Neville's Financial Blog

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