I’m going to a real estate investment conference tomorrow. Supposedly the guy speaking is a genuine marvel of a success story, and I’m not saying that I doubt it. After all, real estate is packed with success stories, but I’m a skeptic until I see something that convinces me otherwise. And that brings me to my question: why is the real estate industry in particular so full of scammers, schemers, and people peddling get-rich-quick nonsense?

There are a lot of possibilities, but part of me wonders if it’s because real estate is truly an industry where people can create incredible success stories in relatively short periods of time. A field where reputation and pedigree are not nearly as important as hustle and persistence. The best lies have an element of truth, so when all these guys sell their ridiculously overpriced seminars and coaching services to starry-eyed dreamers hoping to make it big, maybe we fall for it because deep down, we know it’s partly true.

At least that’s what I’m hoping What do you think?

Earlier this year when I did my taxes, I found myself saying what I say every year: next year I’m hiring an accountant. In general, I think hiring an accountant is good advice, but I’m one of those who likes to really understand the tax code and generally don’t mind doing my own taxes. I use TurboTax, which so far has been able to handle my various complexities quite well.

I have several real estate rental units back in Colorado (I live in San Francisco) and I have a property manager who takes care of them for me. She’s been using QuickBooks to track everything, but as I was transferring all the exported data into TurboTax, I finally had had enough and vowed to seriously check out some web-based property management services and see what the options are. Basically, I’m looking for the following things:

• a simple, clean, efficient user interface
• affordable and scalable
• ability for multiple users with different roles to log into the same account
• track income, expenses, tenant info, maintenance, etc.
• track performance, such as vacancy rate, average rent, etc
• be flexible enough to handle situations like tenants paying late, pro-rated rents, and whatever other weird situation comes up
• ability to upload files, like leases, photos, etc.
• tax reports with pre-defined categories for ease of entry when tax time rolls around
• full data export capability, so that I can get my data out if this company disappears at some point

I looked around and did some searching and came up with a list of seven apps that I wanted to check out and delve into further. Here’s the list:

• propertyware.com
• propertycenteronline.com
• buildium.com
• irealtymanager.com
• rentomatic.com
• rentyield.com
• propertize.com

I don’t really have time to go through all of these one-by-one and give you an overview, but I will say that I was most impressed by Rentomatic and Propertize. Rentomatic has a great interface and a fantastic dashboard that lets you see how your portfolio is performing at any given time. It’s also got a sweet feature where you can setup profiles for each of your units and then post them to Craigslist and other rental sites. The two main features that it’s missing are the ability for multiple users to login and the ability to upload files like leases.

That said, I currently have to give the edge to Propertize. The functionality is very similar to Rentomatic, but it’s a bit cheaper, the interface is a bit better, and it offers the ability for multiple users to login to the account. Sadly, it too lacks the ability to upload, but they’ve been responsive when I’ve offered feedback, so perhaps it’ll make it in the app eventually.

I’m continuing to play around with them both, with the goal of making a decision by Dec 1st, so we can get up to speed on the system by the end of the year. If you’re in this space, let me know what you’ve found that I might have overlooked.

Look back over the last week, the last month, the last year, and ask yourself this question: did I accomplish what I thought I would? Am I happy about the progress I made during that time? Am I likely to accomplish what I think I will over the next week, month, or year?

Truthfully, I can’t say that I’m unhappy about the progress I made over the last year, but it’s definitely less than what I had hoped for. I tend to look forward a year and imagine that things will have changed much more than they have. I imagine that my progress towards various goals will be much more substantial, that my life will look more different than it inevitably does, that I’ll have changed more than I have. Why? Well, probably because I’m an optimist. But also because change is hard.

There’s nothing really profound in this post, just some lessons that I need to remind myself of on occasion. Earlier this evening, I was sitting at dinner, pondering some conversations I had today about opportunities in the real estate market. The real estate market has taken a beating, and right now is a fantastic time to buy if you can make the deals happen. But financing those deals is hard, lenders are wary, and cash is scarce. On top of that, the general feeling in the real estate market right now is one of fear and dejection. The vast majority of people (even experienced investors) would conclude that this is a good time to sit on the sidelines for a bit and wait for sanity to return. But I wonder if times like these separate the timid from the titans. I spent some time today on the phone with lenders and people who are out there doing deals, and I’m much, much further along than I was at the beginning of the day, though perhaps still a long way from doing any deals. But the thing I realized tonight is that lack of capital, connections, experience, etc, etc. are not what’s holding me back. The only thing holding me back is me. The only thing keeping me from diving in 100% and making something happen is my unwillingness to do so, for whatever reason. Sure, lack of capital, connections, experience or whatever else will slow me down and make it that much harder. But it definitely can be done. I just have to want it badly enough.

