Over the summer I started looking for properties to purchase. foreclosures were up and I smelled some opportunity. I started looking in July and made a few offers in August--got one accepted and closed on my first flipper on Sept. 30. I got a pretty good deal only because I am paying all cash and offering to close in 10 days.
This particluar house is a 5 bedroom 3 bath home in a low income but, clean part of San Diego. My plan is to flip it so I want to do a complete surface renovation as cheap as I am able. I paid 160K for the house and so far I have about 11K into it. I think I can get it done for another 5-7K. The comps in the area range from 240 to 305K. I plan to list it between 260 and 280 and see what happens. I would be happy with 275K-----with net profit of 80K after all expenses (i.e. closing costs, commissions. etc)
Just after this house (La Paz) I purchased an equestrian center. I am very excited about this property. It is a 4BR/2Bath on 5 acres. WOW! It also has a detached 1100 square foot building that is plumbed for a granny flat. I got this place for 260 and so far I am not sure exactly what I am going to do with it. Its in pretty good shape right now and a house just down the road is very similar to mine and is listed for 585K. This one should be a really good deal.
Where I am torn is the sell or rent proposition. If I sell I can make some good quick cash---200 to 250K is pretty good for a few months work but, if I keep the properties and rent them I would be adding wealth to my net worth. The only problem is that I am having a hard time deciding which is better--take the 200K and roll it into another deal or rent it out and be cash flow positive of 1500 a month or so.
Anyhow---the most important line item for me right now is to finish the cabin so that I dont lose any powder days in Big Bear.
will try to keep this updated with pics---that would be great.
Monday, November 23, 2009
Wednesday, September 2, 2009
What next?
As usual--too long in between posts. I was busy this summer working on the cabin and trying to have fun with the family. I spent most of July in Big Bear working on the cabin. Its funny how things develop. Here is a quick synopsis.
In June I had a broker guy start putting out blind offers for me on some of these bank owned homes as it looks like the market is heating back up in San Diego--multiple offers over asking price. We got one in late June that I backed out of due to a lengthy repair process. Early July I got into another one from a different agent. This one is pretty good with about 50K in profit and 25 days of work. Just before I pulled the trigger I ran across the proverbial goose that laid golden eggs.
I met this guy who has many deep relationships with asset managers. He says that he can deliver very clean properties with 60-120K profit with almost no work in them. If this guy is legit---this could be huge. We will see. I am meeting him in 45 minutes to put 4 houses in escrow. I will be using my own money on these first ones--they have to be paid in all cash. If we can turn out 10 or so of these I will go back to my bridge fund friends and raise 5-8MM depending on how many properties this guy can provide. I really hope this guy can deliver what he says he can---we will find out this morning.
Dr. Horsepower: Those guys came back with some changes to the company and again want me to head it up. They have a lot of distribution in mexico and the net profit numbers look amazing. They also have an apparel deal in the works that could outshine the beverage piece. OK--looks good--whats the hold up? The snag is that they are undercapitalized and that puts them in a overhead/product squeeze. If I came on----my immediate attention would be fund raising while doing the buildout. Thats fine although, the growth could be so elastic that we could create too much demand out of the gate and not be able to perform on the delivery and service side. I still need to get my head around it.
Other than that----kids started school--sydney doesnt like her teacher but, Hudson loves it. Its sad to see them go off knowing that they will be in school for the rest of their lives. Cabin still has about 15 days of work left. Really looking forward to getting this done and doing some skiing.
In June I had a broker guy start putting out blind offers for me on some of these bank owned homes as it looks like the market is heating back up in San Diego--multiple offers over asking price. We got one in late June that I backed out of due to a lengthy repair process. Early July I got into another one from a different agent. This one is pretty good with about 50K in profit and 25 days of work. Just before I pulled the trigger I ran across the proverbial goose that laid golden eggs.
I met this guy who has many deep relationships with asset managers. He says that he can deliver very clean properties with 60-120K profit with almost no work in them. If this guy is legit---this could be huge. We will see. I am meeting him in 45 minutes to put 4 houses in escrow. I will be using my own money on these first ones--they have to be paid in all cash. If we can turn out 10 or so of these I will go back to my bridge fund friends and raise 5-8MM depending on how many properties this guy can provide. I really hope this guy can deliver what he says he can---we will find out this morning.
