Wednesday, October 31, 2007

I signed up for PPP!

I did. What's PayPerPost you ask?

PayPerPost is a way to monetize your blog. You can make money by posting about something that is sponsors. If I had to claim I liked the product (like celebrities on TV) when I didn't I WOULDN'T do it. You just have to post honestly about whatever the product is, even saying why you don't like it. That's pretty cool. What's better,
PayPerPost even pays you for your first post. Yes that's right, they're going to pay me $20 for 200 words in this post.

Why would I do this:
Well, as many of the people that know me, especially the ones that attend Twin Cities Rich Dads and Moms Cashflow Club events and play Cashflow 101 and Cashflow 202 games both here in Leominster and in Fitchburg, know that I've been building an online business to monetize my online activities, separate from my other businesses. This includes things like ethical affiliate marketing (no spam, opt-in only) for a variety of things, use of Google Adsense

and now PayperPost.

Why am I doing this? As a Cashflow player, you can think of this as like SpareTime Co. in Cashflow 202. Or if you are a Robert Allen aficionado, it's about multiple streams of income. So far I'm made about $3000 over the past 4 months although I'm still waiting for a few checks (Did you hear that, TJ?). My goal by end of next year is to make enough from affiliate marketing, web site and blog monetization to cover all of my monthly living expenses, including mortgage. That means income from other sources can go towards savings, investments and other businesses, of which I'm building several. Why? If something happens to my main business or a meteor wipes out my real estate portfolio and the insurance companies say "oh, gee, sorry, but Acts of God are excluded", I still have income. Or think of it this way: I want to take off a month or two and just relax because I'd still be making money in my sleep so to speak.

Posting for cash is an interesting concept and quite open to being unethical. I disclose anyway but PayperPost requires disclosure. That makes me feel better. You can see the link bottom right on every page saying I disclose and every page has a link to my disclosure policy.

How does it work? Well, there are advertisers that offer compensation of some amount for a post. A blogger can accept it or possibly negotiate a different amount. Additionally, you can get direct placements at an amount you specify (or higher) via PayPerPost Direct. You can even get paid for reviewing this post or any other post displaying the below image:

How much can you make? Good question. I believe the highest earner last month from PayperPost was about $1300. The highest earner all time is Coleen 692, having raked in just shy of $18K! What's $18K good for you ask? How about a down payment on investment property?

So why else would you do this and why would I? Let's say 10 people sign-up from the "get paid for reviewing" link. I'll make a little money, you'll make a little money and have an opportunity for with no overhead. Plus I'd get 10 links on other blogs. Big deal you say? It is. These will likely get indexed by search engines and boost the ranking of my blog because they'd include links to mine. That means more people seeing my sites and potentially clicking on my ad links.

Anyway, I suggest you blog and check it out. Okay, you you aren't likely to get rich, but you can earn some extra money and perhaps invest it in other ways like maybe Prosper. It also will help boost search engine rankings because of links, etc., and you likely will get additional traffic. It's free and you've got nothing to loose.

Tuesday, October 30, 2007

Small Deal / Cash Flow Deal

Jeff Howard of Cape Cod AREI and a partner are looking for $25K to help them refinance a great 2-family property on the beach in Marshfield, MA. To facilitate this, they are looking to get another 5% cash to bring their LTV to 75% because of the changing mortgage landscape. As always, do your own do diligence.

You can lend as little as $50 and you'd get paid 18.26% APR on this! Prosper does all the tracking and collects a small amount of your earnings as a fee. When you set up as a lender using the link below, you get paid $25 just for funding your first loan! If you lend $50 to Jeff, if the loan goes full term, you'll make $14.33 on your $50 while your principle is being returned monthly! 43% is a spectacular CCR.

So check it out. You might just find this a vehicle that helps.

Financed with Prosper, people-to-people lending

Need to borrow? Give Prosper a try! Rates start at 7% and go up to 29%. You create a request to borrow, set your rate and lenders try to fund you. Be reasonable and you should get your listing funded.

Borrow up to $25K. Rates as low as 7.00%.

Monday, October 29, 2007

Change in game days

Starting in November, the Leominster game for the Twin Cities Rich Dads and Moms Cashflow Club moves to the 2nd Saturday of the month to line up with the Northern Worcester County Real Estate Investors meeting. The NWCREI begins meeting in January.

The Fitchburg game continues to be generally on the 4th Saturday of the month. It follows the Worcester Real Estate Investors meeting.

Lessons from October 27th 2007

I couldn't make the game on October 27th for the Twin Cities Rich Dads and Moms Cashflow Club but I understand that it was a good game. In attendance were James and Debbie Greelish, Mike Marques and Sue Sudhalter, Danielle Rocheford and Dan Langford.

