Turn That Hobby Into A Business

Start-a-BusinessMany say start a side business and then when it makes as much or more money than your day job, then quit. I say phooey! This advice mainly comes from people who like to “play it safe”. I am not condoning going into work tomorrow and quitting, but I do want you to think outside the box a little. I have a couple activities I used to consider being hobbies that are now more than that. Ironically, they are also two of the most expensive items you will ever purchase in your lifetime. One is a house and the other is a car. I will start with cars since that is my bread and butter.

I got my Occupational License from the California DMV the middle of last year. It gives me the ability to buy from anywhere, but can only sell in the state the license was issued from. I always wanted to become an automotive dealer, but didn’t know how. After talking to a friend that did it I am glad I went through with the training! It requires taking a two day, six hour class, filling out a plethora of forms, and passing an exam. Very much like getting a Real Estate license (also an OL). The hardest part was filing out the forms correctly! The next hardest part was waiting six months to receiving the documents! Our state governments require us to get these licenses since it shows our intent to hold the utmost moral and legal standards in the industry we choose to do business in.

At the very least I now have a dealer plate to drive my inventory with which can be used for both business and personal use. Even if you don’t aspire to own a retail dealer lot that can hold a hundred cars at a time, buying cars from auction at wholesale pricing is a no-brainer. You can even help your friends and family by brokering the deal. I pay roughly $200 a year to to the DMV to maintain my license plus $300 for the required bond so about $500 total. There are other fees involved like commercial insurance, also known as liability and garage coverage, but I don’t do enough volume to maintain that coverage so I usually put it under my personal insurance.

Real estate is another money maker that also requires class and to pass an exam to prove proficiency. I have not done this yet, but that hasn’t stopped me from acquiring two rental properties so far. The benefit here is being able to represent yourself in buying or selling transactions so you may cut the cut that normally an agent that works for you would get. An RE agent can also make a decent living being strictly a listing agent for REO’s (Real Estate Owned) properties and doing BPO’s (Broker Pricing Opinions). This is what I plan to study for next when time permits.

So why start a business?

There are couple reasons. One is for tax breaks and the other is to shelter income. Take this example. As an employee of a company, you receive a W-2 from the company you work for. All the money you make that year gets passed on to your personal taxes. If you were to instead start an LLC (Limited Liability Company) with at least two managing members, then only 50% of the money (unless a different percentage was agreed upon in the operating agreement) made through your company will be passed through which means you will only be responsible for half the taxable income. This doesn’t even touch on the additional benefits of filing as an LLC that is considered a Subchapter S corporation for tax purposes.

Do you own a business too? Sound off in the comments below with the industry it is in and how you came about starting it. Contractors count too as that is a form of self-proprietorship!

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My Not So Long and Bloggy Inspiration.

finger-tapping-watchI have started a few blogs before in the past: GadgetMed’s, Garage Mod, and Mobile Revival to name a few. I must admit I have a problem focusing on one thing at a time. I like to split my time between ten things at once which means typically nothing ever gets done. This was my way of defeating boredom. It is a good time killer, but not something I suggest others to try. Now I focus myself on this one blog and by this I hope to provide content that is useful and relatable.

So how did I get myself here? I feel like I received an award when I say that. You know when you are handed a polished statue of sorts and asked to give a speech or at least thank some people for which whom we would not be where we are today. I have few of those people that match that category. First and foremost it is my loving and supportive girlfriend, Ms. EWW. Without her life just wouldn’t be the same. Then there is Mr. Money Mustache of the infamous MMM blog (http://www.mrmoneymustache.com). My initial Google search for “like lendingclub” brought me to his article and I have been a Mustachian ever since! I must admit I find Mustaches very Tasty. From there, I backtracked to Jacob’s blog (http://www.earlyretirementextreme.com). Between these two, I have been kept mighty busy reading up on the do’s and don’ts of investing. But do not be fooled! This be no clone. My story is different from your story which is different from all others out there as we are all unique individuals.

Although my advice might be sound, take it for what it is modify it to your own life. Sound off below and let me know who your inspiration in life might be.

PS, live long and Prosper. As in I will be starting to use Prosper alongside of LendingClub to see which P2P Lending platform outshines them all in 2014!

What Does the Future Hold?

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Las-Vegas-Welcome-SignIt is now nearing the end of August. September is right around the corner. My search for a third investment property in Las Vegas has quickly taken its toll on me. The market has picked up from from the 2009 – 2011 lows and sits 25-30% higher than back then. I keep telling myself that at least it is nothing like in 2004 – 2006. The search is only a couple months in, but this “Master Deal Finder” is quickly finding out that the sheer number of local investors have saturated the market enough there to produce slimming margins at best. All this coupled together, has led me into a slump. That is, until last night.