Dr. Horsepower: Those guys came back with some changes to the company and again want me to head it up. They have a lot of distribution in mexico and the net profit numbers look amazing. They also have an apparel deal in the works that could outshine the beverage piece. OK--looks good--whats the hold up? The snag is that they are undercapitalized and that puts them in a overhead/product squeeze. If I came on----my immediate attention would be fund raising while doing the buildout. Thats fine although, the growth could be so elastic that we could create too much demand out of the gate and not be able to perform on the delivery and service side. I still need to get my head around it.
Other than that----kids started school--sydney doesnt like her teacher but, Hudson loves it. Its sad to see them go off knowing that they will be in school for the rest of their lives. Cabin still has about 15 days of work left. Really looking forward to getting this done and doing some skiing.
Tuesday, May 12, 2009
One of those days
You ever have those days where it seems like either everyone you come into contact with is crazy? Either they are nuts or you are---the last few days has been like that for me. Those Dr. Horsepower guys Steve Scholl and Jim McCormick have flipped a switch.
On 2/27/09 I posted that I had been meeting with them again--(against my better judgement)---and they again wanted me to run the company and get the company off the ground. I met with them maybe 4 or 5 times and after looking closely at the company it became apparent that they needed some help and my background could be hugely valuable to this enterprise.
We discussed my salary and I told them that if I was going to dedicate more of my time to this project they needed to pay me. That became a problem for them----I am not really sure why but, Jim and Steve kept saying to join the company and just go out and raise your salary. I have no problems raising money but, I would rather join a company that is able to sustain typical overhead and spend my time raising money for growth and operational needs. I have invested in many private placements and it is my opinion that a private raise should not be for executive salaries but, that is just my thinking. It is possible that people are happy to pay someone to try and get a company started. More on this later.
Jumping forward to May 10 or so---out of the blue I get an email from them saying that they read my blog and that I didnt fit the company image because of my height. I was completely stunned. Where were these guys coming from and what prompted them to send that to me I have no idea. It was so crazy it was humorous. I sent the email to some people who were familiar with my meeting with them and asked for some opinions.
After me sending this out-----somebody thought it was funny to begin a blog. I wont give out the address at this time. I wont give it out because now these guys are threatening to sue me. What they are going to sue me for I really dont know. I have closely read the blogs and the items mentioned in it are common knowledge to anyone remotely familiar with the companies operations. All through this process I have never been asked to sign an NDA, non-compete or anything that would bind me to secrecy.
the only thing I can think of is that these guys are scared that during the fund raising process people will begin to ask certain questions that would be difficult to answer. In my opinion these issues are easily deflected because I am sure a paper trail is non-existant. That is if--they ever happened at all. I think they are also concerned about their other venture Dr. Prison.
The moral of the story is to carefully watch whom you try to do business with as you never know who is absolutely nuts and will threaten to sue you later. I hopefully have learned my lesson---and you know what my wife told me all along these guys were a waste of time---I just wasnt smart enough to heed your "womans intuition".
On 2/27/09 I posted that I had been meeting with them again--(against my better judgement)---and they again wanted me to run the company and get the company off the ground. I met with them maybe 4 or 5 times and after looking closely at the company it became apparent that they needed some help and my background could be hugely valuable to this enterprise.
We discussed my salary and I told them that if I was going to dedicate more of my time to this project they needed to pay me. That became a problem for them----I am not really sure why but, Jim and Steve kept saying to join the company and just go out and raise your salary. I have no problems raising money but, I would rather join a company that is able to sustain typical overhead and spend my time raising money for growth and operational needs. I have invested in many private placements and it is my opinion that a private raise should not be for executive salaries but, that is just my thinking. It is possible that people are happy to pay someone to try and get a company started. More on this later.
Jumping forward to May 10 or so---out of the blue I get an email from them saying that they read my blog and that I didnt fit the company image because of my height. I was completely stunned. Where were these guys coming from and what prompted them to send that to me I have no idea. It was so crazy it was humorous. I sent the email to some people who were familiar with my meeting with them and asked for some opinions.
