Monthly Archives: February 2009

Please don't send out stimulus checks…

Business, concepts, Entrepreneurship, Government, Investment, Money, Politics

The entire point of giving people money in the form of a stimulus is to get them to spend the money and actually stimulate the economy.  Many people have argued against the idea of giving people a stimulus check simply because most of the money will just be saved or used to pay down debt, things that don’t stimulate the economy.

I am not sure that having the government give away money is the best solution but it is what the current powers like.  So what is there was a way to basically force people to spend the money, I think that would work much better.  For all of the various stimulation that is planned it adds up to over $10,000 for every household in the US.  They mostly gave it to banks, and these banks did what was in their best interest, they saved it.  The government is trying to figure out a way to force the banks to lend out any new money they receive.  I predict that this will also fail.

The government knows it needs to spend money to stimulate the economy.  I think that this is correct.  They are planning on spending some money on some infrastructure projects, that is nice but not enough.  So they have the option of giving money to the banks or mailing out check.  Both options will not have a large effect.  So here is my idea.  DON’T give people check, and DON’T give the money to the banks.  Just simply change the format of the money, send out the stimulus in the form of Debit Cards.  This means that they have to spend the money, they can’t use the card to pay off their debts, they can’t save it because it will expire in 120 days.  Also the money will not go the massive hidden black market, they won’t gamble with it, they won’t spend it on drugs.  They will buy stuff with it.  This helps the legit businesses stay afloat, and they will pay taxes on the sales and profits.

This idea even has more benfitial effects.  First people with out bank account will be able to use it with out having to go to a check cashing store.  It also allows the government to track where the spending goes.

This is not a new idea.  I first heard about it because of a story about the stimulus in Hong Kong, they used this method and it wored really well.  After writing half of this blog I did a search for it and found out that Glenn Beck on CNN also talked about.  Even FEMA used debit cards to help the katrina evacuees.

Of course people may spend it on stupid things.  And I am sure some landlords will quickly figure out how to collect rent from a debit card, and of course some people will simply pay 3% and transfer the money to their PayPal account and then transfer it back to their checking account and use the cash, but the majority of people will simply spend it normally.

So the bottom line, is if we must be sending money out in bulk to the population then this is the best way to do it.  I still think that this is not an effective stimulus and really should not be done

It is the cashflow stupid.

Business, concepts, Entrepreneurship, Money, Real Estate,

My friend Adrian posted a very good blog entry about cash flow.  His blog is one that everyone who is serious about being wealthy should subscribe to.  I made and answer to him that point out how stupid so many investors are.  I wanted to share it with all of my readers also so here it is.

Read his entry HERE.

Here is what I replied with….

I have seem this time and again in commercial real estate.  People are willing to leave a strip mall mostly empty, they are unwilling to do short term leases, or even to discount the leases.  So what happens, there are tons of strip malls, and office buildings here in Arizona that are empty.  They have this mindset that if they get a nice long lease that it will be better than the money now.  This may have been the case in the past but to me it just seems so stupid.

An example is a building I was thinking of renting back in 2002.  It was perfect for a business idea I had, I had the backers and was ready to go, I just wanted 6 months rent free and then to rent it for $12k per month, going up 5% per year.  They would not budge on their price of $18k.  It was too much so I passed.  Well now it is 2009 and it is STILL empty, no one has EVER rented it.

Another example is a strip mall that I know of.  It is very poorly designed but has over 400k square foot in total.  Less than 50k square foot is rented out.  A guy I know rented a 8k square foot space, and put a Filipino restaurant and grocery there.  Soon the space next door was rented by another Filipino to build a karaoke club for Filipinos.  It was all located in a part of the strip mall that was totally empty.  The grocery store invested everything they had, over 300k into building out their store and stocking it.  Then the economy hit them, and they could not pay the rent.  On the 15th day of the month the landlord locked them out, charged a penalty and the guy could not come up with the 20k needed, over 50k in food spoiled and they guy was promptly out of business, and the guy next door also moved out  The place is now empty.  So what did the owner of the property have to loose to give the guy some time to catch up, maybe some discounted rent.  He would surely not be making less than he is making right now, he has over 300,000 sq foot of other places to rent out, most of which are better.  It was dumb and short sighted, but that seems to be the majority of commercial landlords, especially the distant ones who never even see the property.

I think of tenants as clients.  They pay you and you should keep them happy.  You have only limited supply so when you are full you can be more selective and follow the rules to the letter, but when no one is buying your product you need to sell at any price to make money, they still like to keep rent high, and if it not rented then they take the tax break at the higher level.  That is illogical to me, but maybe that is why I am not as wealthy as they are.  Or maybe they are just huge REITs playing the game with other peoples money and they don’t really care that much.

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It is the cashflow stupid.

Business, concepts, Entrepreneurship, Investment, Money, real estate,

My friend Adrian posted a very good blog entry about cash flow.  His blog is one that everyone who is serious about being wealthy should subscribe to.  I made and answer to him that point out how stupid so many investors are.  I wanted to share it with all of my readers also so here it is.

