Month: September 2019

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How I Made A Return On Investment In 1 Month By Seeing Opportunity!

What do you see in this picture? An open walkway? An awesome picture of me jumping off a ledge in front of the Colosseum? A random room with some stuff in it?

I would agree with each of those things, but I saw opportunity! Opportunity to turn my current living situation into an even more profitable one.

How I Saw Opportunity!

Opportunity is all around. Some see it while others walk by it every day. As some of you know, I currently house hack my home. House hacking means I rent out parts of my home to individuals seeking a place to stay for various amounts of time. I live in the master bedroom of the home and rent out the other two bedrooms.

Here are the current numbers for my house hacking:

1. Expenses

  • Mortgage $1,777
  • Utilities $180
  • HOA $152

2. Income

  • Renting Bedroom #1: $975
  • Renting Bedroom #2: $900

So with renting two bedrooms alone, I am more or less living for free while paying off my mortgage. Not too bad right?

Wrong! I saw an opportunity to bring in even more income!

Opportunity Knocks When You Are Looking!

One thing I haven’t taken full advantage of was a side room I had vacant. This room is a walk-in room having no door (as shown in the picture). The other day I was thinking to myself, what if I framed a door in the walkway and created another private bedroom?!

Doing this would do two things:

  1. This would add value to my home by the creation of another room (soon could be bedroom) once I add a closet
  2. I could then rent out the room for an $600-700 a month!

Sometimes you have to look at things in a different perspective.

So what did I do?! I started exploring options to get a door and drywall in place to create value! I reached out to the General Contractor I am now using for my Airbnb to get quotes for the work. Total, my GC told me it would cost $700.

Two days later and wa la! Checkout what that old walkin room now looks like!

I now believe I can rent this room out for between $600-700 per month.

How I Am Making A Return On Investment (ROI) In 1 Month!

For most, the concept of a return on investment is foreign. Most investors want to understand what return they are going to make on their money or how long it will take to payback. This allows you to understand how well your money is working for you.

In this scenario, here is how I calculated a ROI of 1 month!

Total Cost of creating the room: $700 of material and labor

Total Income From Room: $700/month

From these numbers you would divide the $700/$700 = 1 month! Yes, that is right! The $700 invested will pay back that exact amount the first month I rent the bedroom out! How incredible is that. If you were to give someone a million dollars and they returned it the next month, would that make you happy? That is how I am feeling right now!

Had I not looked at my home a different way, I would have never seen this opportunity!

Key Takeaways:

  1. You walk by opportunity every day. Some see it while most don’t.
  2. Understand what your return on investment is. From my world, any return on investment where you can make your money back in less than 2 years is a no brainer. Period. The fact this pays for itself in a month is AMAZING!
  3. House hack! It is the most amazing thing that is available to anyone. Yes, that means you.
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Buying A Short Term Rental In Less Than A Month!

The time has come! For the next five weeks, I will share the process I used to identify, submit offers, and buy my first Airbnb property. I will go try staying high level on my IG post and then go into more detail on my blog. Looking forward to sharing the steps I used! I am by no means saying this is the exact way to do it, but I learned a lot during this month long process. Here we go!

Step 1: Identify Target Area to Purchase In

Step 1 in this journey was identifying an area to buy a property in! You will always hear from top real estate investors that you make your money when you buy! A key component of this is buying in the right area. Buying in an area that is attractive for what you are trying to use the property for.

The first thing you need to understand what areas are good for the type of investment you are trying to make. My goal was to buy a property that would work well for short term rentals (STR) through Airbnb/HomeAway/vrbo. A key thing you need to understand are the laws in your area. In Orlando, the Airbnb laws are pretty strict. There are many cities and HOA communities that don’t allow Airbnb. Period. Could you imagine if you spent time identifying a property to later realize you can’t use it as an Airbnb?! That would be a buzzkill.

So first, know the laws. After I understood the laws for each city, it was time to narrow down a more specific area. There are many programs you can use to assist you with this, but I found the best program to use to be Mashvisor.

What Is Mashvisor?

Here is the description used by Mashvisor on their website header

“Use analytics to find lucrative traditional or Airbnb properties in a matter of minutes. No more spreadsheets, no more searching.”

The program has a monthly or yearly subscription model and I ended up paying $350 to use the program for a year.

Different Maps Mashvisor Provides

There are many views provided by Mashvisor that are really incredible. Below shows a snapshot of what you see when you search for a market.

The feature I like the most is the heat map Mashvisor creates. You have the ability to toggle between Airbnb Rental Income, Airbnb Occupancy Rate, and Airbnb Cash on Cash Return. Once you have selected a toggle, you can see heat maps showing more and less desired areas.

How I Used This Information

Having the information is only half the battle. Having a program to merge data from many resources is beneficial to reduce down time I had to research. I leveraged the ability to toggle between different heat maps to identify an area. When staying on the same part of the map, I would look at which areas had the most green. Once I identified an area having a decent amount of green, I would zoom in more to the area and do the same thing. I would continue doing this until I finally identified an area that was roughly 2 square miles.

Step 1 complete!!! I had identified the specific market I wanted to buy a property in!

Key Takeaways:

  1. First understand how you plan to use the property. I planned to use the property for Short Term Rentals. I needed to ensure I narrowed my search down to only areas allowing STR.
  2. Leverage platforms that take data from sources. This will help to reduce the amount of time it takes to research an area.
  3. Continue drilling down into the map further until you have a very targeted market. Doing this allowed me to find a very specific area I wanted to target for purchasing a STR.
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Your Phone Isn’t Worthy of Your Morning!!!!

This weeks ridiculous challenge: No phone time for the first 30 minutes of each day.

Yeah. You read that right. No phone for the first 30 minutes of the day. But YRB33, I set my alarm each morning to wake up to on my phone. Oh boo hoo. You can go buy a $5 alarm clock. Crazy enough those still exist today. Go get one!

Why this challenge? I continue hearing the ability to control your first and last hours of the day to be critical. What better way that having a Miracle Morning with no screen time beforehand.

There is one fundamental issue with screen time first thing in the morning. You are not in full control of what you might see and how seeing that will make you feel. When you have 0 screen time in the first 30 minutes of the day, you have complete control of what you see and think about. This is true power.

Benefits I Expect To See

There are a few key benefits I expect to see from doing this challenge.

  1. I expect my eyes to feel less strained! Ever noticed how your eyes feel drowsy after too much screen time? This might be me, but my eyes are always struggling after looking at a screen for too much time.
  2. I will have complete control of my thoughts in the morning. I will also have much more control over my time in the morning. There are many times when I go to check social media with the expectation of spending 5 minutes. That 5 minutes turns into 30 and now I am in a rush to go somewhere. Take control of your time and mindset!
  3. The first 30 minutes of your day are critical to setting your day up to be productive. Focusing on a morning routine will allow you to clear your mind and take full advantage of the first hour.

I am sure there are many other benefits to no screen time in the first 30 minutes of your day. These are a few that come to mind for me.

I thought the cold shower challenge the other week was pushing it, but this might cross the line. I am super interested to see if anyone else is willing to take this challenge with me. If you already do this, more power to you! That is awesome and you are awesome!

Key Takeaways:

  1. Control your thoughts at the beginning of your day to have the ability to control what you see.
  2. Challenge yourself to do things that feel uncomfortable. This is something that I will definitely struggle with.
  3. Go buy an old fashioned alarm clock! They actually exist and were the main source of waking people up prior to the smartphone.