Category Archives: Business

Ventures Update July 2017

695 Riverview Drive

I said I would never live in it. I live in it now. I said I would never manage it myself. I manage it now. So glad. Awesome location, saving money, and making money all at the same time.

Real Estate Agent

What a great deal. I highly recommend becoming an agent. It costs ~$2,000 and a couple evenings a week for 2 months. You learn a ton about something that affects everybody. $2,000 is the commission on a $70,000 house. Worth every penny.

Kineomen

Kineomen has several balls in the air. Each is unique. Success in any single venture would be very good. They are all early stages, but each is going well.

Park City Holdings

Park City Holdings will invest primarily in mortgage instruments, focusing on discounted non-performing mortgages.

Simple Kneads Gluten-Free Bread

Simple Kneads continues to grow into its vision of becoming the national gluten-free brand.

Vino de Coco

I still plan to visit the Philippines.

Other

www.coldcall.tv

www.youtaxi.tv

I started a small art gallery in my apartment:

www.RR34.info/G

Videos

I have decided that videos are the way to communicate on the internet. I tried making a “no more writing” rule and only do video. However, videos take time and I have a minimum quality level that I’m willing to put out there. I am hiring a video producer ASAP, starting with a college student at $12 / hour.

Around the World in Columbus

I want to do a video series of interviews with immigrant restaurant owners in Columbus, Ohio. Columbus is often considered the token “boring city,” but we are a melting pot with many interesting stories waiting to be told! I am considering taking a film class to give me the connections required to take on this project.

The Stock Market

I have closed my retirement accounts in favor of actively managing the money and accepting that I will pay taxes.

Ventures Update April 2017

695 Riverview Drive

As I branch out into other sectors of the real estate industry, I first want to take an honest look at my first major investment.

The following P&L is for 1Q 2017. See the adjustments below that convert the Net Income to a realistic monthly cash flow. It shows my vision for the property, and hence my enthusiasm since I purchased. I can finally show it on a P&L.

1st Quarter 2017 Actual

Adjustments to Net Income:
+$2500: taxes. This Q’erly P&L includes an entire half year payment.
-$1500: principle payments are not cash flow, just equity.
-$1000: one quarter of insurance paid at once in July.
-$525: 27 rent payments instead of the 28 shown.
= -$525: total adjustments to Net Income.
= $3,945 of actual realistic cash flow for the quarter.

= $1,315 of cash flow per month.

With $102,280 of total cash invested, that is a ~12.8% annual return. That is not a “home run,” that is a “single.”

So why am I happy with this “single”? In the sense that I want to do better in the future, I am not happy with it, but here are some mitigating factors:

  • I have been absent for much of the ownership of the property, and have solved many of the problems with cash, not with my own time. It has truly been passive.
  • I learned to hire a good manager. Much of that $102,280 cash is bumbling around with poor management. I have learned from my professional manager, Panzera Realty, about landlording and management since hiring them in Nov 2015.
  • The property continues to improve. The condition is better every year
  • We continue to cut expenses and raise rents with the market. This year we will sub-meter the water, and new units will rent without wall air conditioning units included. Even with these changes combined, we expect the same rent from the new tenants.
  • My original goal was to learn.
  • 9% matches the market.
  • We are well positioned for an economic downturn with a quality property at reasonable rental rates.

Columbus, Ohio Occupation

Real Estate Agent

I love it so far. It puts you on the inside. A must for full-time real estate career. New website! …

Uber Driver

Fun. More than pays for gas, but a waste of time. I drive a couple times a month still. I hope I always do. I do enjoy it.

Handyman

I will probably always do some handyman work. I enjoy it.

Kineomen

The holding company in North Carolina is positioning to invest in some sector of the real estate industry. Probably non-performing mortgage loans (NPLs).

Click here for info on NPLs. More details in a future post.

Simple-Kneads Gluten-Free Bread

We have a shareholder meeting at the end of this month. There is investment opportunity currently. Your only commitment is to sign an NDA. I do recommend.

Vino de Coco

I still plan on going there in person as soon as possible.

The Stock Market

I’m still out of the stock market.

Real Estate Office

Next week, renovations will be complete on apartment A3 of 695 Riverview Drive. I will live there from 1 May until I find a great deal on a house. Until then, it will serve as an office from which I plan to find this great deal on a house.

I am seeking people who want to work out of this office doing real estate in the listed fields. The fields do not compete with each other. Rather, each one strengthens the others. This can be part-time or full-time and you will use the skills and experience you already have to succeed.