After me sending this out-----somebody thought it was funny to begin a blog. I wont give out the address at this time. I wont give it out because now these guys are threatening to sue me. What they are going to sue me for I really dont know. I have closely read the blogs and the items mentioned in it are common knowledge to anyone remotely familiar with the companies operations. All through this process I have never been asked to sign an NDA, non-compete or anything that would bind me to secrecy.
the only thing I can think of is that these guys are scared that during the fund raising process people will begin to ask certain questions that would be difficult to answer. In my opinion these issues are easily deflected because I am sure a paper trail is non-existant. That is if--they ever happened at all. I think they are also concerned about their other venture Dr. Prison.
The moral of the story is to carefully watch whom you try to do business with as you never know who is absolutely nuts and will threaten to sue you later. I hopefully have learned my lesson---and you know what my wife told me all along these guys were a waste of time---I just wasnt smart enough to heed your "womans intuition".
Monday, May 11, 2009
New Trends
As an investor I am a swing trader. What that means is that instead of looking at fundamentals of a company (stock) I tend to look for swings in the markets. The idea being that if you can jump on a rising tide you can quickly get some upside by following upward ticks and large volume. This is nothing new and really a fairly easy way to capture a few points (percentage points) on your investable money.
In addition to thinking this way about stocks I also think like this about new ventures. My last company www.swppsystems.com was just that. I started this company when two things were rapidly emerging. The first being a huge rise in new housing starts and the second being new laws that were established around storm water. It has been a huge success. With the rapid decline of the housing markets we have also seen a decline in the willingness of municipalities to enforce the laws around storm water. So----
I am always looking for new opportunities and lately I have an interesting convergence between a few things that could prove to be fertile ground for a startup. We all have seen how hugely successful and viral social networking is---facebook with its 50M users and myspace with about half of that. This "social movement" is really a blend of utilizing the internet with its global reach and making it relevant and local to a users wants and needs. We have seen a lot of companies try to do this with content---read citysearch.
The other things that is emerging is P2P (peer2peer) platforms. Five years ago all those bit torrent sites (i.e. napster) were doing p2p stuff with content that is nothing new; but, now P2P is different. We have blended this social movement into a P2P platform that is facilitating all sorts of things---we have social lending and microphilanthropy.
Social lending sites like prosper.com and microphilanthropy sites like donorschoose.com are facilitating inter-personal connections into financial transactions. My question is how far can this go? In 2007 P2P lending was a 700M market. It is projected to be 5B in 2010. While I think 5B is very optimistic there is no doubt that it is a movement that will get larger and larger in the future-------especially as the face of typical banking is rapidly changing and banks are going out of business.
The "swing trade" question is how does one capitalize on this? The easiest thing would be to take one of the more successful business models and introduce it into a different country with a vibrant economy--maybe India or the pacific rim. The other thing would be to take a slice of P2P lending and build it out--maybe focus on real estate or microbusiness loans.
I am not sure at this point but, as with anything timing is critical and its always working against you. Will keep you updated.
In addition to thinking this way about stocks I also think like this about new ventures. My last company www.swppsystems.com was just that. I started this company when two things were rapidly emerging. The first being a huge rise in new housing starts and the second being new laws that were established around storm water. It has been a huge success. With the rapid decline of the housing markets we have also seen a decline in the willingness of municipalities to enforce the laws around storm water. So----
I am always looking for new opportunities and lately I have an interesting convergence between a few things that could prove to be fertile ground for a startup. We all have seen how hugely successful and viral social networking is---facebook with its 50M users and myspace with about half of that. This "social movement" is really a blend of utilizing the internet with its global reach and making it relevant and local to a users wants and needs. We have seen a lot of companies try to do this with content---read citysearch.
The other things that is emerging is P2P (peer2peer) platforms. Five years ago all those bit torrent sites (i.e. napster) were doing p2p stuff with content that is nothing new; but, now P2P is different. We have blended this social movement into a P2P platform that is facilitating all sorts of things---we have social lending and microphilanthropy.
