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.

3 thoughts on “Ventures Update October 2015”

  1. You ever consider managing 695 yourself? Appfolio is probably too big for you but something like Buildium would work. Automating everything is fairly straight forward. You’d have to do a bit more with accounting, but again – once you set it up it’d be an easy thing to bring into quickbooks/freshbooks/whatever you use for your accounting. Actual customer service/dealing with problems would be a pain — you’d need to find reliable contacts you could forward them to — but the biz side shouldn’t be too bad.

    I’m looking at their prices and the transaction costs are a bit higher than the gateway/merchant provider I use. If you know a coder that owes you a favor you could prob route billing through a platform like Stripe or Recurly, which has the added benefit of being able to do recurring transactions (either via CC or pulling from a bank account).

    1. We managed it ourselves for the first 8 months. My brother did it while working full-time. I won’t say it was a mistake–it was a learning experience.

      For accounting, I use QuickBooks, and the book-keeping isn’t difficult or time-consuming. The actual maintenance is where the management company comes in. Response to repairs is very important to tenants and a good manager does better than we can. Also, marketing and being available to show vacant units takes time and commitment. If I am ever in Columbus full-time, I will reconsider!

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