Archive for July, 2009
Craigslist as a Hiring Tool, Pt. 2
Posted by: Todd Metheny in Uncategorized on July 30th, 2009
It says here you'll wash my car...
About a month ago, I wrote a little bit about the bachelor party that I’ve been put in charge of planning for my cousin. The main thing I focused on was the fact that I’m going to hire someone to drive my car for the night. That is still the plan. In fact, tonight I chose my driver.
I’d like to mention at the outset that several people pointed out the possible insurance issue that could come into play. So I emailed my insurance agent. He gave me the following response (basically). The insurance you have covers the car, and whoever may be driving it, as long as it’s someone who is legally able to drive it and isn’t using it for an illegal purpose. He said there is an exception to the insurance if it’s being used for some commercial use, but that this wouldn’t trigger that exception, being as it’s a one time, one night sort of thing. So if my driver gets in an accident, and I hope with all my might that he doesn’t, my policy will still be in affect as far as limiting my liability.
Back to the hiring (interesting) part. I had all kinds of applicants. People are incredibly interesting. From a career perspective alone, I had a wide range of people apply; a fireman, a couple EMTs, a couple teachers, mechanics, musicians, an engineer, students from all walks, writers, artists, nurses, military people. Several people offered to bring guns to “protect” us. I had to wade through all these applicants and pick someone for a job that anyone with a license could do. I tried to just pick people that were interesting, or people that stood out for one reason or another.
One guy was hitchhiking across America, and was part of an organization/club that gave hitchhikers places to stay. People from all over the world had slept on his couch, and he’s slept on couches all over the place as well. Another person was a limo driver who had driven for lots of celebrities that knew him by name. A girl that applied was her college’s homecoming queen. Another guy got the interview by telling me that if I picked him, he’d show up early and wash my car, then at the end of the outing he stick around and detail the inside.
I held the interviews at a neutral location within walking distance from my house. I sat in there and sipped a diet coke. I ended up scheduling time to see five of the 100+ applicants. Two didn’t show up. I’m not surprised. That’s part of how Craigslist goes. Holding the interviews, while it seems like a lot to do for a one night job and the amount of money involved, I felt was a necessary part of the screening process. I told my wife that I was confident that not everyone would show. The people that did were good people.
I ended up picking a 30 year old who is a teacher in a suburb west of St. Louis. Seemed like a cool guy. I liked him. I asked him to call me if something came up and he wasn’t going to be able to make it. He told me not to worry about it, that he’d be there. I talked to him a little bit about St. Louis. He knows the town really well, much better than I do. When I named a place, he’d say, yeah, over on the corner of such and such, my friend Tim works there. And I was naming places all over the city. So that should work out well.
We’re going to a St. Louis Cardinals game, then coming back to my house to shower and change. Our driver will meet us then. I’ll let you know how it goes. Thanks for reading.
Peer to Peer Lending with Prosper
Posted by: Todd Metheny in Business Profiles, Value Investing on July 28th, 2009
I don't know...do you think these gents are good for it?
Since I recently wrote a couple of posts about Lending Club, I thought I would look at Prosper, one of the other big players in the Peer to Peer Lending space. Prosper is built on the same concept as Lending Club. People who need money borrow it from regular people instead of banks. People who have extra money can invest it in loans to the people that need money, and in return can get a better rate of return than they could have gotten from their bank.
Prosper and Lending Club won’t be the last internet players to enter this space. They’ll be the pioneers that are paving the way with a short lived, small competitive advantage based on longevity and name recognition. Once the kinks are worked out, the market is going to be flooded with these types of sites, assuming that it’s a success. I predict it will be. It makes sense to me, and it’s the type of movement that people like to be a part of.
I had unanswered questions and unanswered emails from Lending Club, so before I wrote this post I emailed Prosper to ask a few questions that were raised by a commenter named Patrick on my Lending Club post. Patrick’s questions were concerning Missouri’s approved status as a state. I’m pretty sure all 50 states will eventually be approved in both cases. So far, Prosper has 17 approved states, and their goal is to be approved in 25 states by September (according to their email).