Payment will be negotiated on a deal-by-deal basis, beneficial to all parties. There are industry standards from which to start negotiations.

I provide the place to work and gather.

1. Choose the Right Market Location

Right now, Columbus is the market that I know. Therefore it is the right market for me.

2. Wholesaling

We need sources of good deals on properties.

A real estate agent cannot ethically or legally broker a deal with a large profit without work like with typical wholesaling. However, I can seek a good deal on a property to live in, which is what I intend to do to start out.

3. Real Estate Agent

I am an agent now with Signature Real Estate. That doesn’t stop others from working in this office.

4. Retailing

This includes renovating and selling great deals. (flipping)

5. Landlording

We can’t legally manage properties for pay without a broker, but you can get support in managing your own.

6. Lease-Option, Rent-to-Own

One of the more creative segments. It has its place. (Linden?)

7. Be the Bank, Invest

All deals need funding, and the guy with the money deserves to be paid. Non-performing loans coming soon.

Ready
to
Expand

Nate’s Numbers Hub January 2017

Markets

$2,269 = S&P 500 close 10 Jan 2017 (Yahoo Finance)

28.09 = S&P 500 P/E Ratio on 10 Jan 2017 based on previous 10 years of earnings, AKA “Shiller Ratio,” “CAPE Ratio,” or “PE 10.” (www.multpl.com)

$29.8 trillion = total US market capitalization = $20.2 trillion NYSE + $9.6 trillion NASDAQ

$18.9 trillion = US annual GNP estimate (www.BEA.gov, GDP and the National Income and Product Account (NIPA) Historical Tables, Table 1.7.5)

131.2% = “Buffett Indicator” current as of 10 Jan 2017. This number is a variation* on [Total Market Capitalization] / GNP**.

(The calculation is explained here. Numerator obtained from Federal Reserve Bank of St. Louis, current value obtained by extrapolating with the Wilshire 5000 Index. The denominator is obtained from the BEA’s GNP from above. Calculations and chart in this Excel spreadsheet).

*Instead of using actual market cap value, I used “Nonfinancial corporate business; corporate equities; liability, Level” from the Federal Reserve Bank of St. Louis because the data is available since 1945. That number is only reported quarterly, so the Wilshire 5000 index is used to extrapolate to find the current value.

**The GDP is used by some reports instead of GNP, but Buffett uses the GNP. GDP and GNP are very similar, within about 1% of each other, and don’t fluctuate like total market cap does.

I have to pick an economist. My pick is John P. Hussman. He posts straightforward charts showing strong correlation between current indicators and future results. He uses the S&P 500 to measure performance and he has consistently posted weekly since 2003. All of his posts are available for quick reference: Hussman Funds Weekly Market Comment.

241 = current Consumer Price Index. This number is adjusted so that it averages 100 from 1982-1984. For the first year this number was calculated, 1913, the value was 9.9 (BLS)

1/2-3/4 = target range for the federal funds rate. (www.federalreserve.gov, 14 Dec 2016 FOMC Statement, and bankrate.com)

“Yield Curve” at stockcharts.com

6.93 = Chinese Yuan Renminbi for 1 US dollar (x-rates.com)

My Market Tools, Long-Term to Specific

  1. Buffett Indicator from above
  2. My economist pick: John P. Hussman, referenced above.
  3. Investor’s Business Daily Big Picture
  4. CANSLIM checklist for picking individual stocks

Energy

All energy data here is in petajoules = 1 quadrillion joules = “1-with-fifteen-zeros” joules, which can quickly be converted to other units of energy for comparison:

1 petajoule =

  • 163,456 barrels of oil, energy from (BOE)
  • 277.8 gigawatt-hours = 277,800,000 kilowatt-hours
  • 0.02388 million tonnes of oil equivalents (MTOE)
  • 0.0009478 quadrillion British Thermal Units (BTU)
  • 0.0009202 trillion cubic feet of natural gas, energy from (based on 1,030 BTU / cubic foot, IEA website)

395,000 petajoules = 2014 global energy consumption estimate (International Energy Agency, Key World Statistics 2016)

102,704 petajoules = 2015 US energy consumption estimate, 26.0% of global total (US Energy Information Administration Annual Energy Review, Table 1.1)

See also the US energy flow graph, Section 1.0, for a visualization of energy use.

9,911,000 petajoules = energy contained in the 1,620 billion barrels of proved world petroleum reserves (US Energy Information Administration), using the above conversion as an estimate of the energy equivalent.