What happened? Say what you will about your belief in faith or a divine power (PS, this is not a religious blog), but I saw the light and ran quickly and blindingly towards it. The realization was made that not all realtors do their job correctly. To error is human and not inputting every single fact and figure about a property is fairly common for sake of moving on to the next! With this knowledge firmly in my mind, I started doing what I will dub “reverse MLS’ing” the system. In other words, instead of searching for key words, I would take certain measurable aspects of what I was looking for and work my way down. Like if I knew I wanted a large enough lot to build upon, but had to worry about installing solar panels, I would be sure to look for “No HOA” and started with 1 acre of land. I would then work my way down to 0.50 acres, then 0.25 acres, etc. until I got a handful of hits. I would review each one on an individual basis until I found certain features that only the pictures would reveal.

And there it was, the house of my dreams! It had an RV gate when none was mentioned, land that has never been developed, and no HOA on a build date that is about as new as it can get stating the aforementioned. 1999. An offer was submitted earlier today and I will keep everyone abreast of the details in the hopes that an acceptance offer is received as early as tomorrow.

This is my future. What is yours? Respond in the comments below!

Update on 08/28/14:
The typical two day response on a buyer’s contract must hold no weight with this seller as I have yet to hear back. I will remain steadfast and patient in the hopes that I receive an answer of any kind soon

Update on 09/95/14:
Offer accepted after Counter 2! I can’t help, but try to get a great deal. Unfortunately the seller wouldn’t budge from their asking price. They paid a third more eleven years ago than we got it for today so it’s not all that bad. Plus rentals in the area for an equivalent size home goes for $1400 which is 22% cash-on-cash earnings every month.

Who Am I & Why Am I & You Here?

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Confused by the title? Perhaps The unspoken truth is our very own finances make even less sense to us. You can call me Mr. Eww for now. EWW for Early Withdrawal…When?! I admit I made the last W up just to create a meaningful word, but the when is important too. You might know of this phrase. It typically relates to penalty fees charged by retirement account custodians when withdrawing money before a preset date. Instead, I use it as a way to tell you, the reader, that you too can withdrawal early and escape from the rat race that has been passed down to us from our ancestors from generation to generation. As there is no such thing as a free lunch, this also can not be done without penalty, but the rewards will be far greater. We will not cover the how in this article, but I will discuss the why next. I will get this out of the way first; I am 31 years old and planning for a full retirement next year; although I am already partially retired.

I grew up in a traditional working family. My dad was, and still is, an Aerospace Engineer. With his influence I became a Mechanical Engineer. I always equated being an Engineer as being unavailable when I was a child. This was the observation of a six year old though. The hurtful truth I found out as a teenager was that my parents became house poor by overspending on the place where I spent my wonder years. My mom had to take a job waitressing two jobs just to make ends meet. It wasn’t until I was old enough to understand the value of money that I realized all those nights eating dinner alone was not reflective of my parents not caring about me. On the contrary, they cared about me so much they wanted to continue to keep a roof over my head and in order to do so they had to sacrifice one of the most value assets we have, time, in exchange for money. From that forward I told myself that I would never be a slave to money, that I would be in charge of my own destiny, and have the ability to choose whether used my time to make money or money to “make” time.

My first job after college was at a government contractor which I spent five years building my career in. I was thinking of renewing the lease at the run down shack I was staying in, but I was offered another alternative; purchase my first home. this was right around the time that my mom provided her greatest contribution to date. She told me, “why rent when you can own?” From there I researched like a mad man into asset this and real estate that until I was mentally ready to become a owner. I still cringe to this day when I think about it, because I was so conflicted at the time. How could I consider purchasing something that gave my family such hell as I was growing up? I overcame this fear by arming myself with knowledge.

I made my first purchase in 2008. My second in 2010. And then I lost my job due to government downsizing. This would normally be about the point when the pyramid would come tumbling down, but this is not what happened. I was lucky enough, perhaps smart enough to have prepared for the future. The first home was being rented out by yours truly and all but one bedroom in the second home as well. I was making enough to pay my expenses albeit just barely. Unemployment filled the rest of the gap. 2012 was filled with uncertainty and strife. Finding work as an engineer in San Diego was very limiting at the time. It was only last June that an opportunity presented itself allowing me to move to Los Angeles to hopefully start a new life. Fast forward to today and now I have a job, girlfriend, and dreams I still aspire to.

Tell me a little about yourself in the comments below and let us take this journey into financial freedom together!