Like Lending Club, they’ve been approved by Federal Regulators and now have to go through the process of becoming approved with the appropriate regulatory bodies in each state. This process takes a considerable amount of time in some cases, but I assume that both companies are working on it. I’m a little sour towards Lending Club because I emailed Rob from their company after he left a comment on my blog and got no response. When I emailed Prosper asking for the same info, I got a same day response. Here’s a blog post on what Prosper is doing as far as the regulatory process goes.
Prosper is a little different as far as the system of setting interest rates goes. You can actually place a bid based on what interest rate you are willing to lend at, and so are others, and interest rates are moved in that way, through an auction process. Lenders compete for the loan and by doing so, bid down the interest rate on the loan.
I think we can only expect Peer to Peer Lending to get bigger. I don’t have a recommendation as to investing with Lending Club or Prosper. They’re both fine options. Lending Club boasts of slightly higher average returns (9.61%) than Prosper’s (just over 7%, in A and B loans), but Prosper’s auction system appears to be a little better one for borrowers, and therefore maybe that’s where all the most credit worthy borrowers will end up. I don’t know. I think it’s a good place to have a little of your money. More than anything else, whether they make money or not, I love ideas. I especially love ideas that aren’t pursued in the name of money, but because they make sense. Sometimes those ideas end up making people money, anyway. If you have experiences with Prosper, or an opinion as to why one would be better than another, I’d love to hear about it by email or in the comments. Thanks for reading.
3 Tips on Buying a Car
Posted by: Todd Metheny in Frugal Living, Managing Finances on July 27th, 2009
I really don’t know much about cars. I’m somewhat ashamed of this. My dad owned a construction company (and his dad before him), and they knew a lot about cars. They were the kind of guys that could fix anything. My dad used to buy the oldest, cheapest dump trucks available and then find a way to get them running for whatever upcoming job he needed them for. The company had its own in house mechanic, but my dad ended up doing his share of mechanic work in a pinch.
One thing I truly regret in life is not learning more of the things my dad knew. I don’t think I’m unique in this regard. I know lots of guys whose dads know a lot more about things like that than they do. In some ways, I didn’t try to learn enough about what he knew because I assumed that he’d be around to do those things.
There are some other things, besides working on cars, that I think I’m actually pretty good at. I’m a pretty decent consumer. I’m pretty good at not making impulse purchases, I’m good at trying to learn things from people now (having learned from my own early mistakes), and I believe I’m good with money.
So while I probably couldn’t fix your car if it were broke (besides a jump, tire change, or oil change), I think I can give you some decent advice about how to buy one. I also have the benefit of hindsight, having just bought a car last November. Here are some of the things I feel like I picked up along the way:
1. Financing – If you can help it, you should avoid ever borrowing money to buy a car. It’s just not something that makes financial sense. It’s important to know the difference between an asset and a liability. Cars are liabilities that depreciate quickly. Anytime you buy a car you’re buying something that’s going to be worth less than what you paid for it in the very near future. You’re paying interest on something that you’ll never see your money on.
So how to handle this dilemma? I think the best way, if you don’t have gobs of cash lying around, is to have a little foresight. Decide what your approximate price range is on a car you intend to buy, then calculate what your payment will be at market interest rates on consumer goods. Then pay yourself that payment each month (or more if you can) into an interest bearing account. Don’t buy the car until you’ve made the payments. Then, instead of paying interest on your purchase, you’ll be earning interest on the money you’re saving. Of course, if you’re car breaks down and you can’t wait, you might have to break this resolve. Still, if you start saving for your next car in a “car fund,” you shouldn’t have to use much (or any) credit on your next automobile purchase.
If you do have to use credit (if you have a car that runs, you don’t), it’s usually better not to finance with a dealership. Focus on getting the lowest interest rate possible. If you belong to a credit union start there. Take the time to shop around.
2. Research – One of the most important tools you have at your disposal is your ability to research. I would suggest Consumer Reports as a starting point. Use their reliability ratings to determine what the major or minor problems have been for a particular make, model and year of car. I love Consumer Reports in general, but the car reliability ranking is some of the best work they do.
