Dec 13

I have recently been mulling over real-estate investment oppurtunities in my area.  I have been spending a good amount of my free time researching real-estate investing and attempting to fully understand the process (and have a wonderful mentor coaching me along the way).

The area I live in is a prime example of a good market for real-estate investment.  It has wonderful property appreciation rates, herds of renters, and a whole bunch of “flip-ready” homes.  As I mull that over and continue to learn, I stumbled across a unique investment oppurtunity pitched below:

“As most investors are aware, the SW Florida real estate market has
experienced tremendous growth and appreciation over the last few years.
Although this growth has been extremely rewarding for most investors,
it has also created a significant problem of affordable housing for the
working class community.  Today, affordable housing is considered by many in government and
industry as one of the most significant problems affecting the Florida
market. Shop owners, restaurants, hospitals and schools are finding it
extremely difficult to find employees because of the high cost of

Although the affordable housing problem is significant, it also
creates an excellent investment opportunity to enter the market during
the front end of an affordable housing growth cycle.  We have found a group who has created a business model that helps
address the affordable housing issue while also providing a significant
investment opportunity to qualified investors.

The proposed investment opportunity is for duplex housing in the cities of Lehigh Acres and Cape Coral in Southwest Florida.  Duplexes are two units, each approximately 1050 to 1200 square
feet, with each unit having 2 bedrooms, den, 2 bathrooms and a 1-car
garage on the smaller unit and 2 car garage on EACH SIDE on the larger
unit.  Currently the all-in cost of the duplex project is approximately
$285,000. The cost includes the land, building, and site improvements,
closing cost and interest during construction. Make NO PAYMENTS DURING

The cost of the project can be financed with a construction loan at 85%-90% of appraised value.  The current market price of the duplex today is between $325,000
-thus providing the investor with built in profit before construction
begins. Because the market value is more than 10% higher than the
necessary loan, this is done with very little money out of pocket which
can be as low as just $1500 or as high as $5500.”

If this is a totally accurate pitch, it seems like a reasonably good one.  I think I'll be spending the next few weeks looking into the Florida investing and seeing what possibilities exist.  With that being said, I'm not sure I will immediately jump at an oppurtunity like this.  I don't think I'm far enough along in the investing game to fully understand all the possible outcomes, but maybe in the near future.  Regardless, I'd like to hear your opinions on the matter.

If you'd like to check out this offer in more detail, Check It Out Here.

* Important Note: Remember to do a LOT of research before jumping into ANY investment.  Be careful.. you work hard for your money, so work hard to make sure it's a worthy investment.  In general, you should spend an equal amount of time researching an investment as you do earning the money to invest in it!

Nov 17

I spent a good amount of my freshman year of college and several summers there-after working at Wells Fargo Home Mortgage as a loan pricer.

It was really good money for a college student, and I learned more than I could have ever imagined about the mortgage process. 

I also saw a side of the mortgage industry that most of the public has absolutely no clue about (and likely would shudder knowing).  My job was to take phone calls from brokers from small banks and mortgage companies throughout the country.  The broker would give me lot's of pertinent information regarding you (the borrower) and depending on factors such as loan amount, property value, ltv, your credit rating, and even the state you are in… I would quote the broker a “price” for several different rates and lock the loan with them.

I quickly learned that rule number one for the broker is to make as much money off of you as humanly possible.  Ok, that may be a bit of an overstatement, but I shudder to think of how many poor people I saw completely reamed by their “trusted” broker.  Truthfully, not all brokers are out there to “screw” every customer, but choosing the correct lender/broker can make a significant difference in the overall cost of your home mortgage. 

Anyways, at the time I worked at Wells Fargo, a single broker could make a maximum of around 7.00% (depending on the circumstances of the loan), which meant $7,000 on a $100,000 loan and $14,000 on a $200,000 loan and so on.  This 7% is split amongst two primary areas: origination and a secondary mortgage credit. 

The origination is agreed on by the broker and borrower up-front and is usually straight-forward and rarely exceeds 3% (although I always had a strange feeling that most borrowers didn't really understand how much 3% of their loan amount was even if it was stated clearly on the good faith).  

The secondary mortgage credit (smc) is a bit trickier though.  This part is determined based on how high the broker can get your mortgage rate up.  This is the part that many borrowers don't realize: the higher the rate, the more smc the broker can expect on the back-end from the big lender (up to a certain point at least).  The process is a bit more complicated than that, but you get the idea. 

The point is, most brokers don't really have your best interest at heart.  The difference between 5.5% and 5.75% can mean $6,000 to the broker's pocket book, but may cost you nearly $30,000 in extra interest over the life of the loan (which is why it's a good deal for the lender's to promote higher rates).  Sadly, these are fairly conservative numbers and we are assuming that the broker is honest.  If he or she doesn't have the best intentions, there are some serious and illegal ways to completely rip a borrower off, so watch out!