The following was sent in By Debbie Greelish:
We had 6 people playing Cashflow 101 tonight. James and Debbie took opposite stratagies. James bought anything that was either underpriced or had a good return on investment...no matter how much he had to borrow or how negative his cash flow went. at one point, he had a negative $6,000 per month cash flow. That equates to living off your credit cards and borrowing from your 401K. One player commented on how it was hard to believe someone with that negative a cash flow could ever get out of the rat race. One house buyer later and he paid off all his dept and left the rat race behind.

Debbie played the doctor and was ultra conservative. She would not buy anything unless she had the cash required for the down payment. No borrowing from the bank at 120% for her. She eeked along with a few stock deals, paid off her retail debt, bought a couple of undervalued 3 bed/2 bath houses that were good deals, but didn't have much for cash flow. Then came the $1 stock. After buying 10,000 shares at $1, (not borrowing, just paying with cash) she hit it big with a $50 / share payoff. Sitting pretty with 500K in the bank, Debbie paid off her credit cards, school loans, and car loan. Then she went looking for big deals. She got lucky and any draw was gold. 8-plex, 24-unit apartment building, Car wash. Then that same house buyer that put James out snapped up 3 houses from Debbie, bringing her back to over 500K in cash in the bank. Another 12-unit building and Debbie was out of the rat race as well.

The best thing learned tonight is the benefit of having capital gains properties as well as cash flow properties. The cash flow gets you out of the rat race, but the capital gains speeds things up. James could not have overcome his negative cash flow without having a property to sell that had lots of equity. Debbie would not have even looked for those great big deals if the stock sale had not given her cash. She also may have been driven back to small deals before reaching her cash flow goal if the small properties with big equity had not sold. Both strategies required the player to be willing not only to buy properties that had cash flow(the end goal) but to be willing to sell properties for profit (the means of reaching that goal). There is great truth to what is said: 'You make your money when you buy the property, not when you sell it.'

Lee's comment: I find it interesting that there was no partnering on deals in this game. I can't really say why since I wasn't there though.

Monday, October 22, 2007

Self-employed in the Rat Race

For a while now, we've been talking about adding a house rule that allows someone in the Rat Race to leave their job and become a full-time real estate investor. If you've been around real estate investment clubs for any length of time, you've met someone who's done this.

Starting with the game on Saturday, October 20th 2007, we've finally pulled the trigger on this rule. Essentially, when you are down-sized, you can choose to go to work for yourself if you like.

Instead of waiting two turns to get a new job, you pay your expenses and roll normally on your next turn if you want. Your income is limited now to your passive income. Pay close attention as you play or you will be bankrupt!

If land on down-sized again, you roll one die.
Role a 3 or less: the space acts as a another pay check. Essential, as a self-employed person, you control your destiny and work life. You take a month off, you can even if it's not always the most wise thing to do. And lose a turn.

Role a 4 or higher: there is an economic downturn and your passive income cuts in half for 3 pay checks. But you don't lose a turn.

If you choose to wait two turns and get another job, everything is the same.

Lessons from October 20th 2007

I continue to be amazed at the turn-outs for games and the energy everyone brings to games. We had 11 people for the October 20th Twin Cities Rich Dads and Moms Cashflow Club and for the very first time, both games played were Cashflow 202. People in attendance were regulars James Greelish of Worcester REI, Bob Kay, Terry Fairley, Danielle Rocheford, Bill Holmlund, Herb and Lee Johnson of Beko Investments and Worcester REI. Here for the second time was Ann La Roche and first timers playing with us were Greg Aldrich of Impact Networth, Kim Shreffler and Gus Martino. Like many of us, Kim and Greg are both real estate investors. So once again in Leominster, we had 11 people.

Playing on table 1 were Bill Holmlund, Bob Kay, Ann La Roche, Danielle Rocheford, and Lee Johnson (myself). Our table did a ton of partnering on deals. I personally partnered on no less than 5 deals! Some deals I did myself and some deals took everyone at the table to put together. In some cases, the person drawing the card had little cash and the other 4 people all wanted to participate. Instead of fighting for the deal, we each agreed to reduce our stakes and keep cash on hand to do more deals. Remember, Cash is king.

I started with what probably is the worst portfolio, which is stock only, and included overpriced purchases of MYT4U and OK4U. Generally, both tank and I don't make anything on them but this time I actually made something small on one of them.

Additionally, this time I had owned no businesses, had no royalty income, etc. It was all real estate. Considering that we started playing about 6:30PM and there was a lot of talk and recording of deals, etc., the last person got out of the Rat Race by 9:45 PM. I got out first of the Rat Race first but I was not the first to win.