Read his entry HERE.

Here is what I replied with….

I have seem this time and again in commercial real estate.  People are willing to leave a strip mall mostly empty, they are unwilling to do short term leases, or even to discount the leases.  So what happens, there are tons of strip malls, and office buildings here in Arizona that are empty.  They have this mindset that if they get a nice long lease that it will be better than the money now.  This may have been the case in the past but to me it just seems so stupid.

An example is a building I was thinking of renting back in 2002.  It was perfect for a business idea I had, I had the backers and was ready to go, I just wanted 6 months rent free and then to rent it for $12k per month, going up 5% per year.  They would not budge on their price of $18k.  It was too much so I passed.  Well now it is 2009 and it is STILL empty, no one has EVER rented it.

Another example is a strip mall that I know of.  It is very poorly designed but has over 400k square foot in total.  Less than 50k square foot is rented out.  A guy I know rented a 8k square foot space, and put a Filipino restaurant and grocery there.  Soon the space next door was rented by another Filipino to build a karaoke club for Filipinos.  It was all located in a part of the strip mall that was totally empty.  The grocery store invested everything they had, over 300k into building out their store and stocking it.  Then the economy hit them, and they could not pay the rent.  On the 15th day of the month the landlord locked them out, charged a penalty and the guy could not come up with the 20k needed, over 50k in food spoiled and they guy was promptly out of business, and the guy next door also moved out  The place is now empty.  So what did the owner of the property have to loose to give the guy some time to catch up, maybe some discounted rent.  He would surely not be making less than he is making right now, he has over 300,000 sq foot of other places to rent out, most of which are better.  It was dumb and short sighted, but that seems to be the majority of commercial landlords, especially the distant ones who never even see the property.

I think of tenants as clients.  They pay you and you should keep them happy.  You have only limited supply so when you are full you can be more selective and follow the rules to the letter, but when no one is buying your product you need to sell at any price to make money, they still like to keep rent high, and if it not rented then they take the tax break at the higher level.  That is illogical to me, but maybe that is why I am not as wealthy as they are.  Or maybe they are just huge REITs playing the game with other peoples money and they don’t really care that much.

Recession is a good thing if you have knowledge.

Bootstrap, Business, concepts, Entrepreneurship, Inspiration, Investment, Money, real estate, , ,

Ok, maybe this title is a bit shocking.  In easy time it only really takes money to make money.  In good times you can use a dart board at a page of stock symbols and make a decent return.  But when times get bad, like they are for many right now, most of the money gets really scared.  They don’t invest in the great companies that still exist, they don’t short the walking dead, they don’t buy the houses that are dramatically reduced.  They simply sit there and they buy bonds and Gold or just keep the money in CD’s if they can find a bank they trust.  Bike Race up Cat's Hill

It is said that on a long marathon, or in a long bike race that the best racers are hopeing for the hills to come, because it is the hills that lets them show their mastery and where they can gain ground on the competition.  When it course is flat and easy it is much harder to get ahead.  In the same way a recession is a great time for the smart and knowledgle person to get ahead. I am confident that if I was given $1 million dollars to invest as I see fit I could turn it into $3 million or more before this recession is over.  More self made millionares are made during a recession than during any other time.

During any time of significant change those that figure out the new way things will work and form a profitable business plan around it first are very likely to succed.  The people who are failing the most now are all the people who still have not found themself in the information age, the ones who still think that we live in the industrial age, you know the people who like to work for a factory, get a pension and live forever.  That age has been gone for 15 years or more, but most americans still live in it.  During this time there will be many people entering the information age, maybe for the first time.  People who will make a living online.  And there will be people like me there to help them, there to show them the way, and of course I will make a small profit on the activity.  This actually has been my main source of income for some time now.

So what would I do if I had a million dollars right now.  Well first I would build some online businesses, and make oppertunities for those who want to join the information age to do so with me.  But most of my readers can not do that I would guess.  So what would I do if I was them, and I just wanted to invest.  Well first I would take most of that money and start looking for good real estate.  There is plenty of it around, and there is plenty of it at prices that are lower right now than where the bottom will settle.

Just last week I was presented with a deal on a rental house, it sold for $180k only 3 years ago.  It now sat ready to buy for only $37k, and it could be rented for over $800 per month.  Using simple math that means that in less than 4 years your rental income should pay for the entire house.  That is like getting a stock with a P/E ratio of 3.8.  Sit on this one for 4 years and you get all of your money back, and by then housing prices will be out of the whole and you could sell this house for $120k or so, pure profit.  Do that over and over with half of the money and you could buy over a dozen houses, worth at least 1.5 million total 5 years from now.  Now that you know how to buy them cheap maybe other investors would like in on the deal, and you can let them buy some of the houses from you.  So lets say you buy 10 houses at an average of $40k each (Something that is easy in the phoenix market if you know where to look.) You invest another 5k in to making them nicer, and in getting them rented out to nice tenants.  Then you sell the house, and the future cash flows, you can do this at a rate of 10 times the projected yearly earnings, this is what investors look for.  That would be near $90k or so per house.  Now do this as fast as you can.  Lets say you buy 5 each month and sell 5 of the other houses each month, that would be an income of over $200,000 per month.