So, what's my point?  My point isn't to distrust all brokers or anything silly like that; just be careful.  Consider shopping around and even looking on the web for your home loan.  Not only can you save a bundle at closing (with less origination), you can also save a LOT over the life of your loan by just being careful and taking your time.

Please feel free to ask me any questions if you are unsure about the process.  I would easily take a few minutes out of my life to save you massive amounts of money.

Jun 19

Want to feel a little better about your
salary?  Check out the Salary Clock
This thing is obviously somewhat gimmicky, but it's still quite
interesting to see how your money accumulates throughout the

Warning: Comparing your salary to the famous
people listed in the drop-down is a good way to feel sad about how hard
you work.  However, it's remarkably incredible to see how
Larry Ellison's numbers jump in such huge increments (he apparently
banks $38 billion a year… which appears to be around $5,500 per
second).  wow.

Click Here to check out
the Salary Clock.

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Jun 01

Gizmag had this great article the other day about a new trend in fractional ownership (or cooperative buying).  This new trend can put anyone with reasonable means behind the wheel of an exotic, classic, or luxury car for a fairly reasonable price.

“Partial ownership works best for people requiring a car only some of
the time and is much more efficient financially than keeping one’s own
car. With just a few members, any club can offer the convenience of a
car when you need really need it, with a reduced cost for the miles
that you do when you take account of the purchase price, depreciation
and insurance. Then there’s the added inconvenience and upkeep costs –
paying to park it, getting it serviced and keeping it running in fine
fettle. If you’re cash rich and time poor, these aspects can be
ultimately of greater personal cost as you only get 24 hours in a day
no matter how wealthy you are.”

As you can see, it's a great solution for someone who yearns to drive cars that the normal person could never dream of owning.  From the few sharing plans I've examined, the basic premise is that you pay a flat fee for a certain number of “points” and those points allow you to choose from many different cars.

The more exotic, expensive, and rare a vehicle, the more it costs in points.  The more days you want, the more points it costs.  It costs fewer points to take one out in the winter.. I think you get the general idea.

There are also true fractional ownership plans where you actually  “co-own” a  car with a few other buyers and you split your time amongst the other owners.

I wasn't totally impressed with the offerings of some, but here are a few shining examples:

So, if you are in still dreaming about driving an exotic car, seriously consider checking out these options.

Very Important Note: If anyone feels the need to, oh I dunno, give me a membership to one of these clubs, please feel free… I would enjoy it immensely (and it'd be a great wedding present for me)!

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Feb 16
Being Frugal vs. Being Cheap
- I saw this a while back on a I Will Teach You to be Rich, but I totally forgot how enjoyable it was to read.  I think it has some interesting insight, and although funny, has a lot of truth to it.  The other topics on this blog are worth reading too, especially if you are young and inexperienced with money.  Of course, remember not to make money the purpose of your life.. sometimes I think the readers and author of this blog forget there is more to life.  Regardless, it's still worth reading for some practical insights to reaching financial bliss.

Ramit Writes:

Everybody knows a cheap person, and
probably hates them. But I think we often mislabel frugal people cheap.
These are just my opinions, but here's what I think differentiates the

Cheap people care about the cost of something.

Frugal people care about the value of something.

Cheap people try to get the lowest price on everything.

Frugal people try to get the lowest price on most things, but spend a lot on items they really care about.

Cheap people are inconsiderate. For example, when getting a meal
with other people, if their food costs $7.95, they'll put in $8.00,
knowing very well that tax and tip mean it's closer to $11.

Frugal people won't order a Coke if they're on a budget, so that when the bill comes, they don't look cheap.

Yes, being cheap and/or frugal can be a cultural quality. I won't spend much more time on this one.

Cheap people keep a running tally with their friends, family, and
co-workers. Some frugal people do this, too, but certainly not all.

Because of the fear of even one person suggesting they spent too
much on something, cheap people are not always honest about what they
spent on something. Neither are frugal people.

Cheap people are unreasonable and cannot understand why they can't
get something for free. Sometimes this is an act, but sometimes it's

Frugal people will try as hard as cheap people to get a deal, but
they understand that it's a dance and, in the end, they don't
intrinsically deserve a special deal.

Cheap people's cheapness affects those around them. Frugal people's frugality affects themselves.

Both cheap and frugal people will be more assertive than most people
when trying to get a deal. Over the long term, they'll both save more
money. But one has a cost, while the other pays dividends.

Cheap people think short term. Frugal people think long term.

Side note: After receiving a comment from Ramit about this article, about which I cautioned everyone to not make money their purpose in life, I realized I had forgotten his article explaining his intentions regarding this subject.  You can read this article by clicking here or by reading his comments to this article by clicking here.