Welcome to Chez Cliff!

Lately, HGTV has been spending more time on my television set.  I must be getting an itch to do another renovation or something.

Anyway, this new show caught my eye:  Income Property.

Income Property is a television show where an experienced real estate investor helps couples turn part of their property into a rental.  Those rentals become the staple to help these new owners make their mortgage payment.

I’ve watched a few of these shows and I’m on the fence.

The mentality of the host is that the owners should not skimp when they do the renovations necessary.  He also knows the proper building codes, so the people don’t get stung if an inspector wanders around.  Of course as usual with HGTV, the finished product rivals any multi-million dollar pentehouse in Manhattan.

What I don’t care for: the show isn’t realistic.

It’s television.  Of course they have to show it having a happy ending.

In a recent episode, the budget was $8,500 to redo the small kitchen, bathroom, all the floors and ceilings.  Fifteen days.  During the bathroom renovation, the wife discovered mold.  Everyone’s worst nightmare.

“All this insulation and wood has to be replaced,” the host stated.  “You can’t have your tenant living in this.”

So they replaced all the wood and the insulation.  An added expense of labor and materials.  How much did the budget go up?  Zero.  Nada.

The husband discovers, much to his chagrin, that someone stole his ATM card thus draining their last $1,200 to finish the renovation.

Host to save the day!  He convinces the contractors to put in some over time in order to save a day of labor costs, thereby finishing the project for $1200 less than they originally quoted.

But wait, there’s more!  Host also convinces the contractors to donate money to help the young couple make their mortgage payment.  $1200.  More good news: the value of the house increased $20,000.  The wife cries with joy.

I don’t know who these contractors are but I would gladly give them all free rent if their generosity could be displayed on any of my projects.  Finishing on time, $1200 under budget, and then giving $1200?

The show’s efforts to help people realize there are other methods of producing income should be applauded.  But the show needs to be more realistic in the problems that people may face.

Flip this House seems to be the more realistic show, regarding the interactions between customers and contractors.

Is it worth watching?  Forget the Hollywood ending.  The education value is still there.  He does discuss the ROI on their project and the best way to extend value of the purchase.  His discussion of tile versus carpet mirrored my own.  For newbies, these types of items can be indispensible.  At least they know terms when speaking with contractors in the future.

Opinions are like assholes; everyone’s got one.

With the advent of the internet, nearly everyone has a voice.  You can easily click a button and suddenly your opinion of a product is known to billions of people.  Whether it is an intelligent opinion or not is a matter of debate.

These reviews do have an impact on people purchasing.  I’ve become distinctly aware of it within iTunes.  Good reviews, favorable reviews lead to increased sales.  Quite the opposite, bad reviews lead to decreased sales.

When iTunes first started their ranking system, anyone could leave a review.  Independent of whether you actually purchased the application or not.  If someone released an application for $9.99 and a customer didn’t want to pay $9.99, they could leave a 1 star review and say “This is too expensive.  I won’t buy it.”

Amazon.com follows this model.  I’m amazed at the number of times people leave reviews stating “I ordered this book 6 weeks ago.  Where is it?!?”

What does Amazon’s delivery have to do with the content and writing of the book?  Why wouldn’t you contact Amazon.com about delivery instead of trashing the book itself?

iTunes listened to their paying developers and changed the rules.  Now, reviewers must purchase the software before it is reviewed.  That was an excellent first step.

Now iTunes has changed their review process once again.  This time, customer’s reviews are based on a version of the software.  So if someone doesn’t like the software, decides to leave a trashy review, then you come out with an updated version, their review only applies to that old version.

One aspect they did steal from Amazon.com is displaying how many stars the software received on all levels.  I think this is good.

In the end, I think the folks at Apple are understanding that the ratings system leads to increased sales.  They are also demonstrating that some people have no qualms, trashing a piece of software without allowing the developer to make it right.

I love that Design on a Dime show.  The concept of redesigning an entire room on a strict budget of $1000 is great because it requires the use of imagination.

After years of building businesses and dealing with websites, I’ve gotten to the point where I can get one built (1) quickly and (2) cheaply.

This is how I do it.

1) Cheap hosting with domain name included. You have to love capitalism.  Competition has driven hosting services to the point where (a) hosting is cheap and (b) domain names are included.  Cost for 6 months hosting and domain name:  $15

2)  Wordpress. Ninety nine percent of the population thinks Wordpress is purely a blogging tool.  Not true.  Wordpress is a Content Management System (CMS).  This means you can control virtually every aspect of your site through a “Microsoft Word” style interface.  Blogging can be turned off completely and just have static pages:  Home, About, Products, Contact etc etc etc.  Cost:  $0

3)  Website design.  No need to pay a website designer hundreds of dollars to design a site.  Ask Lord Google.  “Free Wordpress Templates” will generate hundreds of sites, holding out free templates for you to use.  Whether your site sells Corvette Parts or Cooking Utensils, you can always find something that matches your style.