A couple of other tools that wouldn’t hurt to consult are the Kelly Blue Book values (for an approximate value for what a car should sell for in a particular condition), and Carfax reports (or other vehicle history report), if you’re planning on buying a used car.
3. You don’t have to buy from a dealer. There are reasons to buy from a dealer. If it’s a relative or family friend, maybe that’s who you should buy from for relationship purposes. If it’s someone that regularly patronizes your business, maybe it’s important to reciprocate to preserve your business arrangement. Buying for a dealer can have some other advantages as well, such as warranties (which have value of their own).
If you are going to buy from a dealer, shop online first. These prices are often close to the lowest you can get from a dealer. This is because these are prices that are designed to get you into the door. I would print out the price and take it into the dealership. Make this the new starting point. Sales people will hate this, because it takes a lot of their rope away. When I was shopping for a car, my wife and I found a price a dealer had posted on eBay. We went to the dealership and negotiated a bit on price. They ended up giving us what they told us was their rock bottom price. We told them we thought we saw it for cheaper than that online, and they told us we were mistaken. We went home and checked and we were right. Their “rock bottom” price was about $900 than the internet price. We didn’t end up buying from a dealer, but if you’re going to visit a dealership, print that thing out and surprise them with it sometime during the negotiation.
All things being equal, you can probably get a better deal buying from an individual. The individual has much lower overhead – they don’t lease land for their dealership, don’t pay a commission to salespeople, a support staff, etc. On top of that, they might have another significant reason or motivation to sell. And on top of that, they might price their goods inefficiently. A private seller can still get more money selling it to you at a cheaper price than a dealer.
Those are my tips. We bought our car from a private seller we found on Craigslist. It was (still is) a 2004 Toyota Camry with one previous owner (two total) and just under 50,000 miles on it. The Bluebook value was listed at $14,800. We bought it for exactly $11,000. We found almost the same car at a dealership for a lot more. If you have tips on car buying or car buying experiences you’d like to share, please let me know by email or in the comments. Thanks for reading.
Break Your Routine
Posted by: Todd Metheny in Careers on July 24th, 2009
Something I'd like to do in life.
I’m a pretty big baseball fan. I have been since I was pretty small. I used to look forward to little league practice the way I look forward to a day off work now. Only five more days until practice! When we’d have a rain out, you’d have to pry my heart off the floor. In the major leagues, sometimes when a team is losing, they’ll fire the manager. They’ll still have the same players that lost all their games, but a new manager will bring with him a new way of doing things. Maybe you practice at a different time, or he plays different players. Sometimes it seems like the players play harder to try to re-earn a place in the new coach’s heart. In any case, sometimes a team is in a rut, and the organization just feels like they need to change something.
In a lot of ways, I think I was sort of in a rut recently. Before we moved to St. Louis, I had sort of fallen into a routine. It wasn’t a bad life. I would come home from work each day, eat dinner, turn on the tv and write my blog on the couch. A lot of the time I had my wife beside me. We went out sometimes, though a lot of the time I sort of dreaded going out because it was so much easier to stay in. We had people we liked to go out with, and I’d have fun once I was out, but I’d have to sort of force myself to go, because I was so ingrained in my routine.
I’ve used moving to St. Louis as an excuse to try to change things I’d like to change. For instance, there are some basic things that I’ve always wanted to do. There are also some things that I used to enjoy that I haven’t done in a long time that I used to really enjoy.
In some ways, I used the move as a crutch. I put some things off that I probably should have been doing all along, telling myself that I would start when I got to St. Louis. When you do that, you sort of put your life on hold, and I shouldn’t have done that. You have to live right now, because who knows what’s going to happen.
