Neville's Financial Blog

A powerful quote I've heard from many sucessful people comes from Warren Buffet:

"Be fearful when others are greedy. Be greedy when others are fearful."
Source I heard it from: TheKirkReport

I've recently spoke about how I'm buying a house, and about to get financing for it. Well I'm doing a double take after really looking into this. I have no doubt the area I'm buying in will be developed like crazy in the coming years, but there's a little problem lately: All those financing problems in the sub-prime market.

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I look at it this way:

There's currently huge problems in the financing world, many lenders are going bankrupt (even some big ones) and the last few years have been a lending-spree for them, meaning people that really shouldn't have got large loans were getting them with ease. This obviously means almost anyone interested in buying a home could. Which means increased home demand, which means increased prices.

So at the very height of these years of steadily increasing prices and easy lending practices, I'm actually BUYING right now??? Hmmm...

What I'm trying to say is that some of these people with wacky loans will eventually fall....and that means foreclosure. I feel I'd rather hold onto my cash right now and scoop up a home in a year or two when others start getting desperate to sell.

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A family friend of mine who I highly admire for his real estate accumen through the decads sold almost ALL his holdings about 2-3 years ago, when things started getting really hot. I asked why he sold everything, because ever since I've known him he's had multiple holdings and deals concurrently going.

He said, "I'm waiting till 2008 or 2009 when all the foreclosures start happening." Keep in mind he told me this about 3 years ago.

I see what he's talking about now. The way this man has made his wealth is by getting DEALS. I'm getting pretty much a standard rate on this new homes, not even a "decent" deal, and definitely not a bargain price.

So for now I might be backing out of buying the home. All I had to do was put down $500 for the deposit, and if for some reason I couldn't purchase the house, I get it back. Since the last month they've yanked the financing option I was planning on doing, so because of that, I'll be requesting my $500 check back from Centex and the whole deal is off.

Not a bad learning experience....and this time it was actually free :-)

Labels: Housing

A while back I bought a house, and now it's almost complete and almost time to start figuring out how to pay for it, what to buy for it etc.

I know pretty much nothing about any of this, so it'll be a great learning experience.

It's starting to near completion, and was interesting to watch being built!

Just a plot of land...


Structure in place:


Frame fully up:


Starting to look like a house:


From what I understand I just have to prove to Centex homes that I have about 3 months worth of mortgage payments in the bank and have decent credit, and I can get full approval. Seems almost a little TOO easy for taking a $150,000 loan!

As for the interior and exterior design, I did it all myself....and for that reason, I'm very scared. I'm the LAST person I trust with aesthetic design!

The exterior had to follow an algorithm for the neighborhood, so the house had to be a certain model to properly fit the plot dimensions, and I strictly couldn't have brick since the neighbors on either side already have it. I also had to stick to a certain range of colors for the exterior.

However I did have full control over the interior design, and therefore the first consultation I had was horrible! The lady started asking me what type/color cabinets I wanted and then showed me samples of them. I completely and utterly had no clue what cabinets in a house look like. She then proceeded to ask me what color/style for all the doors, bathrooms, countertops, faucets, appliances, tiles, carpets and the list goes on. It was a rude awakening to how little I knew about designing a house.

I actually cancelled our first appointment halfway through since I clearly knew nothing about this stuff. I should've brought my mom!

So after looking inside other similar houses courtesy of my real estate agent, I finally picked out the interior. I'm anxious to see what it turns out like, and I'm sure I'll be making many, many trips to Home Depot in the following months!

Now to find two roommates...

Labels: Housing

For the past few months I've been renting out a room in a house of a friend. It's in the same neighborhood my house is being built, about 5 miles from Downtown. It's nice, quiet and I can get a lot of work done.

However nice and quiet no longer helps me get work done. When I was in college and needed to study for calculus, nice and quiet was good. Now I do a lot of creative design work and need loud, interesting and stimulating places to do work.

So for the next month I'm living in a 4,000 sq. ft. loft right on 6th Street, the epicenter of Downtown entertainment in Austin. I wrote about this area earlier. This loft is made for SEVEN people, however it's only me and one other person living here.

Here is a photo I took directly off the roof of the place of 6th Street:

This loft is extremely spacious (4,000 sq. ft. is HUGE), and it has 20 ft. ceilings, and is located right above some of the busiest bars in Austin.

I've been living here for a little while, and while it's definitely fun, there are some pros/cons:

PROS:

• I can walk everywhere I need to go, or take my scooter if it's slightly further.
• Tons of coffee shops, restaurants, bars and theaters right next door.
• My gym is 4 blocks down.
• High ceilings make the already large loft look larger and feel more spacious.
• Location, location, location.
• PERFECT for entertaining.
• Rooftop access which offer awesome panoramic views of Downtown.
• Puts me in an interesting and Central area, perfect for product photos.

