually loud with a chip on her shoulder, yet seems to know very few facts. Often sporting a gaudy hairdo and lingering perfume, she makes her presence known, whether you want her to or not.

    • Ms. PC (Politically Correct)- Boring and prudish, this chick gets upset when anyone says anything that could be interpreted as "hurtful". Constantly correcting others' behavior, she is actually just afraid of corporate policy gone awry. If I were a regular W2 employee, she'd turn me in to HR for calling her a "chick".

    • The Polite & The Non-Understandable Indian Guys - Referred to as "Mutt & Jeff" because no one can pronounce their names, these two best friends with Green Cards were brought in to replace six employees who had outlived their salaries. Quietly despised by the native employees, they are tolerated because they are so darn nice (and because the company said so). It doesn't matter to them that they earn 1/4 what those around them make, because it sure beats living in a tin shack in Calcutta with 10 relatives and a cow. I'd smile, too.

    • The Grumpy Old Man - This guy's older than dirt, yet holds on to his job for the misery of others. Angry and opinionated, he blames everyone for his problems (the boss, the government, Ms. Thang, Mutt & Jeff, etc.) The only reason he's retained is because he once created some process that no one else understands, yet it is critical to keeping the company from bankruptcy.

    • The Loafer - All I know about this guy is that I can never find him. I occasionally see him around the scrap food table where the meeting leftovers are placed, or spot his shoes under a bathroom stall. I'm not sure what function he performs at the company.

    • The Pontificator - Don't get cornered by this person, or you'll lose 30 minutes of your life. He loves to drone on an on about nothing of interest, yet with great enthusiasm.

    • The Corporate Cheerleader - This person has swallowed the whole corporate thing hook, line and sinker. She is seen at every event, outing, fund raiser, etc. She is often tasked with emailing about United Way donations and Red Cross blood drives. Most folks avoid her like the plague.

    Your J.O.B.

    Early on I mentioned the acronym "J.O.B." to represent one's job. I borrowed that term from some of my readings, I believe from "Rich Dad, Poor Dad" which is an excellent book to re-train your brain on how it thinks about wealth.

    J.O.B. stands for "Just Over Broke" and describes how most people tend to live paycheck to paycheck, no matter what they earn. With a job, most folks know exactly what their upcoming check will be and thus have already spent it.

    I'm no advocate of unemployment, but when working for yourself or your own corporation, the sky is the limit on your earnings. There is a direct correlation between the effort you put into your company, and what you yield for yourself (versus dividends for the stock holders of your employer).

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