Income for Life

Could an "ugly" notebook change your life?

Recently I realized that some very famous and/or wealthy people share a very unusual commonality. This commonality is "journaling." Journaling is defined by the Free Dictionary as...

"A personal record of occurrences, experiences, and reflections kept on a regular basis; a diary."

Now I realize this might sound a little foo-foo to some.

However, you might be surprised to know that Richard Branson, Oprah Winfrey, Michael Masterson and Jim Rohn are all known journalers. Jim Rohn's reasoning was as follows:

"Life rewards the serious student."

In fact, Jim Rohn used to spend a lot of money on high-quality leather journals. He was onced asked, "Why do you spend so much on an empty book?" His reply, "I intend to put something very valuable inside." I sure do miss Jim. Here's a picture I had taken with him several years ago:


Most people think of journaling as writing daily in a diary. This could be one use of a journal, but there are several more ways that journaling may transform your life. Here are ways you might use journaling to your advantage:

1. To track your progress towards goals you've set for yourself. In Michael Mastersons recent book, "The Pledge" he shared that he journals daily. One of the things he tracks monthly in his journal is his net worth. The reason why is because he knows that what you measure improves. By consistently tracking his net worth in his journal, he is able to make better decisions that lead him closer to his financial goals.

2. Keep a record of great business or investing ideas. If you're like me, you come across great business and investing ideas on a routine basis. Unfortunately these great ideas slip through our fingers if we don't write them down and review them regularly.

3. Sort out problems or challenges. Facing a big problem in your life? Spend some time writing about it in your journal. List everything you can do to improve the situation and track your progress.  I promise this little process will relieve a ton of stress and keep you focused on progress.

4. Document mistakes made and lessons learned. It's obviously not a good idea to make the same mistake twice. You can use a journal to detail mistakes you've made and what you've learned from these mistakes. More importantly, you can make notes about how you can prevent this mistake from happening again.

5. Record things you want to teach your children. Our main job as parents is to prepare our children for adulthood. This isn't an easy task. I've found it helpful to document lessons I want my children to learn before they're on their own. I also list various ideas that I might be able to use to help them learn the particular lesson.

6. List things you want to do in your life (aka...your bucket list). What do you want to do? Where do you want to go? What to you want to see? What do you want to learn? Use your journal to document all of these things and make sure you review them regularly. You don't want to get to the end of your life and regret something on one these lists.

7. Capture special life moments. One of the coolest benefits of journaling is what you leave behind for your family. Your children, grand children and great grandchildren will be able to read your journals and "see" who you were as a person. They'll be able to relive your special moments. More importantly, they can learn from what you share in your journal. Maybe, think of your journal as a "Life Book", which may help future generations.

8. Detail quotes that inspire you. Wouldn't it be cool to have one place to record every inspirational quote  you read? Guess what, simply add them to your jounral and you can quickly get your hands on them when needed!

There are numerous ways you can use a journal to enhance and improve your life. The trick is to just get started. You don't need an expensive journal like Jim Rohn used. You can simply use a spiral notebook like this one I used to detail all of the lessons I learned from the real estate market crash and the "great" recession.

Or you can open a new document in Microsoft Word, or a Google Document and use it as your journal. The type of journal you ulimately use  doesn't matter.

What matters is who you become when you journal.

What matters is that you review what you've written periodically and use your journal to your advantage.

A Kid in the Candy Store...

Over the last few years, we've all been bombarded with news stories and predictions about what will happen in the real estate market. As I type this, the real estate market in 2011 is predicted to falter again. Believe it or not, these predictions may not be helpful for you if you're thinking of buying or investing in real estate.

The reason why is because we have a tendancy to make decisions about what we should do after listening to the news or reading a news article. These news stories may lead us to incorrect decisions.

A better option might be to actually get on the street and see what homes are selling for in your area with your own two eyes. Physically walk through homes listed for sale.  This is exactly what I've been doing for the last few weeks. In fact, I've probably walked through 75 homes for sale in our area.

To be perfectly honest, I've been blown away by some of the "deals" available right now.

As an example, I walked through a home listed for sale that was 1,914 square feet, had 4 bedrooms, 2.5 bathrooms, a two car garage, and on top of this, the home was situated on half an acre. The asking price for this home is $80,000.

This is an unbelievable deal.

The asking price per square foot is $41.80. Now, I'm not a home builder, but I would have to think it would cost between $153,000 ($80 per sq. ft.) and $191,400 ($100 a sq. ft.) to have this home built today.

Next I studied recent sales of homes surrounding this one and I found homes that sold in 2010 for $150,000, $175,000, and higher.

Finally, if you're an investor you might apply the 1% rule to see how the property is valued. For the most part, great rental properties typically rent for 1% of their value. Consider these examples:

Market Value of Home $80,000  - Monthly Rent $800 (1% of Market Value)
Market Value of Home $150,000 - Monthly Rent $1,500 (1% of Market Value)
Market Value of Home $200,000 - Monthly Rent $2,000 (1% of Market Value)

You know you've found a good rental property investment when these numbers are in your favor. To find out, start with the extimated monthly rent for the property and see what it would be valued at by working backwards.

This home would rent for $1,300 a month based on its size and location. $1,300/.01 = $130,000

By every measure, this home is a fantastic deal. I cannot understand why it's still available. There is absolutely no way someone buying this home could lose money.

It's really that good.

Let's assume an investor paid cash for this home and planned to keep it for long-term monthly income. Here's how this would look for them:

Annual Rental Income ($1,300 * 12)                         $15,600
Less Annual Property Taxes                                        ($2,800)
Less Repairs/Maintenance/Vacancy                         ($3,500)

Annual Income After Taxes                                        $9,300

Annual Return on Investment                                    11.6%  ($9,300/$80,000)

The investor buying this property would receive an annual return on investment of 10 to 12% after taxes, repairs, maintenance and vacancy costs. This would continue for life. If the real estate market continued to stumble for the next few years, it would have zero impact on this investor because their rental income wouldn't be impacted. Actually rental rates have actually increased since the real estate crash as the demand for rentals has increased.

More importantly, the investor would have an asset that was purchased significantly below value. When the real estate market eventually rebounds, they would have the opportunity to sell the home at a significantly higher price point.

So back to the question, why hasn't this fantastic deal sold?

Well, I guess it's because everyone is fearful because they are bombarded by news storied and predictions on the real estate market. The takeaway from this article is for you to shut off the "noise" about real estate and get out there and walk through some homes for sale.

I'll bet you'll be surprised at some of the deals you find available. I found several homes that were fantastic deals like this one. For someone thinking of buying or investing in real estate, it's like being a kid in the candy store.

By the way, if you'd like to walk through some of the homes I identified as a great deal during my tours, send an email to me at [email protected]. We can schedule a little "candy store" tour for you!