CONS:

• No free parking for at least 12 square blocks except at night & weekends.
• Homeless people all around during the daytime.
• 6th Street isn't the most attractive thing in the day time, its night time appeal is much larger.

I still have my other rented room, so this is like my '2nd home' for the moment.

Since this is directly in the heart of Downtown, there are all sorts of sights and sounds all the time. I enjoy the noise and commotion that happens outside, so I often keep the doors to the place open. There's a fire station across the street which creates the full Downtown effect with sirens going by every now and then.

This is definitely a place to throw a party since it's very big and you can't beat the location. Checkout some of these panoramic pictures I took on the rooftop. I've been wanting to try some panoramic photography so this was a good chance. These images are a compilation of about 13 photos each which I then stitched together using Photoshop.

Here are some inside views of the loft:

Here is a panormaic from inside the loft. This doesn't properly show the scale of this place:

What the pictures don't show are all of the rooms (7 total) which are all quite large themselves. The building we're in takes up more than half a city block, and we take up the entire top floor.


I'll be taking a lot of BodyMonkey photo shoots in this place, and hopefully the surrounding areas will provide for some interesting photo shoot locations. Speaking of Bodymonkey, I've got the logo animated and it will look something like this:

Labels: Housing

In addition to my other million Bank of America accounts, I've opened up another savings account which I've dubbed the House Account so I can start saving for my new house being built circa November.

I originally wanted to have $8,000 in that account to prepare for buying furniture, TV's, sound system, drapes, blinds, beds etc., but friends who already own houses told me that $5,000 should suffice quite nicely for a house this size.

I've started making contributions to this new House Account by putting 10% of my income in it. I might bump that up at some point if needed. As I mentioned before I'd like to pay for the whole house through one online business, but the initial expenses need to come from somewhere else, and this account is the place.

All my house expenses will begin coming up sometime around October 2007, so I have approximately 6 months to save up the House Account to an acceptable level. Hopefully I can push it far past $5,000 so I can keep some reserve cash laying around for miscellaneous house-related expenses.

Labels: house, Housing

I recently just bought a house which will be completed in October/November, and I have decided to pay for the house entirely from HouseOfRave.com.

It will quite literally be a HouseOfRave House!

I started this business in high school as an eCommerce experiment, and it has lasted since first opening its virtual doors in 2001.

I got serious about HouseOfRave not too long ago, and realized it can make several thousand a month easy. With a little love and care, HouseOfRave was making $6,000+ a month in profit....more than enough to pay for the mortgage and associated costs of a house.

My mortage on the new house will be approximately $1,400/month after tax and HOA fees, and I want this all to come from HouseOfRave (and later on some renters).


PROBLEM:
HouseOfRave has been suffering some growth issues, not from my side by my supplier side. I have also been working like crazy getting this last course done which has distracted me big time from HouseOfRave duties.

During the 2006 Halloween season I had a large increase in orders which the supplier could not handle, and bad things resulted: Chargebacks, angry customers, lots of refunded money and the loss of repeat business.

Then in November 2006 order pace started growing again with the holiday season rolling around and the December rush just compounded that problem. I was happy about the large volume of orders, but the supplier did an awful job of sending out orders and notifying me of problems. LOTS of orders were wrong, had missing items, were late or just plain didn't go out. I also never got the final invoices for those crunch months, meaning I STILL didn't know exactly how much profit was made or lost...not knowing how much money you made tends to be a small problem when doing things like TAXES. I was not happy about this, and it isn't the first time this is happening.

WHAT REALLY GOT TO ME were the empty promises I kept giving (justifiably) angry customers such as "I'll PERSONALLY send your order out today..." and the supplier would not send. I was pissing people off and sometimes just plain scamming them (from their perspective, which is the perspective that matters). Over the last few months I've been refunding money like crazy and found a new supplier who can handle a large load of orders.

If you run a crappy operation, it won't be around for long, and lately that's what HouseOfRave has been until I got the new supplier. Now I get orders, and they send them out....NO EXCUSES IN BETWEEN.

So it's nice to focus back on growing the businesses rather than dealing with unnecessary problems.


THE RESULT:
House Of Rave has experienced a decrease in orders and is going through a big inventory change, meaning all the staple products that used to consistently make money are being shifted around and often completely removed.


THE PLAN:
Over the next 6 months I want to rebuild the HouseOfRave reputation and start making $5,000+ per month again. I also want to save between now and November approximately $8,000 for spending on the new house for all those home-associated costs like furniture, washer/dryer, fridge, hardwood floors, new fixtures. Basically all that stuff I used to ignore when my parents bought, I now understand!