Some things I’d like to do:
Buy a bike (and ride it!), have a weekly poker game at my house (I just had the first one tonight – it was a lot of fun, and I met a new person), play more golf, take a martial arts class, improve on my guitar, learn a foreign language, get my CFA (just for fun and to be a better blogger;), run in the morning before work, pursue a particular business idea that I think is a good one, pursue a particular investment idea that I think is a particularly good one, join a charitable organization, be involved in my community (try to make something better), raft down the Colorado River through the Grand Canyon, play volleyball, and cook more. That’s just a random sample, but they’re all things I want to do. I’ve read before that when you write something down you’re more likely to do it. Not only did I write it down, but I published it to my readers, which in a way is difficult for me, because I hate to admit not being good at things;)
If there’s something you’ve always wanted to do, think about how you could be doing it. Write it down. In fact, I’d love it if you left it in the comments or emailed it to me. Do something! If you’d like to take a trip, or learn a new skill, or do something different in your life – write down the path about how to get there. It can be something small. Decide how you can get on that path right now. What is the first step? What can you do immediately that will bring you just a little closer or prepare you to get closer to your goal? I’ll try to pursue the things I’d like to do if you will. Good luck and thanks for reading.
Having a New House
Posted by: Todd Metheny in Frugal Living, Managing Finances, Real Estate on July 22nd, 2009
Taken from our back deck, that pond has fish in it.
We went from about 800 square feet to about 1450 square feet not counting the basement. We lost half a bathroom in the process, somehow (we still have two toilets but now we only have one shower, in a bathroom half the size of the two bathrooms we had before). We gained another unit of about the same size and a couple new tenants.
We absolutely love the new place, but having it has made it harder to control our spending than before. For one, any time you move into a place that’s bigger than where you lived before, you have to fight the desire to fill it up with stuff. We’re not planning on buying new furniture, but our bedroom is pretty big and we’re talking about moving up to a king size bed.
We also have spent more money on consumer oriented goods recently. All of them have been for me, so I don’t have anyone to point at but myself. I’m typing on the most expensive of those purchases as we speak. We talked about just getting a desktop and a netbook, but I was seduced when the salesperson started showing me all the nifty stuff the mac could do.
On top of that, our new home is over 100 years old, and there are plenty of things we’d like to do with it. We have a brand new back deck that we’re going to buy patio furniture for. We’re probably going to buy a potted tree for the front one (the best place to sit and watch the world go by). We have a spot picked out for a home gym in the basement that will require buying several things (a good pair of running shoes is still the cheapest way to get in shape!), though I think it will get more use and save more money than a gym membership, so that should pay off. Read my friend Josh’s comments on the home gym. I’m finally in a place where I can take his advice on constructing my home gym.
Living so close to a park has also really made me want to get a bike. My wife already told me that if I get one, she gets one. Numerous other projects have popped up, including adding a shower to the bathroom that doesn’t have one. All of these things will cost money.
Making things more difficult is the fact that Rachel’s making money now. I think, in some ways, it’s given us a false sense of security. We need to revisit our budget and try to see where all the things we want to do fit in. It’s getting too easy to justify purchases lately. I think it’s good to have to wait for things for awhile. You avoid impulse spending and are less likely to experience buyer’s remorse.
My point is that it’s easy to spend a lot of money when you buy a new house. The thing is, you probably just spent a lot of money buying the house to begin with and should probably be focused on how you’re going to pay that back instead of how much stuff you can get to shove into it. Try to keep that in mind. We’ll try if you try. Thanks for reading.
On a totally unrelated note, I’ve been getting a tremendous amount of comment spam. It’s getting to the point that I’m afraid I might have to add one of those ‘are you human’ boxes to the site. I’m somewhat afraid that would discourage commenting. I know that I sometimes feel compelled to comment on something and then don’t if it ends up being too much trouble. If you read this blog (or others) and have an opinion, I’d love to hear from you by email or in the comments.
Some Legal Types of Eviction
Posted by: Todd Metheny in Real Estate on July 21st, 2009
Since we just moved into our new home, we have brand new tenants living below us. They’re people we didn’t choose, and that we’d never met until just a few days ago. I’m happy to say that they seem to be a better fit than we’d likely find on our own. He’s a fourth year resident at Saint Louis University, and she’s a nurse who’s temporarily staying home with their two young children. They’re a cute family, and they seem very nice. I’m confident they’ll be good tenants for as long as they decide to stay.
