Photo credit: pencilsoda

This last post in the current series signals the return of the 7 Millionaires … In Training ! to its ‘old’ home right here at the NEW, REVAMPED, BIGGER, BETTER, BRIGHTER, ALL-STAIN-REMOVAL:  http://7m7y.com.

Soon, we move on to the next phase of this ‘grand experiment’ and ask the 7MITs to really examine: “is this [their selected Growth Engine] an opportunity worth pursuing?”

With Mark’s “Craig’s List Ad”, it looks as though he has settled on Tax Lien Investing as his preferred vehicle to get him to his Number? Is it investing, or is it a business? Does it even matter? Stick around, and we’ll find out (if not in this post, then in Mark’s next ones) …

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I’ve been settling in the MM101 comfort zone for a while. Now it is time to move up to MM201. I do need momentum and I think I did not recharge enough from the previous exercises to move forward fast enough. I tried “forced” recharging via a business development deal with my accountant and encouragement from my peers but it is still not enough. The plan for me is to redo some of the exercises we did last year to plant enough fire for me to push through.

My number and my date haven’t changed. It is still $5million in 10 years. It is well explained in my previous posts. With my accountant, we have developed a business plan where I’ll spending the next few months preparing for tax lien auctions in South Carolina which will happen in the months of October, November and December. The goal for me is to review my training materials and to develop a written procedures for various targeted counties and also line up the necessary resources – property reviewers, real estate attorney and the bid history to get an idea of competitors and patterns. There is a lot of work but we spaced them out proportionately every month leading to October.

The first year will be focused on South Carolina. I’ll then repeat the process in other nearby states like Maryland, Georgia, Florida and Texas. All these states will fit in to a 5 year plan where there is a target tax lien acquisition, potential conversion, rough expenses, etc.

It looks like I have a lot of things going on. I know without a great push from within, it will not move very far. That’s why I’m going to go back and redo some of the exercises.

Wanted 1: Growing Tax Lien Holding Company

A growing tax lien holding company with operations in at least 5 states. Must have written procedures, templates and archived documents to operate in the various counties which have different proceedings. The written procedures must cover all stages of the tax lien process including due diligence, property review templates, redemption of tax liens, foreclosure processes, strategies to manage properties and established contacts with local resources  – property reviewers, real estate attorney, and investors.

Onward!

Photo credit: Maggie’s World

This is the last of our transition posts!

IMHO – where H = humble as well as honest – it starts to get VERY exciting / challenging – interspersed with long periods of boredom – from here …

…. so, let’s make this a last-but-best post: Mark knows his path (i.e. real-estate and small businesses). How do we help him on his way? C’mon, be creative!

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Onward! That reminds me of my former co-worker. He is a happy go lucky guy who is very smart and he is currently in his 3rd or 4th retirement now.  How that works? Work really hard a few years, save some and spend carefully, hit a jackpot with a start up and retire temporarily. I might adopt some hybrid approach in the near future, hopefully. Too much of either one; work or retirement, is not healthy.

We have just concluded a bunch of MM101 exercises. Most of them are really helpful; I’m particularly fond of the 20% Rule and the 25% Income Rule. Maybe because I like numbers and I got an elephant stamp out of that exercise with my old home. I do need to rework it for my new home. Nevertheless, the other MM101 exercises are equally important.  It is MM101 principles that got me here at this point.

Like a few of the 7 millionaires in training, I started some MM201 activities like converting my old home into a rental property and making attempts to launch a mall business. The rental is not cash flowing a whole lot and I’ve made some significant improvements on the property. The way I look it is the experience that I’ll gain from this activity. It will help me in my future real estate acquisitions too.

Let’s review my original number and date here. It is $5 million in 10 years and the required compound growth rate is about 40%.  I should be looking at:

Real-Estate together with Stocks and Small Businesses

So far, I’ve started on a small rental. I’ll be launching a small business soon investing in Tax Liens and that will bring in more real estate exposure. I did hire an accountant to help me draft out a business development plan and I’m happy with the outcome. The next steps are flawless execution according to the plan. How do I do so far? I must say, I’m not moving forward enough! My current obstacles are my home, assembling furniture and furnishing the new home;  and a very busy social calendar – trips, concerts, parties. It is time to make a choice. I can still do it all but there will be some sacrifices.

