Category Archives: Ventures Quarterly

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

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.

Ventures Update April 2016

695 Riverview Drive

This is the first quarter that I can say things are going as we expect at 695 Riverview Drive. All 9 units are occupied. All 9 tenants are current on their rent. The manager, Panzera Realty, produces a reliable, accurate report each month. The bottom line shows it as well. With reliable tenants and much of the deferred maintenance from the previous owner completed, we are saving for future improvements, or possibly cash for another purchase.

The following pictures are from the stairway maintenance project I completed in December.

The old steps were uneven. The wood was beginning to rot and the nails were coming out.
The old steps were uneven. The wood was beginning to rot and the nails were coming out.
Removed the old steps and patched the side of the building with stucco mortar.
Removed the old steps and patched the side of the building with stucco mortar.
Reassembled with new wood.
Reassembled with new wood.
Finished the railing.
Finished the railing.

Simple Kneads Gluten-Free Bread

Simple Kneads is really taking off. They are gradually adding retail and food service distribution and as of 31 March, they are selling bread directly from the website. The bread is selling fast and the vendors and customers are happy.

Simple Kneads Website

Simple Kneads Facebook Page

Kineomen

Nothing significant to report!

The Stock Market

I am still “all-cash,” and have been since December 2013. Per my previous post, I continue to watch 4 specific indicators. The first 2 indicators, Total Market Cap / GNP “Buffett Indicator,” and economist John Hussman, are hard-negative and I am therefore not looking into the market. I’ll wait for a better opportunity.

Click here for a recent commentary by John Hussman. He is very technical, and currently pessimistic, but he is consistent in his analysis and he makes sense. From week to week, he uses the same indicators week to week rather than chasing news headlines, and he uses only indicators that have a strong correlation to future results in the S&P 500 specifically. He has incorrectly predicted market crashes in the past, but he discusses these failures in his commentary. He doesn’t claim that there will be a crash. His claim is that because of overvaluation, the potential long-term upside is too weak to justify the exaggerated short-term risk of such extreme valuations.

Vino de Coco

I plan to visit the company in the Philippines in December–all business of course!

Click the picture for the website.
Click the picture for the website.

Ventures Update January 2016

695 Riverview Drive

The new new management company is doing really well. This is our 4th—my brother Thad started, then Renting Ohio, then North Point Asset Management, and now Panzera Realty. Changing managers 3 times sounds like a lot and sounds like we might be the problem and not the manager, but each manager has been better than the previous. We have found that timely and effective maintenance is the #1 most important thing, followed by accurate accounting. They all charge basically the same price.

 

2015 11 04 New Pic from Front 2
Notice the new pavement in the parking lot. Also, the front lights are now on a dusk to dawn sensor, so they are on all night.

Simple Kneads Gluten-Free Bread

The team in North Carolina is growing and the company is taking shape as it begins to hire employees. Sales began in August and, though there are challenges, demand for the excellent quality gluten-free bread makes meeting those challenges well worth the effort. It is now available to buy on Amazon, and will soon be available directly from the company website.

Kineomen

Nothing significant to report!

The Stock Market

With my available money, I am still “all-cash,” and have been since December 2013. However, I spent about a week last month nerding out on the internet to sort through all the news, economists’ opinions, indicators, and general stock market chatter to find some sources that I can understand and trust to make sense of the market and use to make confident, informed buy and sell decisions. I came up with four sources that, in order, tell first when to pay attention, then once the market is primed for buying, what to buy. Those four items are listed in this post.

Vino de Coco

Nothing significant to report!

Click the picture for the website.
Click the picture for the website.

Ventures Update October 2015

695 Riverview Drive

We have made steady improvement on the apartment building.

  • The parking lot is resurfaced and it looks great.
2015 11 04 New Pic from Front 2
Notice the new pavement in the parking lot. Also, the front lights are now on a dusk to dawn sensor, so they are on all night.
  • We have good paying tenants, and have received all of our rent due since April.
  • Since July, we have averaged 8/9 occupancy.
  • We currently have 7 occupied. I remodeled one of the two empty units and we have people lined up to rent them when they are ready next week.
  • The market rent has increased to at least $650. We may look to get $675. When we purchased the building, average rent per unit was $465. If we rent the vacant units for $650, our average rent will be $560. That’s a 20% increase over 2.5 years!

I am in the process of hiring new management (again), and I am excited to have an experienced professional on board.

Simple Kneads Gluten-Free Bread

Devaunt and Tristaun have been working full-time to develop the business in Raleigh, North Carolina. It has been so successful that they have brought Nick Rapkoch in full-time as well to help with marketing and distribution. This short summary does not do justice to what they are doing in Raleigh. Simple Kneads is the real deal!

Click the picture for the Simple Kneads website.
Click the picture for the Simple Kneads website.

Kineomen

I visited Devaunt and Nick in Raleigh in August. We ate mostly gluten-free bread with lots of butter, and we talked about real estate and business. Loaves of gluten-free bread were everywhere. I felt like we were drug dealers and that was our product. Tony Montana said, “don’t get high on your own supply,” but I don’t think that applies to high-end bread.

Currently, their time is taken up on their best opportunity, which is Simple Kneads. I came away from the meeting recognizing that I have to get my traveling out of the way before I commit to starting a business or another real estate venture. My current real estate investment is enough for me for now and I am on a steep learning curve.