We’ve been lucky in recent years when it comes to tenants in our other rental property as well. We’ve had the same tenants for about three years in that property. They rarely ask for anything, and usually fix things on their own when things need to be fixed. They pay their rent on time, and I almost never hear a peep out of them. That property has been around 6 driving hours away from us for the last 4 years – now we’re around two hours from it. So that’s another nice thing about moving to StL.
Having two sets of tenants has the “worst case scenario” part of my mind working hard, though. What if they default and refuse to pay? What if they both break their leases and move out? What if both places stay empty for extended periods of time, and we’re stuck paying the extra mortgage/taxes/insurance with no income to show for it? What if I have to evict someone (I have once)?
I’d like to briefly digress into a little bit of land ownership theory. I think one of the most difficult jobs the government has is trying to decide who to help. I typically trumpet a free market view point, but if you’re making the law too beneficial for landowners it puts them in a position where they can potentially mistreat tenants, especially in poorer housing situations. If I mistreated my tenants, they would just go somewhere else. My location in St. Louis has lots of available housing. It’s a desirable area to live near a popular park and lots of popular restaurants, but they could find another place to live, and, if they had to, spend more money. Not every tenant is in such a powerful bargaining position.
Do you make it easy for the tenant to force the landlord to do things? Or do you let the landlord do what he will and let the market for housing play out? One of the difficult things about letting the free market decide questions like these is that it could potentially leave some people without homes, or without a refrigerator that works, or plumbing, etc.
Turning back to the actual subject of the post, what are the general types of eviction? This isn’t a how to (though that might be a good idea for a later post), but rather just a primer on eviction in general. There are four basic types:
1. Actual – For an actual eviction to occur, the landlord must wrongfully keep the tenant from having physical possession of the property they’re leasing. The landlord has to physically exclude the tenant from the property. If the tenant is kept out of part of the property, it’s an actual eviction. Ex. the landlord changes the locks while the tenant is away.
2. Constructive – This occurs when the landlord’s bad acts keep the tenant from being able to benefit from being able to use and enjoy the property. There’s a catch to this one, though. The tenant has to leave the property to be able to claim that he or she is a victim of constructive eviction. I think an example of this might be if the landlord refused to fix the only toilet and the tenant moved out. In either constructive or actual eviction, I believe the tenant would have a right to quit paying rent (as always, I’m not your attorney – get legal advice from someone licensed in your jurisdiction).
3. Retaliatory – This basically is a doctrine that states that if a landlord can be required to do something by the tenant, like fix something, the landlord can’t then evict the tenant for the tenant’s decision to report the landlord for doing whatever it is that he or she did that isn’t in compliance with a housing or other authority.
4. Self-help – most jurisdictions have statutes in place that require that a landlord use a judicial type of eviction to get rid of his or her tenants. A couple states allow you to use self-help to get the tenant out of your house (like changing the locks when the tenants are away). The risk, for landlords, is that while the eviction process is underway, the tenants could be trashing the place. You don’t want to walk into a place you just evicted a tenant from without a Hazmat suit on. Even the states that allow self-help require that it be peaceful. There aren’t any wild west provisions out there that allow you to physically throw the tenants out of your house.
Do you notice anything about those types of eviction? I don’t know about you, but I would say they’re set forth in a way that is designed to protect the tenant (and not the landlord). Sure, a landlord can go through a judical eviction procedure, where the Sheriff goes over to the house and asks the people to leave, but by the time you’ve given the tenant notice and gone through the procedure, your house might be in substantially worse shape than before.
Then again, tenants need to be protected from “slumlords” who let their property go to waste. It’s a fine line, and one I don’t know exactly where I come down on. As a landlord myself, I want to be protected, but I also don’t want people in a less advantageous position to be taken advantage of.
I usually fight the urge to write about things like this. If this bored you to tears, let me know by email or in the comments. In any case, I’ll try to do better tomorrow. Thanks for reading.