7,153,000 petajoules = energy contained in the 6,582 trillion cubic feet of proved world natural gas reserves (US Energy Information Administration). This is probably a very rough estimate because of variance in the energy contained in different natural gas.

$50.82 / barrel = current price of WTI crude oil (US EIA) = $8,307,000 / petajoule of energy

$3.41 / million BTU = Henry Hub spot price of energy from natural gas (US EIA) = $3,232,000 / petajoule from natural gas

8.307 / 3.232 = 2.6: oil energy currently costs 3.4 times as much as natural gas energy.

Commodities

$1,188 = price of one ounce of gold (goldprice.org)

$16.74 = price of one ounce of silver (goldprice.org)

1,188 / 16.74 = 71, current gold-silver ratio, historical range of 14 – 100 since 1975 (goldprice.org charts)

Jobs

324 million = total US population (US Census Bureau Population Clock)

251 million = US civilian noninstitutional population

59.0% = employment-population ratio, which is the percentage of civilian noninstitutional population who are employed. Total employed is 148 million people. This is 45.7% of the total population.

5.3% = “unemployment rate” the most-often-reported percentage that does not include people who are not seeking employment, whether receiving unemployment benefits, welfare, or otherwise.

Click here for historical employment numbers. For more detail in easy-to-read charts, see “Charting the Labor Market.” The data is also broken down regionally and by state.

(US Department of Labor, Bureau of Labor Statistics Current Population Survey, November 2015)

Ventures Update January 2017

Columbus, Ohio Occupation

It is time for me to get a job. My credit card monthly balance is now roughly equal to my checking account balance. I need income.

Uber Driver

I have driven for Uber about 5 different occasions now over the last 2 weeks here in Columbus. The bad news is, you can be online for hours at a time sometimes without getting a single trip. The good news is, it is great fun, you talk to a lot of different people, during peak times there are plenty of trips to be had, and you can know exactly when those peak times are, they’re obvious. The peak times I’ve identified are 1. weekend nights when the bars close, 2. after sporting events like after Ohio State football and Blue Jackets hockey games.

I have averaged only about $10/hour so far, but a lot of the online hours that Uber counts include sitting at my house waiting and not getting a call. I made $75 in the 3 hours after midnight on New Year’s Day. Last night, I made $20 in the 1 hour following the Columbus Blue Jackets hockey game by making 4 Uber trips from the Arena District.

I would now not say, “I drive for Uber,” but rather, “I use the Uber app to get paid to drive people home from specific local events.”

Handyman

I helped my uncle build his shed!

 

Real Estate Agent

I signed up for the real estate course at Hondros Business College. I am scheduled to finish the course on 18 February.

I also joined the Central Ohio Real Estate Entrepreneurs, COREE, yesterday. It’s a really great group of about 320 members.

Business Consultant

I am seeking to help lawyers implement accounting software and take a directed look at the business side of their practice in order to more effectively self-manage and consciously make business decisions.

695 Riverview Drive

Still running smoothly and fully occupied. We are saving money for a remodel in a few years depending on the market and situation. In October, I replaced the steps.

Mike was the first tenant on the steps. He’s giving them a quick inspection.

Kineomen

Kineomen is a holding company based in North Carolina. The president of Kineomen is also the CFO of Simple Kneads, the bread company . Kineomen holds a stake in Simple Kneads and owns 707 Brookgreen Terrace in Graham, North Carolina.

707 Brookgreen Terrace, Graham, NC

I lived at “The Terrace” for about 6 weeks in October and November doing upgrade work. It was like camping indoors. I really enjoyed it and I am now looking to do the same thing in Columbus, Ohio. Removing the vines from the side was one day out of many projects.

“The Terrace”

Simple Kneads Gluten-Free Bread

Continuing to build the brand and expand sales. Exciting advancements each month.

Vino de Coco

I still plan on going there in person as soon as possible.

The Stock Market

I’m still out of the stock market.

Ventures Update November 2016

695 Riverview Drive

We are fully-occupied, 9 out of 9, and running smoothly.

Panzera Realty has been our property manager for one year as of the 1st of November. Comparing the year ending 1 November 2016 to the year ending 1 November 2015, we have a 20% increase in rent collected and a 22% decrease in overall expenses. We are making money and saving for a future re-model.

Moving to Ohio

I have decided to return to Ohio. I plan to start a business there, but haven’t decided what yet.

Kineomen

I arrived on 14 September in North Carolina as scheduled. We purchased a foreclosure in Graham, North Carolina for $65,000.