As I think about what’s truly and honestly holding me back, I’m reminded of a quote:

“After a lifetime of making money and observing better men and women than I fall by the wayside, I am convinced that fear of failing in the eyes of the world is the single biggest impediment to amassing wealth.”
-Felix Dennis

What’s holding you back?

I want to be rich. There, I said it. Ever since I was a kid, I always knew that I would be wealthy one day, and I’ve been steadily moving in that direction ever since. I’ve made a lot of mistakes along the way, learned a lot about myself, and spent a lot of time thinking about why I want to be wealthy. In particular, I’ve spent a lot of time thinking about being rich in the context of my faith (I’m a Christian), and in the context of being a good steward of what I’m entrusted with. My good buddy Ben Rasmusen pointed me today to a blog post by John Reel about the lessons learned by getting rich and then losing it all. It got me thinking about this subject, so I’d thought I’d share eight reasons I want to be rich:

Support worthy causes

The way I see it, the more I have, the more I can give away. There are so many organizations and efforts in the world today that need money, and I’m excited to have the opportunity to contribute. I guess when I analyze the rest of the items on this list, many of them are more specific examples of this point.

Give my kids great opportunities

I have been blessed with two wonderful parents who taught me everything I need to know about the things that matter most in life: faith, family, marriage, integrity, etc. However, I don’t come from a wealthy family. My parents are smart people, but neither had the opportunity to go to college, nor did they have the resources to pay my way through college. Thanks to the Navy, I was able to attend a decent school, but I sometimes wonder how things might have turned out differently had I gone to MIT or Stanford out of high school, instead of enlisting in the Navy. I would have had trouble paying for it, and perhaps that’s part of the reason why I didn’t consider those schools to be options. I want my kids to have great opportunities without finances being what’s holding them back. I want to help them pay for school, buy a house, start a business, etc. There’s no guarantee that they’ll have success later, but the least I can do help them take the first step.

Give the underdog a chance

One of my friends just got a job at a company out here in San Francisco and he blogged about their values as a company. One of them is to “help outsiders and underdogs win”, and I can’t stress enough how much I believe in this. I have observed over the last few years that the maxim of “It’s not what you know, it’s who you know” is very true, at least out here. I’m incredibly grateful that someone at CNET saw my resume on Craigslist and emailed me to offer me a job as a product manager. I was just out of college, had pretty much no experience, no connections, nothing. They took a chance on me, and I hope they would say it was a good choice in the end. Money opens doors, and I hope to use any influence I have to hold the door open for other people who may not have the right background or connections. Someone gave me a chance, and it made all the difference.

Own my time

The most valuable resource that any of us have is time. We only get so much of it (and we don’t even know how much), and there’s only so much you can do to maximize the amount that you get. Even if you eat healthy, exercise, be careful, etc., you’re unlikely to live much longer than a century, at least under current life expectancy (this could change, though). The point is, I hate selling my time. I hate that there are things in life that I need and currently, the only way I can get them is by selling my time in exchange for money. Granted, since I’ve started freelancing, I sell my time for a lot more. And I’ve read about people who sell their time for hundreds or thousands of dollars per hour. But in my mind, that’s still slavery. It’s a much more palatable form of slavery, but slavery nonetheless.

My goal is to reach a point where I can live a comfortable life through passive income sources. I will never have to get a job, take a client, or borrow money unless I want to. I can spend my time pursuing the things in life that matter to me. And as a side note, I’m not entirely sure that kind of financial security can’t be considered happiness that money can buy. John agrees with me.

Explore the world

You know that saying about how the things you own end up owning you? Well, it’s true. If you want proof, just try moving frequently, ideally into gradually smaller and smaller places so you have to get rid of stuff. It’s so liberating to get rid of junk that you don’t need or even want anymore. My wife and I sold both our cars when we moved to San Francisco, and I’m so glad. Is it a pain sometimes? Yes. But aside from the financial benefits (which are huge), just the peace of mind of not having to worry about a car is amazing.

