More Craigslist purges

It’s been a while since we talked Craigslist. As I’ve men­tioned before, we are on the fore­front of knock­ing down lifestyle infla­tion and con­vert­ing the pro­ceeds to lifestyle cre­ation (or design as it’s most commonly known).

Over the past year, we man­aged to purge a quite a bit of junk. It may seem to some that sell­ing a bunch of crap on the inter­webs is a lot of has­sle — it really is. My expe­ri­ence has been that I also put off “the doing” it until I give myself no choice. The purges have came in phases I sup­pose, so what seemed like a big task was done by tak­ing lit­tle bites here and there. You know that say­ing “how do you eat an elephant?”

• Phase 1: Pick the crap that sits and gath­ers dust, that still has value. You prob­a­bly know what I’m talk­ing about, that shiny toy you splurged on, only to replace that excite­ment with some­thing else — or maybe over time you for­got that you even bought it. For me this has been odd elec­tron­ics and gad­gets that I picked up over the years. Yeah, cat­a­log that crap, sell it. I’ll tell you right here, you wont miss it much if at all, and the cash you make off those mis­takes is just that icing. My main con­cern was it was tak­ing up space in my life, and it no longer had a place there. Now you wont have you worry about ever mov­ing it out of the way to get to some­thing else, or dusting it.
• Phase 2: This one is a lit­tle more dif­fi­cult. You prob­a­bly use this doo­dad a lit­tle more often, and are very fond of it. Your bud­dies come over and mar­vel over that wall of com­puter screens, TV’s (or pro­jec­tors in my case), stereos, what­ever it is. Deep inside you know that doo­dad exists to suck up your pre­cious time, but you love it any­ways. Cat­a­log that crap, sell it. You may miss it a lit­tle at first, but a week or two from now, you will prob­a­bly find that your new found free time, the spare cash you made from it, and more room in your liv­ing space is a whole lot more ful­fill­ing. If you have to stack your crap because you have no room, that’s a clue to take action.
• Phase 3: We’re still work­ing our way up to this one. It con­sists of the crap that is quite use­ful but not so much if you want to be mobile. This one is not for every­one. Some exam­ples of our own would be stuff like air com­pres­sors, tools, fur­ni­ture, kitchen stuffs, and appli­ances. If you are a home­owner, you know that some stuff you can’t get by with­out. There are really a few ways you can approach this one. Some folks might want to sell most of it but store some in stor­age, at least if you plan on uproot­ing your life (I did men­tion this one wasn’t for every­one). Our plan is to work our way up to lighten the load, so that we still have a lit­tle bit of crap we can store should we choose to come back and re-establish in Port­land, Ore­gon. Where are we going? Not a clue, but we rec­og­nize that this is a one of those steps we have to take if we want to have the option of being mobile in the near future.

As you can prob­a­bly tell, it’s not an easy task to lighten lifestyle infla­tion — espe­cially if you have stayed put and the clut­ter has slowly over­whelmed and taken over. One thing I can assure you is that if gets eas­ier, as long as you start some­where and per­sist. It seems as if the more you de-clutter, the bet­ter you get at it. Another side ben­e­fit is that I have become a whole lot more respon­si­ble with dodg­ing impul­sive buy­ing. Once you have had to get rid of crap (maybe even kick­ing and scream­ing some­times), you start to know the value behind not bring­ing that garbage to your home in the first place.

Some of the crap we have sold recently have included (in no particular order):

• BenQ 7800PE  pro­jec­tor — Pur­chased for ~$800 (and gone through 2 bulbs at ~$250 a pop) — Sold for $300
• Zebra label printer — Pur­chased for ~$150 — Sold for $80
• Onkyo 5.1 sound sys­tem — Pur­chased for ~$300 — Sold for $120
• Ibanez Elec­tric gui­tar — Pur­chased for ~$350 — Sold for $60 (I know, ridicu­lous, didn’t even learn to play)
• Asus EEE (7″) — Pur­chased for ~$250 — Sold for $51
• Nin­tendo Wii (with mod­chip) — Pur­chased new for $300 plus $50 for chip (when they were scarce off Craigslist) — Sold for $122
• Dell 30″ mon­i­tor — Pur­chased for ~$1100 — Sold for $600
• Cus­tom gam­ing rig (I built this for Kim — Com­po­nents cost ~$2000 — Sold for $600 for a quick sale

We’re look­ing at about $5300 worth of crap, and recouped only $1933. Ouch!!!

Clearly, Phase 2 is still not done. We still have some ways to go, includ­ing (for exam­ple) sell­ing my PC/Monitor, Kim’s D60 Nikon, and quite a bit of other crap. We also have to main­tain a bal­ance for a lit­tle while because we have a lot of work to do on this house, so that means a lot of tools will need to stick around, the fur­ni­ture etc. But rest assured, that stuff will totally get whacked as soon as we are able to uproot. That is the objec­tive at least.

We have more crap to sell in the pipeline and I’m pretty sure I’ll write more about that.

Updates on the rentals

We finally closed on our 3rd rental (this ones in Mem­phis too). This was the lay­out of the transaction:

• Earnest: $2,000
• First clos­ing: $11,063.48 ($8,000 down pay­ment + $3,1063.48 clos­ing) — assumed hard money $86k (to dodge the points) & took a 2nd note from seller $19k (invest­ment firm in Memphis)
• Sec­ond clos­ing (refi — conv 30yr): $4,573.98
• Total invest­ment: $17,637.46

Our posi­tion:

• Paid: $115,000
• Appraised: $145,000
• Debt: $108,850 (rolled some clos­ing costs in after appraisal came in favorably)

Cash flow:

• Rented for: $1,350
• Debt carry (PITI): $892.99
• Man­age­ment (8%): $108
• Gross cash flow (no vacancy or repairs fac­tored): $349.01

With the gross cash flow, we are look­ing at ~23% cash-on-cash return. With repairs, vacancy, depre­ci­a­tion etc. — we are prob­a­bly around 15–20%. I don’t like to throw solid fig­ures out, because there are way too many vari­ables, and I’m still a noob. We will talk more num­bers down the line when I have some con­crete fig­ures. But regard­less, that’s a nifty return. We aren’t even con­sid­er­ing the fact that in 2007 this prop­erty sold for $200k, so there is also the poten­tial of an equity upswing that I can take advan­tage of later down the road. I guess the funny part for me is that the pre­vi­ous prop­er­ties took more cash, even though they were lesser value. This goes to show that the total cost of an asset doesn’t mean jack, it’s all about how much you need to bring to the table to take con­trol of it.

Anger­ball

Which brings me to my next point. After I talked to The Ren Men, I have to admit, I was dev­as­tated to learn that they don’t bring any cash to the table (they’re doing it the right way). Instinc­tively I knew this; I’ve read this in books, I’ve read this in var­i­ous blogs, I’ve heard this in audio books, and yet — I still brought money to the table. This isn’t nec­es­sar­ily a bad thing, my prop­er­ties are still giv­ing me a excel­lent return com­pared to them paper assets. I’m totally stoked with the cur­rent results. And yet, I know it’s time to move on to big­ger deals that involve…infinite returns.

It’s clear to me it’s time to grad­u­ate to more sweeter deals. This means it’s time to rework our approach to invest­ing. At this moment, we are rebuild­ing reserves. We are sharp­en­ing our tools. The next one will (it must) take as min­i­mal amount of cash as pos­si­ble. It’s go time baby!

Stay tuned…I think we’re on to something here.