I started with just my savings and monthly cash flow, which is okay for the engineer. Some others started with cash and cash flow so I felt confident starting (and staying) with big deals.

Almost immediately, I partnered 50-50 on an 8-plex, taking a bank loan for part of my share of the down payment and a few "months" later, sold it to a plex buyer that made both owners happy because we both pocketed $33K. That took care of my bank loan that had grown to $16K and paid off my credit card and retail debt. My cash flow had dropped to about $1000 per month but because of the sale, it jumped back to nearly $3000 per month. And I still had cash that allowed me to buy duplexes and the like with what I would previously have considers large down payments, and still have cash. I even was able to sell a option.

I find it rather ironic that with my cash flow growing past $6000 and $7000 and with cash growing at one point to $140,000 +, because of deals I completed on my own or as a partner, my cash shrank to $680. And then I got downsized. However, because of my cashflow (substantial and not negative), I was able to borrow $4000 to cover the short-fall.

And it was control, dealmaking, and ability to negotiate and cooperate that enabled me to get out. For the longest time, I was the only one with all risk insurance and therefore everyone wanted me to control the deal which meant therefore I could sell when I needed cash. However, I also looked at others situations when talking about selling which won me trust on future deals. I joined a deal when I drew a card for a 1031 exchange. My fee for transferring it was to join the new deal with Danielle for a portion of what was now a 16 unit apartment; so they didn't have to pay me any money to buy the card, I took a portion of the deal AND became the general partner because of my all risk insurance.

The final deal that got me out was a 1031 exchange deal in a market card. I was the managing partner/trustee/manager or the property on large property that I owned 75% of it before the exchange. Bill paid me $4000 (which covered my bank loan) and I kept enough enough of a percentage to keep cash flow that would put me at passive income being 2X expenses. That exactly worked out to giving up 25%, receiving $4000 and getting a substantial increase in passive income. It cost Danielle nothing, she still had 25% of the new deal and Bill because general partner because he now had all risk insurance.

Within another "month" or two, Bob joined me on the Fast Track, followed by Ann, Danielle and Bill. There were some business buyouts and I started two franchises and actually had one franchisee, which again shows the power of working together. Bob won first, and then Ann and I won almost simultaneously. We stopped at this point because Bill was the last person on the Fast Track and he would have won in probably 3 more rolls.

And this was all by 9:45PM!

I'll try to record the number of months (paychecks, etc.) I get next month so I can show the number of months to translate into life.

On the other table, James and Greg both pursued a strategy of heavy negative cash flow. As a result, nobody partnered on deals. Gus got out of the Rat Race first about the time that most of us on the table I played on had won already on the Fast Track.

This got me thinking about the power of partnering on deals. Had there been a pattern of partnering instead of borrowing large sums and paying out more than one receives because of negative cash flow, I have no doubt that everyone would have succeeded and exited the Rat Race sooner. That doesn't mean negative cash flow is always bad but it needs to be a measured, educated response and fit with your risk tolerance. I've played both ways and I've certainly done the former in real life and am actively pursuing the later in real life. Because of the results I've been experiencing, I'm finding that partnering is maybe the most powerful way to get out where everyone goes for the ride.

Friday, October 19, 2007

October 2007 Cashflow Games

The next two Twin Cities Rich Dads and Moms Cashflow Club are coming up. There's is a game today, October 20, 2007, here in Leominster and another game in Fitchburg on October 27, 2007. Networking starts at 5PM, and the game starts at 6.

Subscribe to the newsletter for directions and to RSVP if you are coming and sharing in pizza. It's free to play. Expect to contribute $5-7 if you want pizza.

Last month in Leominster, we had a hard money lender as speaker, 14 people here during networking and 11 playing on two tables. In Fitchburg last month, we had 14 people on 3 tables.

We play both Cashflow 101 and Cashflow 202 and all are welcome.

Jim Cramer: Cash is king

Tonight, on "Mad Money", Jim Cramer said "cash is king". I know it's not the first time he's made this pronouncement and he was talking about stock portfolios.

He says that if you have only 5% cash in your portfolio, you are maxed out. He recommended keeping at 10% cash portfolio with a strategy of taking some gains off of the table (he calls it "schnitzel"), even if that means you raise your cash position to 40%.

He talked about making this mistake himself in the past.

I think this applies to real estate also. I know I've made this mistake before and I'll bet most real estate investors have too.

Real estate tools

I'm pretty sure that everyone reading this blog is trying to escape the rat race.