I want HouseOfRave.com to quite literally pay for my entire house. It'll be nice to have just ONE side businesses covering the expenses.

I predict getting HouseOfRave back to the $5,000+ mark will take 3 months. With the new supplier I have to change around all aspects of the businesses including the whole inventory, accounting system, ordering method, shipping prices and genre of products.

$5,000/month will be an attainable but difficult goal for 3 months time, as for the first time in 6 years, HouseOfRave might go into a loss this month!


On another note: I still have never been to a rave.

Labels: house, house of rave, Housing

That's right, I bought a house.

Technically the house is still just a plot of land with the builders temporary office and a large trash bin on it...but it's MY plot of land.

I put down a $500 deposit and instructed the builder (Centex Homes) to build it far out as possible, so I won't be moving in the new house till around November 2007.

The plot I bought was the last one in the entire neighborhood (71 and Riverside in Austin, TX.). It's on a cul-d-sac and is an oversized lot so I'll have a bigass backyard.

SUPPOSE SOMETHING GOES WRONG and I don't end up wanting the house, I basically get my deposit back from Centex. However I can also sell the contract to someone else and make a nice 4-figure profit as the demand for space in the neighborhood is very high.

The cool thing is this community is strictly no-investors, so the demand for these homes is not coming from people just trying to flip the homes or rent them out, which is a sign that a bubble is not driving the prices, but just shear population growth (Austin is growing like crazy).

The reason this neighborhood had such great prices is because it's in a relatively unknown area. However there are 4 major projects around the neighborhood under construction (and nearing completion), and a brand new highway with an exit/entrance right near by. It's also only 5 miles away from Downtown.

There is nowhere to buy a house in Austin for $148,000 with that proximity to Downtown.

This is a bad Photoshop rendition of what the brand new house will look like. In actuality it will look much like that house on the right.

Me on my swath land (and an industrial receptacle in the background):

Move in date: November 2007
First Payment: October 2007
Price: Roughly $148,000 + additional features.
House: One story, 4 bedrooms, roughly 1,500 sq. ft.

One room will be my bedroom, one room will be an office, and two rooms will be rented out. There are 3 very large high tech companies not even a mile from the house, so I can pretty easily find some other young professionals to rent to.

Hopefully this turns out to be a good financial move in the long run, I have a feeling it will with the amount of development happening around here! I also have 8 months before I have to start paying for anything, which means I can get proper finances in place for the mortgage and start saving for all those expensive things associated with home ownership (furniture / tools / TV / bedroom sets etc. etc...).

Labels: Financial, house, Housing

School is out till the 31st of August, meaning I have about two weeks to concentrate on business projects big and small. It's time to stop spending time on school and start dedicating full days to business projects.

I've also moved out of my old apartment......

.....and moved into a bigger, 2-storey apartment on the lake. I'm less than half a mile from the freeway, and I still get great views like this from my balcony:

So far I plan on spending $0.00 on furniture. Our living room is already stocked, and I'm not too picky about what's in my room. I'm an awful decorator anyway.

I'm hoping to score a free mattress somewhere around Austin, so I've been cruising CraigsList quite often. I might eventually take a trip to WalMart or Fry's for a small computer desk, but for now I'm going to play it cheap.

The lake is a 10 second walk out my door, and I met my new neighbors, these gooses and ducks!

The move hasn't been bad so far. One of my roommates has a hookup for free moving trucks, so we've spent literally nothing the entire time.

Labels: Housing

One thing important to me right now is mobility. I am graduating pretty soon, and if an opportunity arises in a different state, or even a different country, can I attend to it easily?

I recently moved to a larger apartment right across the hall from my old one, and the simple move took much longer than expected. Since then I have got rid of some "junk" and started to unload some more bulky items like my monitors (I'm selling them on Ebay). My plan is to fit all of my posessions in two suitcases.

A drawback to this is a rather boringly decorated room:

Not winning any "best-decorated" reviews eh? After I send my guitars and piano back home, the only bulky thing I will own are my speakers. I am a high-quality-sound-fanatic and can't yet part with my THX certified Klipsch speakers, no matter how many neighbors they annoy!

Other than that, I can pack up my clothes and Tablet PC and leave town whenever I want.

Labels: Housing, Productivity

This blog will be dedicated to tracking my financial progress. Today I turn 22, let's see how far I can financially advance by the time I am 23.

Labels: Blogging, business ideas, eCommerce, Events, Financial, Goals, house of rave, Housing, Learning, Links, Meeting CEO's, Money Experiments, Personal, Productivity, Quotes, Transportation