MM101 Summary

Photo credit: janet7r

I hope that Mark actually bought some of that ‘prime HK land’ at those bargain Monopoly-comparison prices … it’s kind’a like the McDonald’s Index except that select HK property has probably skyrocketed in value compared to US since Mark was 5?!

And, just look at the reason that Mark gives for not blindly putting your faith in Uncle Sam and his ‘retirement accounts’: “I … did not effectively apply [investment tools] to protect my portfolio. It could have prevented the sharp decline in my net worth the past year even though the tools are not available in my regular retirement accounts.“

Mark’s future looks to be in property investment (and some ‘business development activities that I, for one, am looking forward to hearing more about) … any suggestions?

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We have been looking at our MM101 activities ranging from our housing, to our choice of transportation, retirement accounts, debts, income statements and net worth statements. These MM101 building blocks are definitely important for us to check if we have the habits and foundation to graduate to MM201. Looking at the various MM101 activities, I think I’m ready to transition into MM201 although there are still room for improvements. I do intend to reexamine these M101 activities in the near future to make sure I still abide by its rules.

As for MM201, I’ve converted my former residence into a rental and also engaging an accountant to help with with some business development activities. My focus will be in real estate and hence the monopoly theme. I did not get to play the original monopoly until much later in life. I did play the Asian version called “Millionaire” when I was about 5. Instead of having British or American landmarks, it uses landmarks in Hong Kong and it cost a lot less ($0.50 vs $10-$15 or so after currency conversion). I did enjoy that game at a very young age and I hope I’m going to enjoy it in real life, sort of.

Now, back to Adrian’s questions:

1. What, if anything you will change in relation to your current financial situation?

Looking back, I wish I spend more time on my investment activities. I’ve learned some of the investment tools but did not effectively apply it to protect my portfolio. It could have prevented the sharp decline in my net worth the past year even though the tools are not available in my regular retirement accounts.

Anyway, looking at my current situation, I’m looking forward to kick off a few MM201 activities this year. I may not have immediate success but I hope to learn a lot from it.

2. How / when you intend to go about it?
3. What results you are hoping to achieve?

I’m going to use my former residence as a rental and acquire some property management skills. I did learn how to look for reasonably priced contractors, how to market the property, the need to abide by local laws,  have the relevant paperwork for this activity and proper tenant screening. This will aid me in future property acquisition and how to select a good property management company.

I’m also starting some business development activities with an accountant which I hope will result in a solid business plan in the area of my choosing and push me to execute it accordingly. I’ve learned that without the push, I’m not achieving much.

4. If you haven’t specifically addressed debt in your response/s to 1. – 3. (above), what (if anything) you intend to do about your current debt?

Since my debts are mostly mortgage related, I’ll be feeding the banks regularly on schedule.I don’t intend to pay off any mortgage but I do intend to sell my rental property in the near future and acquire another better performing property.

5. What questions that you may have (if any), in relation to how you are (or should be) handling:

MM201 activities will have a different set of rules and Adrian did throw in some examples in various posts including the analysis of the recent commercial property acquisition. I’m hoping to see more discussion on MM201 activities and try to understand what are the common problems and what strategies we can apply to address them.

Quick and Dirty…

I couldn’t resist adding the photo …

But, a short post can be a sweet post, if it tells you what you need to know.

So, did it? What else can Jeff tell us and what can you tell (well, suggest to) him?

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I feel bad even calling this a “post.”  It’s so short that it hardly qualifies as a response.

The only changes I think I need to make at this point relate to my approach to long term investing.  As a reminder, I’m primarily using index based mutual funds in a variety of tax advantaged accounts (401K, Roth and Traditional IRAs, 529s).

The change I’m going to begin implementing is a move away from mutual funds and into a more concentrated portfolio of individual stocks based upon value investing principles.  To help me accomplish this move, I’m re-reading Rule #1 by Phil Town and am reading Buffetology by Mary Buffett and David Clark.

This will be a measured process of moving money.  I plan to move a portion of my money…test the results and then move greater amounts over as I see results and become more confident in the stock selection methods.  Future investments will be prioritized to non-tax deferred accounts so that I can access the funds when I deem necessary (hopefully by age 50) rather then when Uncle Sam says I can can.

By doing this I hope to do accomplish two things….

1. Grow richer quicker 

2. Access my money whenever I desire

As far as my debts are concerned, I do not intend to do anything about my mortgages other than continue to pay them monthly per the amortization schedule.  I intend to pay off my $17,500 bridge loan in May.