The good news in using these templates are

• Easy to install
• Easy to change style

Literally you can change the entire “look feel” of your site within seconds.  If you don’t like the first Cooking Utensils site style, you can upload a different one.  Wordpress is a powerful tool.  Cost:  $0

4)  Wordpress Plugins. This is where you can really customize your site.  Programmers from around the world have created simple plugins that can make your Wordpress site to amazing things.  I was surprised to find a plugin for eCommerce.  Downloaded 175,000 times and in use.  Cost:  $0

5)  Google/PayPal.  In just getting your idea off the ground, the fastest and easiest way to start accepting payments is via Google and Paypal under a personal account.  They don’t charge monthly fees but they do charge a percentage when you make a sale.  You can always upgrade your account when your proof of concept is rolling.  Cost:  $0

So the total startup costs on building a website:  $15.  Sell virtually any product (like a toilet that can flush 2.5 pounds of carrots).

As a footnote, if you are absolutely stuck that your site must have a feature which your template doesn’t offer you can get it modified.  Guru.com is filled with freelancers just dying to do some work.

Example: I found a great template but I wanted the menu to be a drop down menu.  Also the template was 3 columns and I only wanted two.  I found a programmer who did it within 24 hours and it cost me $50.

It’s March timeframe and once again the idea of trying to sell my latest acquisition has come up in conversation.

To be honest: I’m a bit skeptical the property will sell for the price tag I need it to sell.  My real estate agent and I spent a few hours, going over the MLS and what was listed versus what was sold.  He feels confident we can get the price.  I’m not so much.

The big reason for wanting to sell the houses is monthly expenses.  To get the back house finished, most of the renovation had to be carried on my credit cards.  If I could pay off those credit cards, I would be sitting in a really good position.

So rather than sell the houses and potentially take a loss, I wondered if I’d be able to sell some of the write-offs.

Right now, I can’t use all the write-offs that I have.  There’s too many.  I’m already carrying-forward a ton of write-offs.  So if those write-offs could go to people who can use them, why not?

Here’s my thought.  Put the houses into an LLC or S-Corp.  Write up a plan, whereas an investor could put $7,000 or $8,000 into the corporation.  That investment would get some rate of return but more importantly the investor would be able to declare a loss on their taxes.

Let’s say that between the interest payments, depreciation, repairs, etc. the property has $50,000 which can be deducted from taxes.  Each investor would get, for example, 10% of those write-offs.  Which means they can declare $5,000 worth of write-offs on their taxes.  They would get roughly 40 cents on the dollar back, which translates into $2,000 per year.

When the houses are sold, in 2 or 3 years, the investors are paid back their investment plus whatever rate of return they get.  If that’s 5%, the translates into $800 over a two year period along with $4,000 ($2,000 per year) back from the federal government.

From my end, I use their initial investment to pay off my credit card debt.  Then I can start breathing again.  When the house is sold, I can make back my money and with a little bit of luck, have a few extra dollars left over.

Obviously it’s just an idea and the details aren’t all in place.  My mentor loves this idea.  He believes putting the houses on the market right now is a waste of time.  To quote him, the corporation idea “solves the problem”.

**Edit:  I failed to mention in this article how this idea helps me.  The money invested by the investors is used to pay off my credit card debt.  Without that debt, my finances are looking really good.**

I’m always looking for ways to ease the management of my “life”. For these mundane tasks, my thinking involves removing tiny Time Suckers from my schedule so I can focus on more important things.  New things.  Like that bottle of 2002 Chateau Neuf de Pape sitting in my wine fridge . . .

Last year, I put my bills on autopilot and that rocks.

This year has seen the return of mundane tasks.  The other day, the car registration came along.  California has strict emission control and since my car is older, it must be checked every two years.

This is that “two year”.

This is that “pain in the butt two year”.

Even though the test only takes 15 minutes, it’s the 30 minute drive there and back.  It’s the $70 I have to pay.  It’s having to schedule an appointment.  It’s having to hear for the third time “Oh, our machine is broken and we don’t know when it will be fixed.”  Of course they don’t tell you this on the phone.  It’s like they think “Let’s wait ’til Cliff gets here and then tell him we can’t do his car.  It’ll be a hoot!”

To their credit, the Smog Check Factories are all plugged into a state computer system.  Once your car passes, it’s in the state computer and no more paperwork is required on my part.

To their shame, DMV won’t permit me to pay online.  I use to be able to do this.  Since the smog check is in the computer system, the DMV website picks that up.  But that’s not an option this year.  I have to mail a check.  And guess who doesn’t have stamps?

This guy.

Why would I have stamps?  My bills are on autopilot!

What does this mean?  I’m glad you asked.  It’s a trip to the Post Office.  To buy a stamp.  One measly stamp.  I know if I buy a book of them, the new 44 cent stamp will come rolling out then I’ll have to make another trip to buy 2 cent stamps.

Why not go to the DMV?  That’s a great question.  We’re now back to the days where we have to schedule an appointment with the DMV.  That’s right.  You just can’t show up and get new tags.  You have to schedule a “time slot” which is usually 2 hours long.  When can they see me?  Two weeks.

So do I wait two weeks only to wait for another two hours to get the stupid sticker for my license plate?  Or do I mail a check and wait 7 to 10 days for the stupid sticker for my license plate?

Yeah yeah yeah if this is the toughest thing in life, I shouldn’t be complaining.  I should also eat the crust because there’s starving kids in China.

The point of this: it’s amazing how one little thing can completely gunk up the smooth operation of your life.