707 Brookgreen Terrace
Graham, NC 27253

We closed on the house on 6 October. The house will be used to for employees of Simple Kneads bread until summer, then we will rent it as an investment property. We expect to spend about $11,000 in repairs and improvements, plus about 6 weeks of sweat equity in order to make it marketable. Once prepared, it will be worth about $95,000 to sell or about $800 per month to rent. The rental market in Graham is high compared to the purchase prices.

"The Terrace"
“The Terrace”

Simple-Kneads Gluten-Free Bread

Selling bread, pushing every sales channel to expand the market share.

Vino de Coco

The wine is FDA approved and they have partnered with a liquor company to help distribute the product in the US. I still plan on going there in person as soon as possible.

The Stock Market

I’m still out of the stock market.

Ventures Update August 2016

695 Riverview Drive

We had to pay a lot in retroactive taxes because the county finally decided that we have to pay property tax based on the “new” value of the building, the amount that we paid when we bought in July 2013, instead of the amount that the previous owner was paying.

Other than that, the quarter went smoothly. Three tenants moved out, but the units leased quickly. We are 8/9 occupied currently with the ninth expected to lease quickly.

The insurance company mandated a routine inspection and we passed, probably largely thanks to all the repairs and maintenance that we’ve done.

Simple-Kneads Gluten-Free Bread

It’s going well.

Kineomen

I will arrive on 14 September in Raleigh, NC to work with them full-time.

The Stock Market

It keeps creeping up. I’m still out.

Vino de Coco

Nothing significant to report. I still plan on going there in December to see in person.

Nate’s Numbers Hub December 2015

Markets

$2,091 = S&P 500 close 4 Dec 2015 (Yahoo Finance)

26.09 = S&P 500 P/E Ratio on 7 Dec 2015 based on previous 10 years of earnings, AKA “Shiller Ratio,” “CAPE Ratio,” or “PE 10.” (www.multpl.com)

$26.1 trillion = total US market capitalization = $18.7 trillion NYSE + $7.4 trillion NASDAQ

$18.3 trillion = annual US GNP estimate (www.BEA.gov, GDP and the National Income and Product Account (NIPA) Historical Tables, Table 1.7.5)

121.5% = “Buffett Indicator” current as of 7 December 2015. This number is a variation* on [Total Market Capitalization] / GNP**.

(The calculation is explained here. Numerator obtained from Federal Reserve Bank of St. Louis, current value obtained by extrapolating with the Wilshire 5000 Index. The denominator is obtained from the BEA’s GNP from above. Calculations and chart in this Excel spreadsheet).

*Instead of using actual market cap value, I used “Nonfinancial corporate business; corporate equities; liability, Level” from the Federal Reserve Bank of St. Louis because the data is available since 1945. That number is only reported quarterly, so the Wilshire 5000 index is used to extrapolate to find the current value.

**The GDP is used by some reports instead of GNP, but Buffett uses the GNP. GDP and GNP are very similar, within about 1% of each other, and don’t fluctuate like total market cap does.

Buffett Indicator chart with various standard deviation lines based only on past data.
Buffett Indicator chart with various standard deviation lines based only on past data.

I have to pick an economist. My pick is John P. Hussman. He posts straightforward charts showing strong correlation between current indicators and future results. He uses the S&P 500 to measure performance and he has consistently posted weekly since 2003. All of his posts are available for quick reference: Hussman Funds Weekly Market Comment.

236 = current Consumer Price Index. This number is adjusted so that it averages 100 from 1982-1984. For the first year this number was calculated, 1913, the value was 9.9 (BLS)

0-1/4 = target range for the federal funds rate. (www.federalreserve.gov, 28 Oct 2015 FOMC Statement, and bankrate.com)

“Yield Curve” at stockcharts.com

6.42 = Chinese Yuan Renminbi for 1 US dollar (x-rates.com)

My Market Tools, Long-Term to Specific

  1. Buffett Indicator from above
  2. My economist pick: John P. Hussman, referenced above.
  3. Investor’s Business Daily Big Picture
  4. CANSLIM checklist for picking individual stocks

Energy

All energy data here is in petajoules = 1 quadrillion joules = “1-with-fifteen-zeros” joules, which can quickly be converted to other units of energy for comparison:

1 petajoule =

  • 163,456 barrels of oil, energy from (BOE)
  • 277.8 gigawatt-hours = 277,800,000 kilowatt-hours
  • 0.02388 million tonnes of oil equivalents (MTOE)
  • 0.0009478 quadrillion British Thermal Units (BTU)
  • 0.0009202 trillion cubic feet of natural gas, energy from (based on 1,030 BTU / cubic foot, IEA website)

389,000 petajoules = 2013 global energy consumption estimate (International Energy Agency, Key World Statistics 2015)

103,000 petajoules = 2013 US energy consumption estimate, 26.5% of global total (US Energy Information Administration Annual Energy Review, Table 1.1)

See also the US energy flow graph, Section 1.0, for a visualization of energy use.

