Life of an Investor » 2008

Archive for May, 2008

The First Deal…hopefully

Tuesday, May 20th, 2008

In a previous post, I discussed the preparation that we have been going through over the last year or so, but how we are just now getting started. Today, I want to give you a few details about the deal that we’re working on and get your reactions and feedback. Advice from those who know more is always appreciated. Disclosure: These numbers are not the actual numbers, I factored all numbers to more round figures for easier comprehension.

Almost a year ago, I inquired about a property on Craigslist that was for sale. It was a fourplex and from the pictures, it seemed to be in reasonable condition, with some need of rehab. At the time, we weren’t ready to move, so I just passed up the opportunity. Well, a month or so ago, the seller contacted me and said that they were putting it up for sale again and wondered if I was interested. I looked at the info again, and the numbers really seemed to make sense. We scheduled a viewing that evening. When we asked the seller when they needed to close, the response was “Yesterday”; not a surprise. With this in mind, we submitted an offer to them the next morning. What was a surprise is that we then spent the next week or two haggling over terms. I guess they weren’t in that big of a hurry after all. It was obvious that the seller was trying to get the price up by telling us that they had higher offers, although for some reason they ended up taking ours instead of the higher ones…hmmm. Eventually we did get a contract signed, although it was a huge pain as they continued to try to change minor terms, such as closing date, contingencies, etc.

Here are some of the details:

Sale Price: 100,000
Rent per Unit: $750 (3,000 total)
Down Payment: $20,000
Repairs needed: $20,000

Here is a rough breakdown of my potential estimates:
Loan P&I:$500
Taxes: $265
Insurance: $100
Repairs: $200
Vacancies: $250
Management: $365

That leaves over $1,300 a month in potential cash flow from the start. That’s before depreciation, equity buildup and appreciation. Even with $40,000 out of our pockets up-front, that could be recouped within 2.5 years. To us, this seemed like a no-brainer deal. As I stated in my Hard Money post, getting this property with no money out of our pockets was going to be a difficult ordeal.

What do you think about what you’ve heard so far? Well, stay tuned for tomorrow when I’ll give you the other side of the story. There are definitely some downsides to the deal as well. I’ll discuss the risk and rewards of this property as well as update you on the status of the closing.

Investing in your health - the joy of exercise

Monday, May 19th, 2008

If you read the About this Site page, then you will notice that I am not limiting my posts to information regarding investing in real estate, stocks, or other monetary investments. As I stated there, life is a series of investments of time, money and love. This post is about an investment of both time and money as many things are. When it comes to exercise, most of us have either purchased large machinery for hundreds of dollars that we subsequently stuck in a garage sale for $25 because we never used it, or we joined a health club for hundreds of dollars a year and eventually quit because we never used it. Can a video game replace these with better results?

On Wednesday, Nintendo will be releasing their latest game for the Wii, which is named Wii Fit. A few weeks ago, my wife and I purchased a Wii and have been enjoying it since. This new game is seriously tempting. It looks dangerously addictive, but when the addiction is to exercise then can it really be that bad? Basically, the game comes with a weight sensitive platform that you use to play the more than 40 activities that come with it. These range from sports games, to yoga, to push ups and even a rolling ball game that is very reminiscent of Marble Madness. I watched a video of a couple of people trying out the yoga. It was very cool, because on-screen, it showed your center of gravity so that you adjust your stance for a more proper form. One of the pictures below even shows a day-to-day record of your BMI, which could be a great motivator to play more games.

Now my question is, does a game like this make a sustainable fitness plan? I personally know one person who got a lot of exercise out of a cheap children’s game called Veggie Tales Dance Dance Dance. But many games have come and gone without a spokesperson to tell how much weight they have lost (I want to see a Subway Jared for the Wii Fit. OK, no I don’t. I can only take one Jared). The Wii Fit costs $90. Do you think it’s a good investments. It will be a while before I even have to make the decision; I hear they are already sold out even though they are in pre-order right now.