My other activities are in the realm of MM201 where I continue to fiddle around with increasing my income via a variety of online methods and look for opportunities to buy a business and more residential or possibly commericial real estate.

Clicking My Way Into Making Money 201

While we wait for the other 6 MITs to follow Diane’s lead, with her excellent post based on my Finding Your Growth Engine exercise, Jeff – our newest Millionaire … in Training! – welcomes us into 2009 with some insight into his own money-making plans …

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Making Money 201 is all about focusing efforts on increasing your income so that you can build wealth and make some headway on achieving your Number.

Being in the military affords me a nice and steady income (which I’m thankful for these days) but it doesn’t give me much of a chance to earn more by working harder or smarter so that I can earn that big promotion at work.  Nor can I focus on growth opportunities for the organization to improve profitability and earn more through profit sharing or bonuses.  This means I need to find an alternative, separate from the military to pursue new profits for my family.

But what should that be?

My required annual compound growth rate is approximately 38% to reach my Number.  I expect to use stock and real estate investments as well as some type of small business to make that happen.  I have more detailed plans for stocks and real estate that I’ll share another time, but today I’m going to focus on my options for a small business.

Ideally, whatever I pursue should be as passive as possible.  I’m not afraid of hard work, but my time is my most precious asset.  The more income streams I can generate that require little or no time/effort to maintain, the more wealth I can produce as an individual.  I think of this as leveraging my time.

Another reason I’m chasing passive income streams at this point in my life is that being in the military is a full time job that doesn’t leave me much room to head off in my own direction.  If I find the perfect business opportunity, I’m not at liberty to “quit” when I decide.  Therefore, my efforts need to fit with my present situation and service obligation.

My final reason for chasing passive income is that I have some big dreams I want to pursue on a full time basis as soon as possible.  Yes, I understand the point of our exercise is to achieve the Number so we can retire and fulfill our life purpose stuff.  But I think I can get on with it sooner than 10 years from now if I can generate sustainable passive income streams to live off of.

Currently my passive income efforts revolve around:

- Real Estate investment – One of my 2008 goals was to begin investing in real estate other than my primary home.  However, the Navy changed my real estate investment efforts and that goal with orders to Boston, MA.  I’m going to be managing the Navy’s recruiting efforts in New England.  Drop me a line if you want to join up.  Because of this change in plans I’ve had to defer my goal just a bit, but will still be a real estate investor very soon, I’m just going in through the back door.  I have renters lined up for my VA Beach home and am closing on a house in Boston at the end of January.  The Va Beach home is renting with positive (and passive) cash flow and the Boston house is a foreclosure that I’m picking up for $200K below market. 

- An Internet approach – As I mentioned above, I need a business that I can fit into my military career.  The Internet is everywhere.  It never sleeps and my online activities can be tailored to my schedule.  I can devote some time over lunch, during my commute on the train, or even while on travel and in the evenings at home.  Thus the title of this post, I’m trying to click my way into increasing my income.

I think of the internet as a big river money just waiting for me to dip a bucket into.  I am using several approaches to try and scoop my bucket into that river.  Mostly centered around advertising and internet marketing, I’m using several blogs (I have ten right now) to target specific niche markets.  The idea is to drive highly targeted traffic to the niche blogs which contain Google advertisements and related affiliate products.  Traffic = Clicks = Advertising and Sales Revenue.  So far the websites are paying for themselves, and I continue to build content and generate traffic via backlinks and search engine optimization.

I’m also dabbling in running targeted Pay Per Click ads (they are at the top and right side of Google’s Search results) to sell affiliate products.  I paid for an online course to learn some of the in’s and out’s of PPC, but have only lost money so far in this area of Internet Marketing.  I’ve suspended my PPC activities for now because I need all the cash flow I can muster to finalize my real estate deals in the end of January.

For now I’ll just focus on my niche blogs since I’ve got that breaking even.  I’ve heard “stories” of folks on the internet using this approach to make several thousand dollars per month.  I’ve only been at it for three months now and am making whopping $45/month from my ten blogs.  It’s not much, but I see the potential.

The idea is passive income from military retirement (someday), real estate rentals, and internet income so that I can really begin to focus on what I view as my true business opportunity…building an Air Taxi business.

You knew it had to come back to flying at some point didn’t you. 

In the mean time…Click Baby Click!