I say all that to say that what I’ve come to value more than stuff are experiences. Stuff doesn’t make you happy. My wife and I were blessed to be able to spend eleven weeks trekking around Asia earlier this year, and it was one of the most amazing, enriching experiences of my life. I think travel is one of those things that just fundamentally shifts your perception of the world the more you do it. I want the opportunity to live in some of the world’s greatest cities, explore the world’s cultures, and broaden my horizons by getting out there and seeing how the other six billion people live.

Create wealth for others

I read this fantastic essay about wealth the other day by Paul Graham, a noted angel investor who has funded dozens (or hundreds) of startups, mostly in the technology space. In the essay, he talks about how many people view the world’s wealth as something that’s fixed, and they accordingly view wealthy people as having taken more than their fair share. But entrepreneurs are not working in a zero-sum world. Entrepreneurs actually create wealth, and when they do, lots of other people get wealthy along the way, from the investors, to the employees, to even the customers. Think about how much richer our lives are thanks to the work of Bill Gates, Steve Jobs, and the Google guys. They’ve been rewarded with billions for the work they’ve done, but they’ve given the world a lot of wealth, too, both monetary and in terms of technological advances. I want to create wealth for others and help make their dreams come true.

Change the world

This brings me to the next point: entrepreneurs change the world. The innovations that they create make our lives richer in countless ways. I believe that the next few decades will foster in so much innovation that the last couple centuries will pale in comparison. In particular, I believe that advances in artificial intelligence / robotics, genetics, and nanotechnology will change the face of the world beyond recognition. I want to be a part of these paradigm shifts and wealth will give me the opportunity to fund great startups in these and other spaces, as well as start companies of my own.

Master myself

Finally, one of the best things about getting rich, I’ve heard, is not the destination, but the journey. Becoming a millionaire is something that most people can technically do, but statistically, few of them will. It’s just too hard. Controlling your finances, investing, starting a company, and other paths to wealth are all difficult and require a lot of personal growth and development for most people. One of the best lessons in John’s blog post is the first one: “I can get rich.” Once you’ve done it, it’s much easier to do it again, because you believe in yourself, and because you’ve mastered yourself, at least to some degree.

Conclusion

I’m not waiting until I’m “rich” to do any of these things. I believe that building wealth is a process. There aren’t shortcuts, per se, though there are methods to get there faster and smarter, but they usually require more risk, more dedication, and more time. Regardless of how I get there, I hope that if and when I do, I’m able to keep these things in perspective and be a good steward of what I’ve been blessed with. I’d love to hear your comments on the subject.

All men dream: but not equally. Those who dream by night in the dusty recesses of their minds wake in the day to find that it was vanity: but the dreamers of the day are dangerous men, for they may act their dream with open eyes, to make it possible.

T. E. Lawrence, “The Seven Pillars of Wisdom”
British soldier (1888 - 1935)

I’ve posted this quote before, but it’s especially appropriate for recent developments in my life. I haven’t posted to my blog in the last 3 months, and so much has changed since then. Let me give you the highlights:

This Blog
I’ve received lots of notes from people asking if I’m going to finish the investing series I started. I owe my readers an apology. I’ve just been swamped with a bunch of other things, some of which you’ll read about below. I wanted to let people know that not only will I be finishing this series, but I’ll be launching a new project in the next few weeks that the readers of this blog will hopefully find very interesting. It’ll live on a new site of its own and I’ll be releasing details within the next couple weeks, hopefully, so stay tuned. I know you’re probably thinking that I’ll flake on this as well, but the good news is that my time has opened up some. For more, read on…

CNET Networks
As I’ve mentioned before, my day job is an Associate Product Manager at CNET Networks, one of the largest web companies in terms of traffic. I started at CNET in August of 2006 and I’ve really learned a lot there and made some great friends. However, about three weeks ago I started looking around for some contract work, primarily through craigslist.org. After about a week, it was apparent that not only was there enough work for several full-time jobs, I could make 2-3 times as much doing freelance work as I was making at CNET. I managed to hang on for a few more days before I decided that going freelance full-time was the right move and I gave my notice at CNET. My last day was Friday and I am now completely free. I have punched my last clock and done my last 9-5. From where I’m sitting right now, I have a hard time imagining any circumstances under which I would be an employee again, but I’m always open to discussion :-). I already have more than enough work coming my way to stay busy and I now have the flexibility to be able to work from anywhere in the world, at any time that I choose. I’m sitting in a 24-hour starbucks in San Francisco writing this at about 12:30am and it’s comforting to know that I don’t have to get up in the morning unless I want to.

