April 25, 2007

Flip Houses | Dining Rooms

Building Wealth - House Flipping - Dining Room Improvements

To build wealth and retire early, I'm flipping houses. The next room that we worked on making over was the dining room. As you will see by the pictures, we don't use it as a dining room, but more of a sitting, or cigar, room, but I think it was designed to be a dining room.

Room Pre-Flip

The "before" condition of this room was pretty sad, to say the least. As you can see from the picture, it had a lot of promise, but was painted terribly. First, the bottom was kind of a poop brown that played very poorly with the color of the wood floors. Second, the painting in general was terrible. Whoever did the job was in a big hurry. They put only one coat of paint on and were not particularly careful with making sure there was complete coverage. As a result, looking down the wall you could clearly see two different colors on the wall. Finally, there was no shade over the window. With something that big facing the street, window coverings are a must.

There were some good aspects to the room that we wanted to make sure were promoted. First, obviously, was the wood floor. It was a soft wood, reddish brown in color, and in great shape. It was one of the things that originally drew us to the house. Second, the wood border put in around the middle was a nice touch. It cut the walls in half, creating the opportunity for two toned success. Third, the ceiling details made for an interesting look. We may not be able to do much with it, but it provides something interesting.

Room Post Flip

In the after you can see that we completely redid the room. We chose two tones of gray, and painted the trim white. We also ordered some custom window shades that are faux wood. Just a note on the faux wood - if you are going to go with white, don't pay the extra for real wood, because you can't tell the difference, and the faux wood won't fade. You can also see that the white makes the room just pop with energy. The wood stands out more, the trim stands out more, the room is brighter, and just looks better. We thought about doing an epoxy floor covering, but ruled it out.

If you haven't figured out the trick to flipping houses yet, it is obvious from these pictures. Just take something that is ugly and make it pretty. Realized that some people would rather pay for a great looking house than put one together. Do that, and building wealth by flipping houses is easy.

Stay tuned for more updates, as I take you through the updates to the rest of the house and continue to build wealth!

Building Wealth Personal Finance

April 9, 2007

Compound Interest.

Building Wealth - The Magic Math of Compound Interest

Ever wonder why some people are so adamant about saving money (including me)? Ever wonder why some people seem to always have money, particularly those in traditionally wealthy families, but you never do? Although not completely the answer, compound interest has a lot to do with building wealth and retiring early.

Compound interest is the concept of adding accumulated interest back to the principal, so that interest earned on interest from that moment on. Confused yet? Another way of explaining it is with an example. Say you put $1,000 dollars in a high-yield savings account (the only place it should be if it’s in a savings account) at 4% interest. Under traditional interest guidelines, you could expect to earn $40 in one year from the $1000 you invested in the savings account.

Using compound interest principles, however, that $40 becomes $1040.81 (assuming the interest is compounded daily – this number will be different depending on when the interest is added back into the principal). Wow, 81 cents isn’t much, you might be saying, but take that out ten years, and what would be $1400.00 is now $1491.79. You’ve now made $91.79 where you would have had only $400. $91 may still not be a lot to you, but you had to absolutely nothing to earn it. You were paid for your money!

Again, this may not seem like much, but as you add to your principal and it grows, the money can start to add up fast. Imagine the scenario where you have $10,000 or $100,000 in the bank. The interest can be substantial. As this grows, your wealth grows too. At some point, if you become wealthy enough, you can live just on the interest earned by your wealth (Imagine earning 4% interest on a billion dollars – that’s $40,000,000 or forty million dollars!).

So, it is important to, as you accumulate wealth, to get that wealth working for you, even while you are sleeping. Compound interest can do that for you.

Remember to get your money working for you so you don’t have to. Take advantage of the magic of compound interest, and you’ll be wealthy before you know it!

Building Our Empire

January 9, 2007

Building Wealth is More Than Flipping Houses.

Building Wealth - Passive Income - Retiring Early

Although most posts here so far have concentrated on my house flipping venture, I wanted to let you know that this site is about more than that. In addition to making money by flipping or rehabing houses, I want this site to be about building wealth in general - what to do with the money you have now to maximize its returns and what to do with all the money you will make in the future.

This includes the magic of compound interest, taking advantage of tax laws and retirement plans to maximize returns, other money making ventures (from sports gambling to loans to blogging online for money), creating passive income, and little things you can do to make a little bit more here and there.

Although many sites focus on how to make what you have get you more, my philosophy is to always be building your empire. A popular analogy explains it very well. Imagine all the money you have is water in a bathtub. All the expenses you have are holes in the tub letting water (money) out. When ever you want something new you have three basic options: first, don't get it because you don't have enough water in the tub; second, plug up or slow some of the other leaks (reduce some expenses) so you have enough water left over to get what you want; or third, fill the tub with more water. I subscribe to the third philosophy, so I'm always trying to fill my tub with more water (while always monitoring the leaks).

Hopefully this isn't too Steve Pavlina for you. I'm all for personal development, but don't want to come off like a hack while trying to get you on track to building your empire.

So, if you want to make more money, make more money with the money you've made, and keep filling that "tub" with "water," stay tuned!