The Stock Market

In December of 2013, I decided to get out of the stock market completely. That money has been sitting in cash ever since, gaining near zero interest. On the day I sold, the S&P 500 closed at 1775 on 13 December. Today, it closed at 2090, up 17.7%. I owned VWIAX mutual fund at the time and I sold it for 61.46. Today, its value is 62.17, up just 1%. I missed VWIAX’s dividends of about 3.5% per year, so I actually missed out on a total of 8% of gains. The market is not up as much as I thought it was. I don’t feel so bad about my decision.

I have decided to consider stocks again for my retirement accounts using the strategy of “buy fear, sell greed.” Phrased a different way, I want to “do the right thing as an investor by standing behind good companies when nobody else will.” I do not believe that now is that time. Investors have not been really burned since 2008. Confidence is high. Money is cheap, in fact almost free to borrow. Cautious, pessimistic investors who haven’t bought into the current market look like fools for their missed opportunity. Most of the bad news has been around for a while. There is ongoing conflict in the middle east. China steadily gains ground while each country fights to devalue its currencies. Russia acts more and more boldly each year. Washington plays brinkmanship games with the federal budget. Economists continue to warn that holding interest rates at zero is a short-term band-aid that is causing the next “bubble.” Investors are numb to it and blindly throwing their money at stocks. I ask people why they are in stocks and I hear, “well, I wasn’t, but it just kept going up and I didn’t want to miss out.” Who can blame them? What else are they going to do, put it in a savings account for 0.1% interest?

It’s easy to put money in stocks right now. It feels safe. Therefore everybody is doing it. Therefore, I’m still staying out! … So then why write this whole thing? I have been out of stocks for two years.

Because now I know what I’m looking for:

I am looking for the time when the market “needs investors’ confidence.” The economists will be talking about years of recession. Investors will be just recovering from the gains they lost. The news will be talking about the “new norm, where stocks aren’t safe, and maybe even the dollar isn’t safe.” When everyone is down and out, that is the time to be positive. That is the time to use a good system to pick the winners that will see us through.

Vino de Coco

Same same. Tim Bowles is in the Philippines. It has been fun to be a part of the venture. Tim is quite a salesman and I think that coconut wine will succeed. Maybe I’ll go visit!

Click the picture for the website.
Click the picture for the website.

Ventures Update June 2015

695 Riverview Drive

I am currently reading the book Multi-Family Millions, and it is transforming the way we look at our property. The author, David Lindahl, has been successful on a larger scale in exactly the type of property that 695 Riverview is. He calls what we are doing—creating value by turning over to higher quality tenants and higher rent—“repositioning.” Important note: Zell did not recommend this book to me. I discovered it, and read it first, and I deserve all the credit for any positive outcome that comes from it! Click the book below to link to it on Amazon.

Reading the book after having owned the property for almost 2 years highlights our successes and mistakes from the past and enables us to make better decisions in the future. For example, the book points out that multi-family commercial properties generally make more money than their smaller residential counterparts. I ran the numbers before we bought and that is exactly why we chose it. The numbers are far better than smaller properties in terms of cash flow. Despite the issues we have had, we have never had fewer than 6 tenants at a time paying rent and that money has been crucial. Bottom line, we bought a great property with a lot of potential and the book reinforces that fact.

Conversely, we made some big mistakes. First, we tried to self-manage the property. It was way too much for one person to properly handle without being fully-committed. The book adamantly advocates hiring a property manager. He is right, and it took us 8 months to learn that the hard way. The book also says to hire a good property manager and lays out exactly what to look for, how to hire, and how to ensure results.

The second mistake that we made was to delay resurfacing the parking lot because it costs a lot of money. The book recommends to start by fixing the exterior in order to change the perception of the building within the local community. It is absolutely worth the money in order to attract better tenants. We have learned that from our 2 worst tenants—who we evicted—and who each cost us a lot of money. We are getting resurfacing estimates as we speak and the job should be done by the end of July.

With the amount we plan to spend on improvements this year, it now appears that we may not be profitable in 2015. A lot of the maintenance that we have completed until now has been backed-up maintenance that was deferred by the previous owner, and we have moved on to improvement projects. The increased value of the property due to the improvements and rent increase is easily making up for the few thousand dollars that we are in the red in terms of actual cash flow.

Gluten-Free Bread

Gluten-free bread from Shiloh’s Five Loaves is now being marketed as “Simple Kneads.” Tristaun and Devaunt in Raleigh are rapidly transitioning from the “stand-up” phase to the “distribution and profitability” phase. The new website speaks for itself. Click on the picture to visit it:

Click the picture for the Simple Kneads Website.
Click the picture for the Simple Kneads Website.

Kineomen

Devaunt and Nick have been busy networking in the Raleigh area and sifting through opportunities to find the next Kineomen investment (Simple Kneads gluten-free bread being Kineomen’s first investment). Devaunt has focused primarily on Simple Kneads, while Nick has taken on some clients as a business consultant. I am still a relatively small investor working to develop ideas that I could take on as my own project.

Coconut Wine (Vino de Coco)

When I originally invested in Vino de Coco, I hoped that I would eventually get a chance to learn more about the business and gain experience from them as a start-up. I finally got a chance to meet Tim Bowles, the Vino de Coco co-founder who was our contact for the investment. His stories are fascinating. I decided to keep my investment with them and consider a future partnership.

Click the picture for the website.
Click the picture for the website.