I am confident that I could do this already, I have the connections, I have the renters, I have the knowledge, my only problem is that I don’t have the money, because I was distraced with my other businesses, and my investment in them does not let me walk away.    My plan is to work hard in my current business, make $100k or so and then get started buying, filling and then flipping houses to other investors who don’t want all the trouble.  Take all procedes from each sale and buy more houses with it, do this until I am so busy that I can’t sell all the houses, so then start to keep some of them.  Do this until the recession is over then ride the wave of the readjustment back up, it will not be as large but should be good.  Now these rentals are my retirement fund.  Sell one when I need money.

This is a lot of work, and the key to success is partnerships.  This was my plan back a few years ago but things happened that distraced me, a wife and two kids later I was ready to go, but I got stunned by the economy a bit, but now I am over it and ready to go.  Anyone want to join my team and work with me.  Send me an email.

1 Year Blogging

blogs, Business, Computers, Inspiration, MLM, , , , ,

Well this year is now exactly 1 year old.  My first entry was on the date back in 2008.  It has been an interesting year.  I expected to blog much more than I actually did.  I have so many ideas but many of them are already written by someone else much better than I could do it.  Then other times I have a great idea for something that I want to share with the world, but I either don’t completly form the idea and I figure that I would rather wait, or else I forget about it by the time I get to a computer.  I have tried to bring up interesting topics, such as my series on MLM‘s and my series on computers.

I have found some interesting stats while I have been doing this.  First off my article on How to select a laptop, is by far the most popular one I have ever wrote.   It has been the most popular article EVERY week after I wrote it.  Other entiries also have stayed popular for months, such as my article about Gold Prices, and one about a new Nigerian Scam that they tried on me.

If you do not subscribe to this blog I hope that you would.  I have a lot of ideas and I am also working on blogging about my new business I am working on.  I would love for people to follow along tell me what they think.

Thank you to all of my readers, I hope nothing but success for you in the next year.

I found a great deal on a laptop.

Computers, Marketing, , , , , , , ,

The other day one of my friends who also own a computer store emailed me that he purchased a large number of great laptops for a special price. He does this about once a week so I thought little of it. Well on Friday a customer came by and was interested in getting a laptop so I told her about the one my friend had. She said it sounded good and she ordered one. MSI LaptopI left an hour later and picked up one unit from my friend.

On Saturday morning my customer came back and I opened the laptop for the first time, and I was instantly blown away. For the price that I paid this laptop was the best one that I had ever seen. First off it was made by MSI, my last laptop was also MSI, and their quality is very high, they are one of the main OEM makers of laptops, and they make laptops for many other companies. Next it was a Pearl White color, this is the favorite laptop color of most women, and this customer also really loved it. For specs it had a Dual Core T3400 Pentium CPU on the Centrino Platform, this means it is fast and saves on power. It had 2GB of DDR2 RAM, a 250GB Hard Drive, Gigabit Ethernet, Modem, Wireless Lan, DVD burner, memory card reader, and a 14.1 inch wide screen all running Vista Home Premium. This is all fairly standard, but what made it stand out was the extra features, a built in 1.3MP webcam, the fingerprint reader (So you can log in to things with just your fingerprint), and support for Bluetooth and simcards. But the best part of the whole thing was the price, only $545. I looked online for another one like this and I could not find one with all these features and such a good price.

If you are interested in getting one send me an email at dragon@emeraldcomputers.com there are a few left. If they are gone there may be a different one that is also a good deal.

The biggest problem now is that my wife asked me twice today to buy her one of these.

Some prespective for your life…

Business, concepts, Inspiration, Money, The World

One of my friends posted a blog the other day.  Here is his blog entry.

Please read that before you move on…..

After reading that I had to make a reply, and I thought that it was important for everyone to read it so I posted it here also.

Anyway it is so true.    I lived in the Philippines for a year and a half and I was very much in the elite, I was able to get the best service and best of everything when I was there and I lived on less than $2000 a month.

Most of the people we know there made less than $100 per month for their entire family.   We have chosen to give to pay for 4 kids to have a full ride at one of the nicest private high schools, with tuition, transportation, food and extras we send them a total of $150 a month, and that covers all of it with some left over.

If I was a millionaire I would have a very hard time buying this really expensive things, knowing that for the price of this Rolex I could send 10 kids to school for a full 12 years and dramatically change their life, after thinking about that there is no way I could buy the watch, the $80 watch I have now works great, looks great and is enough for me.

While I was there I was at a church and they had a video, it basically showed some stats, that if you slept in a bed, had a shower in your house and kept your food in a refrigerator you were better off than 85% of the world population.  If you had a computer in your house, now you were in the top 9% and if you had a car that put you in the top 5%.   I am sure that almost everyone that reads this falls in that top 5% and most of you also feel poor, and depressed about it, so feel blessed for what you have and move forward in life.