I will say that CNET was an awesome opportunity for me. They gave me a shot when I needed it most and it was a fantastic place to cut my teeth in the web field. I met a lot of very passionate and talented people who inspired me greatly. They offered me a great job before I left, but ultimately, I’m just not an employee. I came to the Bay Area to start a company, not work at one. I don’t want people to think that I’m saying that there’s anything wrong with being an employee or that I didn’t enjoy it. I am fortunate in that I have skills that are in such high demand that I can pay the bills with part-time freelance work and have a lot of time left to focus on projects of my own, some of which I’ll talk about below.

Oh, and my wife quit her job the same day. She’s been working towards it for a lot longer than I have and now we’re both unfettered freelancers, free to travel the world, set our own rules, and take the road less traveled.

BlueSwarm.org
For the last six months or so, I’ve been hard at work with two brilliant and talented partners on a project called BlueSwarm.org. It’s a social network aggregator / lifestreaming / friendstreaming service, which are all fancy ways of saying that it helps you easily keep track of what your friends are doing all over the web and vice versa. Very cool stuff. We launched a private beta of the site on July 7th and have been steadily working on improvements since. Please check it out and request an invite…we hope to be giving out a bunch in the next couple weeks.

Real Estate
As I noted in a post earlier this year, I purchased a single family home with a partner and rehabbed it. We had it on the market for about six months before I finally decided that I’d rather keep it than drop the price any further. I negotiated an agreement to buy out my partner and I now own my 2nd long-term rental property.

Last Wednesday, I was forwarded an email about a sweet little 3/2 condo and managed to put it under contract at a great price within the next 24 hours. The best part is that about 75% of the purchase price is covered by an assumable private note at 6% fixed (!) and the current seller agreed to carry another 15% of the purchase price at 7.5% fixed, leaving me with just 10% to put down and no banks or mortgage companies to hassle with. If you can find a private lender at a good rate, I highly recommend it. We can close any time that works for us, so hopefully in the next couple weeks, I’ll own my third property. The empire grows…

I think that’s pretty much it…I’m also getting my pilot’s license and learning to sail, but so far those haven’t been too time-consuming

In closing, I would just like to say that I’m overwhelmed by how richly God has blessed my life in just about every way. I’ll be 25 years old in less than a month and the world is stretched out in front of me, filled with endless opportunity. I say this not to brag, but to encourage others to take the road less traveled, to take risks, to discover and follow their passions. I won’t say that it hasn’t been hard at times and sometimes it’s completely overwhelming to have a seemingly endless array of options available, but overall, I wouldn’t trade it for anything. Once you taste the freedom, you won’t either.

I’m in the process of buying the house below. Yes, it’s ugly (you should see the inside). It’s a HUD foreclosure and it needs about $8k in repairs, but I got it for about $33k less than the ARV (after-repaired value). Unfortunately, commissions and repairs and everything else eat into that pretty severely, but I still expect to make a 200% annualized return on my investment. Not bad.

I’ve been reading a book called The Sky’s the Limit: Passion and Property in Manhattan about the high-stakes and often crazy world of residential real estate in NYC. It’s fascinating stuff.

A few of the streets in Manhattan, like Fifth and Park Avenue, are home to some of the most concentrated areas of personal wealth in the world. These people buy homes for $10 - 25 million in cooperative buildings. Unlike condos, where owners actually own their unit and pay dues to take care of the common areas, cooperatives are owned by a private corporation, with the shares being held by the owners of the units in the building. As a result, the boards of these coops have absolute power to accept or deny anyone the right to buy a unit in the building, for any reason they deem suitable. Billionaires, celebrities, politicians, and musicians have all been turned away from some of the most exclusive buildings, not because they couldn’t afford the unit in question, but because of their industry, their reputation, or simply their lack of pedigree.

It’s a very interesting inside look at the way the ultra-rich families of America protect the space around them and maintain, for better or worse, an exclusivity and elite status that lasts for generations.