We need tools to do that so to help you evaluate real estate, I've posted some mortgage calculators at Beko Investments.

So now you all have access to this kind of tool and don't have to go searching for them. I still prefer a good old financial calculator (link to come so you can buy one) but they aren't always with you. So check these omortgage calculators out.

Sunday, October 14, 2007

Disclosure Policy

This policy is valid from 14 October 2007.

This blog is a personal blog written and edited by me. For questions about this blog, please contact ratraceescapes @t bekoinvestments daht com.

This blog accepts forms of cash advertising, sponsorship, paid insertions or other forms of compensation.

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The owner(s) of this blog is compensated to provide opinion on products, services, websites and various other topics. Even though the owner(s) of this blog receives compensation for our posts or advertisements, we always give our honest opinions, findings, beliefs, or experiences on those topics or products. The views and opinions expressed on this blog are purely the bloggers' own. Any product claim, statistic, quote or other representation about a product or service should be verified with the manufacturer, provider or party in question.

The owner(s) of this blog would like to disclose the following existing relationships. These are companies, organizations or individuals that may have a significant impact on the content of this blog. We are employed by or consult with: Beko Investments, Worcester Real Estate Investors, Northern Worcester County Real Estate Investors, StormForge Technologies. We serve on the following corporate or non profit boards: Mount Gunnison Fuel Company, StormForge Technologies. We have a financial interest in the following that are relevant to our blogging: real estate investing, small business, Beko Investments, affilliate marketing, Worcester Real Estate Investors and Northern Worcester County Real Estate Investors.

To get your own policy, go to http://www.disclosurepolicy.org.

Thursday, October 4, 2007

Great video for anyone trying to get out of the Rat Race

A bit heavy of on trying to scare you but it has a powerful message:

You have to rely on yourself, not the government, a pension/retirement account, your boss, etc., if you want to break free of the rat race. This motivational video is all about you: start a part-time business in the basement, earn extra money, keep extra money, and work to set yourself free.

That's why we play Cashflow, right? Right?

We want to get out of the rat race. Some of the Twin Cities Rich Dads and Moms members are employees, are self-employed (own a job really, me included), own investment real estate (I do), invest in the stock market or really own a business. We come from all parts of the Cashflow Quadrant and we all have one thing in common: we want out of the rat race. Let me repeat that a little louder because I don't think everyone was listening:


Many of us are trying to improve the tools we have to do this. Some are taking or have taken coaching, some of us belong to a real estate investing club like the Worcester Real Estate Investors and Northern Worcester County Real Estate Investors, belong to professional organizations or landlord groups like the Northern Worcester County Landlord Association. Many of us subscribe to newsletters on areas of interest. And there is lots of reading involved.

How you do it is up to you but I'm working at it several ways: self-employed for now moving into business ownership, real estate and investing in other things that make sense.

Boston is a big Red Sox town so I'll use a baseball metaphor:

Don't try to hit run every time; that might work for the David Ortiz' of the world. You might get lucky but Big Papi has incredible skill and power and can do it with regularity. I can't. Playing by myself, I've got to play small ball and look for singles and doubles. Or even a sacrifice.

Investing is a team sport. It's unusual that a team wins solely on the luck or skill of a single player.

Take partnering. You've now got the skill of many working as one. That means a by working together, if you and I and a few other people work together, we collectively become a power hitter/base stealer whatever. Together we have a big impact.

Want an example? Look at the last game post at the 3 people that got out on one deal by partnering. 3 people! One didn't even have cash.

Think on that that for a while.

Lessons from September 29th 2007

Big game at the Greelish's. 14 total people on 3 boards. There were two Cashflow 101 games and one Cashflow 202 games. People in attendance were: James and Debbie Greelish, myself, Bob Kay, Dan Langford, Murthy Pothuraju, Mike Marques and Sue Sudhalter, Jeff and Tina from the Northern Worcester County Landlord Association, Tina's parents, and Brian and Hyun-Ju Lucier of the Northern Worcester County Landlord Association. Thanks to everyone for coming.

I'll let Debbie describe the table she played on below:

"Wow! What a great game we had last Saturday!

I (Debbie) played Cashflow 101 at Table 2. We had the extreme of occupations at our table: the Doctor and the Janitor. I've always liked the doctor, because there is always enough money to do a deal, even if it is a small one, but you can't beat the janitor for getting out of the rat race quickly. What you can learn is the importance of limiting what I like to call 'non-performing' expenses: the $1,900 mortgage/rent payment vs the $200 mortgage/rent payment; the $380 car payment vs $60 cap payment; the $270 credit card payment vs $60 credit card payment; the $2,880 other expenses vs $300 other expenses; and the $640 per child expense vs $70 per child. Many of these expenses represent not being able to wait for our reward. Advertising works, and we have been inundated with advertising all our lives saying we deserve it, need it, and can have it now, but if we simply bought assets instead of liabilities and waited for our reward, then we would get to work and play on our own terms. Our Janitor made it out of the rat race before anyone else and our Doctor never made it out at all. It wasn't because the Janitor had more assets than the Doctor. The Doctor had more than twice the passive income that the Janitor had. That says something important about the expenses."