Lending Club Update
Posted by: Todd Metheny in Value Investing on July 20th, 2009
I recently wrote a post about peer to peer lending with Lending Club. A reader astutely pointed out that Missouri is not one of the approved states for Lending Club. I live in Missouri. Lending Club, allowed me to sign up and funded my account. When I clicked invest, a box popped up asking that I check the box stating that I live in an approved state. The box stated:
The Notes are presently being offered and sold solely to residents of the states of California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Louisiana, Minnesota, Mississippi, Montana, New Hampshire, Nevada, New York, Rhode Island, South Carolina, South Dakota, Utah, Virginia, Washington, Wisconsin, West Virginia, and Wyoming, and are not presently being offered or sold to residents of any other state, the District of Columbia, any other territory or possession of the United States, or any foreign country.
This is easy enough to get around if you wanted to. They make it incredibly easy though. They just ask that you check the box. That’s the only checks and balances system.
Patrick, a reader, asked whether we could be subjected to any legal penalties or audits for investing. I don’t know the answer to this, and I don’t want to give anyone legal advice. My gut reaction is no. Since I don’t know the answer, I emailed my contact person at Lending Club. Her name was Meredith. She sent me this email 5 days ago:
Dear Todd,
I hope you are doing well. I wanted to touch base with you about your investing at LendingClub, and let you know that I am available to offer you personalized assistance. If you have any questions about your account or investing experience, I would be happy to answer them for you.
As you know, Lending Club notes are a high-performing alternative to traditional investments available in the market today, with investors averaging over 9% net annualized returns after fees.
In addition, I am delighted to share that The Harvard Business Review named Lending Club one of the top 20 Breakthrough Business Ideas of 2009: http://hbr.harvardbusiness.org/web/2009/hbr-list/forget-citibank-borrow-from-bob
We have a number of new developments underway. I’m very excited about some of the upcoming options for investors. Please feel free contact me to learn more.
Do not hesitate to reach me anytime directly at (408) 524-3069 with any questions, suggestions, and requests. I look forward to hearing from you.
Warm regards,
Meredith
Meredith Kramon
Investment Services
Lending Club
440 N Wolfe Road
Sunnyvale, CA 94085
www.lendingclub.com
(408) 524-3069Lending Club: One of the Top 20 Breakthrough ideas for 2009 –Harvard Business Review
Notes offered by prospectus filed with the SEC:
https://www.lendingclub.com/info/prospectus.action
I immediately responded with an email explaining that one of my readers had mentioned to me that he was concerned about Missouri not being an approved state. Of course, you can still buy notes through Lending Club’s Note Trading Platform. This means you can buy notes from other members that they don’t want anymore.
I also left a comment on the Lending Club blog on a post by Rob Garcia, asking him whether I could incur any legal penalty, and if so, what, if I invest anyway. I also asked him about this on twitter @robgarciasj. No response in any of the three cases. I’m trying to find the answer. I am pretty sure I could proceed and nothing would happen, but I would think they would have a standard response ready, telling me that I shouldn’t invest. I would, at a minimum, expect a response saying that they can’t give me legal advice, and that I should consult my attorney (who would of course probably discourage me from investing – if I wasn’t my attorney;)).
I really just want to know exactly what it means when they say they are only approved in certain states. Does that mean they can get in trouble for allowing me to invest? Or does that mean I can get in trouble for investing? I think it would be practically impossible to regulate this – I guess the state Attorney General could file an injunction against Lending Club to keep them from allowing Missourians to sign up – but they wouldn’t do this unless they decided Lending Club was dangerous to consumers in Missouri – they have enough to do already.
Anyway, how about a response Lending Club? I’ll let all of you know the scoop as soon as I do. I haven’t checked the box…yet. Thanks for reading.
Getting on Your Feet
Posted by: Todd Metheny in Careers on July 16th, 2009
I feel like I’m always receiving career advice…and I love it. I love hearing people tell me what their perspective is on how to be successful in this world, whether it’s based on something they have done or something they would do a bit differently if they could take it back. I like hearing this advice, because I’m still sort of trying to figure out where I’m trying to go and how I’m going to get there. I like hearing other people’s insights. Advice is usually very hard to take. People giving it were typically in different situations than you were, in different time periods, perhaps with different goals and values.
