I came across this online mortgage/rental calculator several months ago at http://mortgage-calculators.org.  I found it very useful in trying to determine cash flow for potential rental property.

Generally, I use about $1000 per year for insurance based on what I have my first rental insured for, and I can find the property tax amount online.  Depending on the condition of the house, I use 1% of the selling price of the house for yearly maintenance fees.  Plug all the numbers in and see what your after-tax cashflow is.

It’s pretty handy, and even goes so far as to tell you the yearly addition to your net worth.  I don’t rely on …

My rental property is in need of an 220V electrical outlet for a clothes dryer.  It is plumbed for a gas dryer, but I prefer that my tenants use electricity if at all possible.  I think it’s a bit safer, and with gas prices as high as they are, much cheaper.

I called a local electrician, and he quoted me $250 to run a new outlet, which would be less than 4 feet from the circuit breaker panel in the basement.  I thought this was a bit extreme, as he wouldn’t even have to run wire through walls, as both the washer/dryer hookups and the circuit breaker panel are in the basement.

With gas prices on the rise I started thinking about my driving habits, and how I can get a little further down the road on a little less gas.

I’m not a big speeder.  Five mph over the limit is about as fast as I’ll go.  But I started thinking about the value of going faster. I even broke the analysis down a single mile per hour.  How much time do I save for each mile per hour over the limit, and how much more does each mile per hour cost me?

The results are quite interesting…

2005 turned out to be a really bad year for my personal taxes.  Those darn capital gains killed us!  All in all, it will cost us several thousand dollars to take care of our tax responsibilities, including paying the tax preparer and the first installment of estimated quarterly payments.

It’s not that I can’t pay my taxes, I just don’t want to.  It’s hard to part with a large chunk of money when you don’t feel you’re getting your moneys worth in return.  Last year I paid for a bunch of congressmen to grill professional athletes about the effects of steroids and how rampant they are in major league baseball.

Gas prices are back on the rise (again) which reignites the general sentiment that big oil companies are gouging us at the pump.  I’ve been thinking about this for a while now, and have come to the conclusion of: So what?

I always like playing the devils advocate, as it basically means I’m stepping out of my own viewpoint and seeing the matter from a different perspective.  Play the what-if game, it will help you find a better solution for the problem.

What if they aren’t gouging us?  What if gas prices are really this high based on fundamentals?  What would you do?

The basis of economic principal is very simple.  Supply vs. demand, coupled with selling a product for what the market will bear.  Fundamentally, if prices get too high, people will quit buying the product.  Note that I made no mention of why prices got too high.  It really doesn’t matter.  If the price of a product exceeds what the general market can afford, the price will either go down, or the product itself will go away.

I got in contact with another real estate agent yesterday while I was looking for my next investment property.  He called the listing agent, and found out that the property will need carpet and some paint touchups, but other than that, it was in good shape.
They are asking $82,500 for the property, and it is located within walking distance to the university.
I drove by the house last night, and it’s not in the greatest part of the neighborhood, but it does look like it’s in decent shape.  I’m not sure I’m in the best financial position to take on another property, but I also found an ad in the paper …

…and you don’t want to make the Queen mad!

I quickly learned after doing my first real estate deal that your credit score is the most powerful tool you can have in your “investors tool chest”.

Before starting the real estate endeavor, my wife and I went to a mortgage broker to find out how much of a loan we’d qualify for.  We gave them all of our financial documents, and told them we wanted 100% financing.

After acquiring my first investment property, I had a lot of work to do, and I was up against the calendar.  Every month that goes by that I don’t have a tenant, I have to pay the mortgage out of my own pocket, and I don’t like parting with my money!

The first task was to make a list of what absolutely had to be done. 

Interior Paint through the whole house
Buy and install new appliances
Install new carpet in the lower bedrooms
Hang a new ceiling fan in the dining room
Clean up the outside landscaping
Repair three plaster walls
Replace two broken window panes
Replace miscellaneous hardware

This was the first list.  By the time I was through, the list was much longer, which I did account for in my budget of $5,000.

The other night I was watching a Larry King interview with Donald Trump. They talked mostly about “The Apprentice” and his little tiff with Martha Stewart, but then towards the end of the interview, they talked about Trumps newest endeavors, Trump University and GoTrump.com.

He said GoTrump.com was his new travel agency site, and offered the “best seats and the best fares” so that you too could travel like Trump.  To end the interview, he said that GoTrump.com is “huge” and is doing incredibly well.

Out of curiosity, I had to try it out, primarily since I just bought tickets for travel overseas, and wanted to see if Trump could beat what I just paid.  I typed in my flight information, and hit search button. What pops up?  A list of flights and fares generated by Travelocity.com!  GoTrump.com is just an affiliate site for someone else doing the work.

As I mentioned in the first post, I’ve just finished up acquiring my first rental property. I’ve been intrigued by the real estate business for a number of years, but finally got up the nerves to just go out and buy one. I developed a game plan:

Buy houses next to a university. This will insure a continuous tenant pool.
Look for three bedroom, one bath (or more) houses that can be occupied by three unrelated people.
Buy the house significantly below what it is worth. (I have yet to quantify this statement)
Buy houses which most of the rehab/upgrade work can be done myself.
Always look for 100% financing. Use as little of my own money as possible.
If I must use my own money for the rehab, use the cash flow to get my money back in two years or less.
Screen the heck out of potential tenants.