Building Our Empire

January 4, 2007

Flipping Houses - Kitchens

Building Wealth - Flipping Houses - Real Estate Development

In building wealth and retiring early, we are flipping houses. I'm going to run through the typical kitchen remodeling ideas you can make to a kitchen to maximize its value while minimizing your costs. Here are a couple of pictures of the kitchen in its current state for your viewing pleasure.

The first thing that should jump out is the darkness of the kitchen. The dark paint, dark wood, and dark tile do not allow any natural light to reflect off the walls. So, job number one - light paint on the walls, white trim, and white outlets/covers. This will brighten the kitchen up, make it look bigger, and make it more inviting. And this is a very easy DIY home improvement.

The second thing I immediately notice is the appliances. First, there is no microwave - very bad. Second, the other appliances are mismatched; the diswasher is black and stainless steel, and the refrigerator and stove are white. Job number two - stainless steel appliances in the kitchen. It will give an updated, modern look, and provide a good contrast with the brightness of the kitchen.

The third thing I notice is the countertop - old, uninviting formica. Although this house may not be in the price range for granite ($70-$80/sq. ft), there has got to be another option. We are thinking concrete ($50-$60/sq. ft). It is contemporary, modern, and looks great.

Finally, and this is a small touch, is the hardware on the cabinets. There is no sense in modernizing this kitchen only to leave the kitchen hardware with a gold, old-style finish. We'll go online and find some hardware that fits better with our overall theme of the house (young, vibrant, contemporary).

Hopefully this will help you lay out your house flipping dreams (or keep progress on ours - whichever you wish). Either way, next time I'll outline our plan for three of the four bedrooms (one needs its own plan), as I work my through all the changes we are making to the house.

How to Flip Houses Successfully

January 2, 2007

Our First Property Flip

Building Wealth - Real Estate Development

Although it is easy to talk about finding the perfect home, unless you have seen one it may be hard to visualize. Do not worry, I am here to show you the way to house flipping success, building wealth, and real estate development. Below are several pictures of the house I have picked up to flip. Now, this is a long term flip, doing many of the repairs as you go. Hopefully it can be done in a year or two.

Interior of a great house flip example.

First a picture of the exterior. Immediately you can see from the picture it is a nice house. It has a good look to it, it is in a relatively good neighborhood and it is in good condition. But a closer look reveals some chipping paint, warped and badly working fence doors, gaudy evergreen bushes, and a bad driveway. These are perfect ingredients for a successful house flip(the driveway quality is not desireable, but you have to take what you can get. Overall, a very good start.

Interior of a great house flip example.
The overall details on the interior are as follows: four bedrooms; two 1/2 bath; two story house (no basement); two car garage; fenced in backyard; fireplace; lower level has hardwood floors and tile; and the upstairs level (where all the bedrooms are) is carpet. In the coming posts I'll break down the problems/opportunities in each room (with pictures) and then move on to the fun stuff - where to start, where to go, and how to make money flipping houses. It really is not hard.

What a house to flip! Watch the transformation from dud to stud! And pay close attention to the garage floors, we are putting in epoxy garage floors.

Flipping Houses

January 1, 2007

How to Find a House to Flip

Building Wealth - Passive Income - Real Estate Development

One way to build wealth, build passive income and retire early is to flip houses. Finding a property to flip is not difficult. All it takes is knowing what to look for, knowing what to avoid, and keeping emotions out of the equation. To show you how easy it is, I'm going to let you in on a property I recently purchased to flip. Before I do that, though, I should probably outline my house flipping philosophy.

First, I am in this game to make a lot of money. I know there is tremendous wealth in flipping houses, and I am eager to get some of it. It doesn't take rocket science to understand the art of flipping - find an undervalued, underappreciated house, fix it and add some cosmetic touches, and sell it for a profit. Easy as pie.

Second. In spite of my first philosophical rule, I am not in this to flame out or go bankrupt. I want to earn a lot of money, but I want to do it over time, maximizing profit and minimizing risk. This means flipping one house at a time, over the course of one to two years, until enough cash is built up to become more agressive. Although this probably isn't the most popular track, and isn't the method glamourized on TV, it works.

Finding a House to Flip - Rule #1

Your search for houses should be limited to the following: 3-4 bedroom, 2-3 bath houses with a garage. There are more of these houses than any other on the market, and there are more buyers for these houses than any other. This is good because it will make it easier to find a fixer-upper and when you want to sell it you will have a lot of willing buyers.

Finding a House to Flip - Rule #2

No major repairs!! This is where people get in big trouble. Don't go for the house (especially when starting out) that requires walls to be moved, studs to be exposed, or any other major renovation. You should stick to the flipping houses money makers - new paint (interior and exterior), new carpet, new countertops (kitchen and bathroom), new tile, landscaping, and new appliances. All of these can be done relatively easily and relatively inexpensively and return big bucks. Successful house flippers don't go for broke all the time!

Finding a House to Flip - Rule #3

Keep emotions out of it! It is important to remember that you are not looking for your dream home (that comes in at about home 4-6). You want something that is appealing, needs fixing up, and that others will buy. When you are through, this flip should look like the perfect home for the perfect couple. You aren't going to get to customize it the way you want anyway, so look for properties that maximize profit, not that fit your eye.

Using these three rules, you should be able to find something you can successfully fix and flip, begin building your real estate empire, and retire early!

Fixing and Flipping Houses