For instance, one distinction Penelope Trunk makes (again and again) between Baby Boomers and Generation Y, is that Generation Y job hops, while Baby Boomers would be more likely to stay at the same time for their entire career. So with regard to when and how to move jobs, a Baby Boomer’s advice might be skewed toward his or her own experience.
I got a piece of advice from an experienced attorney when I was still a law student. He said, (and I paraphrase), “Early in your career, get on your feet as much as you possibly can.” He meant as a lawyer, the early experience you get standing up and talking in court, for whatever reason, will help you for the rest of your career. Getting on your feet in court is scary when you’re young and inexperienced (I would know). It pushes you outside your natural comfort zone. Being pushed out of your natural comfort zone is good for your career and personal growth.
This week, I’m at a trial training seminar that’s actually pretty intense. I’ve spent a lot of time on my feet, in a courtroom, in front of real judges, doing openings, closings, directs and crosses. It’s been a good experience.
Obviously, not everyone that reads this blog is a lawyer. As far as a I know, most of my readers aren’t lawyers. So ‘get on your feet’ might not be excellent advice for you at this point of your life. You’ll have to figure out what getting on your feet is in your chosen profession. What experiences scare you that can help you learn things you need to know to get where you want to go?
I think the key is that you need to do things that are difficult. You need to step outside your comfort zone on a regular basis. You need to keep learning. Turn your weaknesses into competencies, and your talents into legitimate strengths. That’s all I’ve got for today. I need to prepare for tomorrow’s closing argument;) Thanks for reading.
The Personal Finance Playbook was included in this weeks Money Hacks Carnival posted over at the Money Beagle. Money Beagle is a good personal finance blog. Check it out while you’re over there.
Do Better Next Time
Posted by: Todd Metheny in Real Estate on July 15th, 2009
My wife and I just closed on our new multi-family. I am out of town for work this week, writing this in the comfort of my hotel room, but when I go back to St. Louis, I’ll be going home to our new place instead of the place we’ve been subletting. It’s an exciting feeling. Meanwhile, most of the responsibility for getting things going at our new place have fallen on my wife (as so many things have throughout this process). It’s just one of those twisted coincidences that I end up out of town the week we close on our place.
Looking back on the process, there are some things I think we did well. We stayed conservative about what we could afford. We got a property capable of producing revenue of 10% of the purchase price annually if fully occupied. At the same time, there are a lot of things that I would do a differently, too. For instance, a couple of weeks before closing, I mentioned to my wife that it was important to me that the sellers leave the basement completely empty (it was packed full of stuff when we saw the house). She communicated this to our realtor, who told her, “there’s really not much you can do about that.” (I’m not crazy about our StL realtors professionalism or advocacy – but I have a great Kansas City realtor if anyone in that area ever needs a recommendation).
Rachel told me that our realtor said that there was nothing we can do about making sure they empty the house completely. I disagreed, and sent our realtor a note saying that if the house was not empty to our satisfaction at the time of our final walk through, we wouldn’t sign at closing.
Our realtor then wrote me telling me that if we didn’t sign as scheduled (our realtor isn’t crazy about me, either), then we would be in breach of contract and we would need to consider whether it was worth it to us to proceed under those circumstances.
As a practical matter, being in breach of contract means nothing until someone actually files a suit. If that had happened for some reason, they would have to explain to the judge how they were damaged and demonstrate they had a claim to survive a motion to dismiss. I think a judge would find it unreasonable if we asked them to remove their personal property and they filed a breach of contract suit against us. At the very least, a mediation likely would have been ordered. For one, closings get pushed back all the time for all kinds of reasons. Further, it would likely be cheaper for the sellers (two non-lawyers) to simply have their excess stuff removed than to pay the cost of prosecuting a breach of contract suit. (On the flip side, it would likely be cheaper for us to just hire someone to move it out rather than defend the suit, but I didn’t want to do that;)) I told the realtor all of this (and more). I tried to be polite, but after having several problems with this realtor throughout the process (all long stories), I’m not sure I came off that way. I hope I wasn’t too bad.