10,100,000 petajoules = energy contained in the 1,656 billion barrels of proved world petroleum reserves (US Energy Information Administration), using the above conversion as an estimate of the energy equivalent.

7,578,000 petajoules = energy contained in the 6,973 trillion cubic feet of proved world natural gas reserves (US Energy Information Administration). This is probably a very rough estimate because of variance in the energy contained in different natural gas.

$39.93 / barrel = current price of WTI crude oil (US EIA) = $6,527,000 / petajoule of energy

$2.11 / million BTU = Henry Hub spot price of energy from natural gas (US EIA) = $1,942,000 / petajoule from natural gas

6.527 / 1.942 = 3.4: oil energy currently costs 3.4 times as much as natural gas energy.

Commodities

$1,086 = price of one ounce of gold (goldprice.org)

$14.54 = price of one ounce of silver (goldprice.org)

1,086 / 14.54 = 75, current gold-silver ratio, historical range of 14 – 100 since 1975 (goldprice.org charts)

Jobs

322 million = total US population (US Census Bureau Population Clock)

252 million = US civilian noninstitutional population

59.3% = employment-population ratio, which is the percentage of civilian noninstitutional population who are employed. Total employed is 149 million people. This is 46.2% of the total population.

5.0% = “unemployment rate” the most-often-reported percentage that does not include people who are not seeking employment, whether receiving unemployment benefits, welfare, or otherwise.

Click here for historical employment numbers. For more detail in easy-to-read charts, see “Charting the Labor Market.” The data is also broken down regionally and by state.

(US Department of Labor, Bureau of Labor Statistics Current Population Survey, November 2015)

Big Money 2

I wrote a post called Big Money almost 2 years ago in January 2014. This is a follow-up to that post to update the numbers.

$18.1 trillion = annual US gross domestic product estimate (www.BEA.gov)

$3.2 trillion = US government tax revenue, fiscal year 2015 estimated (http://www.gpo.gov, Fiscal Year 2016, Historical Tables, Table 2.1)

$18.7 trillion = US government national debt as of today (www.treasurydirect.gov)

$0.40 trillion = interest expense on US government outstanding debt, fiscal year 2015 (www.treasurydirect.gov)

0.40 / 18.7 = 2.1% average annual interest rate on the national debt

0.40 / 3.2 = 12%, interest expense as a percentage of tax revenue

$3.53 trillion = currency exchange reserves held by the Chinese government as of Oct 2015 (www.tradingeconomics.com) This has been steadily decreasing since it peaked at $3.99 trillion in mid-2014.

$4.25 trillion = money supply inflation as of Nov 2015 by the practice of quantitative easing (www.federalreserve.gov with data interpretation help by Wikipedia) This amount has been relatively steady since Oct 2014.

All of the US government numbers come directly from balance sheets available on .gov sites. It was calming to find the numbers I’ve heard about in the news on a regular old balance sheet. I don’t think I will rush to cash in my savings bond.

Big Money

Consider these numbers to put some current news topics in perspective:

$16.9 trillion = annual US gross domestic product estimate (www.BEA.gov)

$2.7 trillion = total US government annual tax revenue, fiscal year 2013 estimated (http://www.gpo.gov, Fiscal Year 2014, Historical Tables, Table 2.1)

$17.2 trillion = US government national debt (www.treasurydirect.gov)

$3.66 trillion = currency exchange reserves held by the Chinese government as of Oct 2013 (www.blogs.wsj.com)

$3.57 trillion = money supply inflation as of Oct 2013 by the practice of quantitative easing (www.federalreserve.gov with data interpretation help by Wikipedia)

17.2 / 2.7 = 6.4. The US government owes more than 6 times what it brings in annually with taxes. (per my own math)

3.66 / 2.7 = 1.4. the value of China’s foreign exchange reserves are equal to the US government tax revenue for a over year and a quarter.

Check out the links. There is a story behind each of these numbers, but the numbers themselves are generally not disputed.