Social lending sites like prosper.com and microphilanthropy sites like donorschoose.com are facilitating inter-personal connections into financial transactions. My question is how far can this go? In 2007 P2P lending was a 700M market. It is projected to be 5B in 2010. While I think 5B is very optimistic there is no doubt that it is a movement that will get larger and larger in the future-------especially as the face of typical banking is rapidly changing and banks are going out of business.
The "swing trade" question is how does one capitalize on this? The easiest thing would be to take one of the more successful business models and introduce it into a different country with a vibrant economy--maybe India or the pacific rim. The other thing would be to take a slice of P2P lending and build it out--maybe focus on real estate or microbusiness loans.
I am not sure at this point but, as with anything timing is critical and its always working against you. Will keep you updated.
Friday, February 27, 2009
Dr. Horsepower saga continues
Dr. Horsepower (DRHP) whom made me CEO of their company last September and then changed the terms in October asked to meet with me last week. They said that they want me back to run the company.
I told them that some things would have to change but, I would consider it. I met with them today and got a look at their financials and deals in progress. I realized there is a huge gap between how I think of a startup and its components than how they currently think. I also got a look at how messy it can be to step into a startup that already has been started.
Here are some thoughts about how to start a startup:
First you need to have a very good team. A team is more important than an idea to prove this go to any VC with a brilliant idea and ask them to sign an NDA---they will blow you off---ideas have no value but, a great team with a mediocre idea certainly has value.
Second: create something that people actually want and do it with as little money as possible. Most startups fail because they failed to do one of these------if you can do well at all three your startup has a good chance at success.
The team is important because business is like your love life---there is always give and take and there must be passion for them to work. If your product is something people want and they derive value from it ---they will seek it out and buy it. That is why a hole in the wall restaurant at the far edge of town will be packed while a "nice" restaurant downtown with marginal food will have to put out coupons to get people in the door. People will go to great lengths to obtain something that gives them value.
The third and most important component (from my perspective) is to do everything with as little money as you can. While expensive (furniture, office space, etc.) looks impressive and says success ------spending unnecessarily can be the kiss of death for a startup.
After that--dig in and never look up until you hit your numbers.
I need to figure out what to do with these energy drink guys.
I told them that some things would have to change but, I would consider it. I met with them today and got a look at their financials and deals in progress. I realized there is a huge gap between how I think of a startup and its components than how they currently think. I also got a look at how messy it can be to step into a startup that already has been started.
Here are some thoughts about how to start a startup:
First you need to have a very good team. A team is more important than an idea to prove this go to any VC with a brilliant idea and ask them to sign an NDA---they will blow you off---ideas have no value but, a great team with a mediocre idea certainly has value.
Second: create something that people actually want and do it with as little money as possible. Most startups fail because they failed to do one of these------if you can do well at all three your startup has a good chance at success.
The team is important because business is like your love life---there is always give and take and there must be passion for them to work. If your product is something people want and they derive value from it ---they will seek it out and buy it. That is why a hole in the wall restaurant at the far edge of town will be packed while a "nice" restaurant downtown with marginal food will have to put out coupons to get people in the door. People will go to great lengths to obtain something that gives them value.
The third and most important component (from my perspective) is to do everything with as little money as you can. While expensive (furniture, office space, etc.) looks impressive and says success ------spending unnecessarily can be the kiss of death for a startup.
After that--dig in and never look up until you hit your numbers.
I need to figure out what to do with these energy drink guys.
Tuesday, February 3, 2009
another post
I need to be more disciplined with this blog. I have started on some home projects --first a retaining wall--about 120LF of country manner block--it came out really nice. My hope was to pour a concrete pad in the horse corall and put in a car lift to store my race car and work on the cars. Here it is.
After the wall I started on a fireplace that quickly escalated into an outdoor kitchen. Here you can see the bar and on the other wall is another countertop.
With all of this I have not had a chance to get back to the cabin and I am looking forward to getting back up there. We went up there over the Xmas break and Sydney and Hudson went skiing for the first time---Hudson ripped--the whole mountain was looking at this little guy carve beautiful lines down the bunny slope. Fun.Until this outdoor stuff gets done I am kinda house bound so the contractor doesnt screw it up.
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