In any case, if that was something that was important to us, we should have put it in our initial offer. It’s the kind of tack on language that gets thrown in to contracts all the time. ”Seller agrees to remove all personal property before closing unless specifically identified and agreed to in this document or in an addendum to this contract.” The seller is worried about getting the best possible price. The seller typically isn’t going to balk at this kind of language in an offer. It would have been easy to do and would have protected our interest in this particular circumstance. That was my mistake.
Ultimately, this did not end up being an issue. The sellers got their stuff out. They were the kind of people that took good care of their house, and were nice enough to leave the place nice and (mostly) empty for us. Even when we were having this back and forth dispute with the realtor, my wife and I suspected this based on having met the people that we bought the place from.
All in all, I think we did well with our purchase. We got it at a good price and ended up getting lots of add-ons and throw-ins after the inspection (about 30k worth of extra, necessary upgrades). From a negotiation standpoint, however, I think a buyer should add in lots of extras into the initial offers. It’s easy to focus only on price (that’s what the average realtor would like you to do, because that makes their life easier). If you ask for lots of things and the sellers focus on price because the add-ons seem small, you might end up getting a better deal overall. In any case, if it’s your first opportunity to make an offer, I would put in all the things that help optimize your the property to fit your needs, especially in a down market (like this one). If you have a negotiation story, or another perspective, I would love to hear it (via comments or email). Best of luck, and thanks for reading.
Staying Hungry and Foolish
Posted by: Todd Metheny in Careers on July 12th, 2009
In 2005, Steve Jobs gave the commencement speech at Stanford University. It’s an excellent speech, and you should consider watching it or reading the entire script. He’s an interesting guy. One of my favorite parts of his story is that he was actually fired from Apple (AAPL), the company he started, by Apple’s board. He went on to start a couple of other companies, including one that was eventually bought by Apple (Next) and helped fuel their rejuvenation (the other was Pixar, which is now owned by Disney [DIS] – Jobs is actually Disney’s largest shareholder). Apple really bounced back when he took the reins back. He ended his speech with the sendoff, “Stay hungry. Stay foolish.”
The other day, I was reminded of those words while talking to a good friend of mine. My friend lives in New York, and is trying to survive as an actor. He’s had some early success, but things have been pretty slow since summer started. He makes plenty of money doing other things, and survival hasn’t been a problem. When we talk, I tend to try to brainstorm about things he might like to do on the side while still pursuing acting. I tend to try to find something that would allow him to make good money while he waits for things to pick back up.
But for him ideas and jobs aren’t the problem. He has been offered several opportunities (even now, in this economy) that would be lucrative. He’s a talented guy. There are lots of things he could do. After one of my suggestions, he stopped me. The problem with that, he told me, is that if I were making that amount of money, I don’t think I would be able to stay hungry enough to put up with the life you have to live as an actor.
I really liked the way he framed that. He started telling me horror stories about what you’re sometimes expected to do at auditions. Most of the things were things that I don’t think I would do. I’m not hungry enough. It’s an excellent point, and the one Jobs was trying to make. My friend is trying to do what he loves and believes in. In Jobs speech, he says, “the only way to do great work, is to do something you love.”
Eventually, people reach a point where they have all the money they need. At that point, they could easily just keep doing what they’re doing. Carve out a living and go about their business. If you have a dream, though, like my friend, you can’t just get up and drift from day to day. You have to be hungry to chase success under those circumstances.
I think the advice, “stay foolish” comes into play as well. Because he’s doing something that someone else might view as foolish. He’s living a more difficult life than he has to in order to pursue what he wants to do with his life. I don’t think it’s much different than the entrepreneur who loses everything and claws his way back towards success. It’s a big, difficult undertaking. So difficult that only someone really hungry could succeed under those circumstances.
All of this has made me wonder, am I hungry enough to succeed? Am I growing complacent? What am I doing to make sure I keep pushing? Are you doing anything to ensure you haven’t grown complacent? Are you staying hungry and foolish? I hope you are. Good luck and thanks for reading.
