Falling Behind

My wife said something to me yesterday that really got me thinking. She said that this Saturday will be one year since we closed on House #1.

Later, I recanted what she had said and reflected on what I had accomplished in the last year regarding REI. The result? I haven't done enough to keep the business moving forward. Yes, I managed to get tenants in House #1 that provide us with a little positive cashflow each month. Yes, I would go out and hang bandit signs up every Friday night (or Saturday morning). Yes, I'd get calls (albeit, few and far between) and talk to a wide range of sellers, which produced no deals. It's not that I haven't done anything, it's just that my efforts have not produced anything. So, for a full year now, I've gotten -0- deals, and tat has to change.

I've decided that in order to get the ball rolling, I need to be more proactive. I've slacked off almost totally in marketing, and sat spinning my wheels on that 12-property "deal" that never materialized. In order to move my business forward, I need to not only elevate my marketing, but also introduce systems that will enable me to turnover deals more quickly.

After talking with my wife, briefly, about this over the past weekend, these are my new to-do items:

Create an LLC - My wife and I agreed that "MNS Real Estate Solutions" is a bit ... I don't know how to say it, really ... complex? long? Just not right. We have decided on a different name, but I'll need to contact my CPA to get the thing set up. I've also been doing some reading of late on various REI message boards, and am split between using land trusts or not. For legal purposes, I've heard they are better for Sub2 as they do not violate the federal law that gives lenders the option of calling a loan due (i.e., the Due-on-Sale clause). However, they also seem like an extra layer of complexity. The jury is still out on using them or not for now. I also read that people prefer setting up an LLC for each individual property they have. For instance, if a property has an address of 123 Main St., they'll create an LLC called 123 Main, LLC (or similar derivative). This can get costly (Texas now charges $300 to set up an LLC, plus the $50+ my CPA will add), but probably just peanuts in the whole scheme of things. Also, in Texas, the state charges a franchise tax on LLC's with over $150k(?) in assets (or is it revenue? or profit?). Therefore, having individual ones may make even more sense in my case.

House #1 in Land Trust? - As I just mentioned, I'm still weighing the pros and cons of using land trusts. What I may end up doing is moving ownership of House #1 into a land trust for practice. I'd get a competant RE attorney to do this for me (read: $$$), and eventually have our new LLC as the beneficiary. If it isn't too much of a headache, I'll probably start using land trusts for now on. We'll see.

Marketing - Wow, where has the time gone. Back in late February, I created a list of targeted homeowners to do mailouts. I had fully intended to start my mailouts starting March 1st. Geez Luoise. Here it is nearing the end of April, and I haven't done a thing. Instead of going back and updating the lists, I'll just use what I had before and start mailing out my postcards. I may not send out as much as I had initially wanted due to various reasons (cost and some areas are depreciating in value), but I'll still reach a good many people each month, hopefully. It's a numbers game, and I'll see what kind of response rate I'll get with the first mailout. If it's low, I'll mail more out - if it's high, I'll cut back some.

Personal Issues - The main reason my business has suffered is because of personal issues. Mainly the twins. My wife and I had such high hopes on using my bonus and tax refund for investment purposes, but that has fallen throught he floor. Neither of us could even comprehend late last year how much the two newborns would cost as as far as medical bills. Holy cow. It has not only taken my bonus and our tax refund, but also some savings to pay for all these bills. I am truly baffled as to how people who have newborns and make half as much money as us do it. They must have to make monthly payments, like a mortgage, or something. IMHO, either the loss of foreign investments or higher health costs (or both) will eventually do this country in.

Networking - I managed to meet with the birddog, who gave me the lead on those 12 properties, last week for lunch. Turns out he his a 23yr-old recent college graduate who works right across the street from me. He seems to have his head on straight and knows exactly what he wants to do with his life: invest in real estate. He also came from San Antonio a few years ago, and has strong REI connections there, so not only can he be an asset for me finding properties, but he also has some conections I may be able to use as well. We agreed to meet for lunch every few weeks to touch base. I also met another investor online who lives/works in Fort Worth, but has family and REI connections in my area. He also gave me some names of other investors he knows and said we should all meet for lunch one day. Besides marketing, my weakest pipeline right now in my business is networking. Hopefully, I can start building up a good list of contacts that I can fall back on if I ever need.