Thanks, Debbie. Back to Lee:

On table 3 for Cashflow 202 I played on, with Bob, James and Dan, we all played the Engineer to see the results. We did not start with the same portfolio however. We saw a good mix of starting position (portfolio strength), luck as to what deals came your way, risk tolerance, decision making skills, etc., deals you couldn't do because the card said you hesitated, all play in to different outcomes. James got out in 45 minutes because of decisions he made, deal making, partnering, and risk tolerance; instead of going to the fast track, he came back to the rat race.

This was an interesting game to watch: as people ended up with too much cash, so to speak, the desire to overpay for a deal just to do a deal creeps up on people (myself included). I think this happens in the real world too especially when there are too many people with money bidding on a property. It also shows that a property or business may be worth more to me than it is to you on some given day or worth very little the next. In some cases, something is worthless to you one day vs. the next.

There were several market cards drawn that affected rents, with two dragging them down and one pulling them up. My starting portfolio included a duplex and a four plex, both cash flowing $50 per unit. Then a market card was drawn pulling rents down $50 per unit. I had $0 cash flow from these but I wasn't losing money so I figured I could hold out for a while. This turned out to be quite a while. I wasn't able to do an exchange and no rent increases occurred while I held them. But a buyer appeared at $40K per unit and I sold, pocketing a decent amount of cash.

I had some cash during this time but not a huge amount. I had enough to cover expenses. Now I had the money to move forward, partner on deals or do them myself.

Over on table one, there was an important nugget playing Cashflow 101. There was a big deal that nobody could pull off alone. But 3 people could together and it got all 3 out on that turn! Think about that. I believe the person who drew the card didn't even have money in the deal but either through generosity of the other partners or deal making skills (or both), this person received a big enough piece and was out of the Rat Race.

The lesson there is when a good deal appears, be creative and look for help.

Tuesday, October 2, 2007

Lessons from September 15th 2007

Another big turn out for the Twin Cities Rich Dads and Moms Cashflow Club at the Leominster game. 14 people were here during networking including our guest, Naz Dirinian of Financial World. Naz is a commercial mortgage broker and hard money guy. Naz spoke about different programs currently available and answered a lot of questions. Thanks, Naz, and we hope to see you again soon.

The number dropped to 11 for the games and we had one game of Cashflow 101 and one of Cashflow 202. Playing tonight, we had Bill Holmlund (real estate broker); James Greelish of the Worcester Real Estate Investors; myself; Terry Fairley; Bob Kay; Mike Marques and Sue Sudhalter; and Maryann Lacey. Additionally, playing with us for the first time, we had Ann Le Roche; Jay Johnson of Re/Max and board member of the Northern Worcester County Landlord Association(I'm a member); and Murthy Pothuraju.

Playing Cashflow 202, we had James, Bob, Terry, Ann, Murthy and myself. Ann and I both ended up playing the Engineer although we had different starting portfolios. There were a combination of things that went on in this game: I kept drawing property cards where I hesitated and the player to my right got the deal (Ann) and we had our first partnering on a deal happen (Ann and James) and this is now a house rule.

Hesitation on analysis happens every day in real estate investing and I'll be we all know someone who does it chronically! So it was me in the game tonight. And let me tell you, it cost me! No money down, cash flowing deals, even if the purchase price is a little high, have an infinite return! Passing on three of these helped Ann a lot. I started with a fair amount of cash and real estate plus some stock and I ended up struggling whereas Ann got out fairly quickly.

Ann and James partnered on a good sized apartment deal and James got out pretty quickly after partnering on this. Learn this lesson. Robert Kiyosaki repeats himself repeatedly: investing is a team sport. Your team include lawyers, accountants, bankers and mortgage brokers, carpenters, etc. and it can also include other people with $$$ or something else to contribute. James couldn't do the deal alone and Ann couldn't buy it from him unless one of them went to seriously negative cash flow early in the game. This way neither did.

So I see three big lessons from tonight: don't hesitate on money making deals (especially when they are free), starting from the same condition doesn't mean the same results (luck, effort and decision making skills) and look for help when you've got a good deal that you don't have the money to do alone.

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