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Kevin's Thoughts!

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Поскольку так уж вышло, что хозяин нашей площадки Кевин вот уже два года не может найти работу, я стараюсь найти способы поддержать наш семейный бюджет (а не только расшатывать его! 😉 ) именно поэтому я предложила Кевину попробовать воплотить в жизнь этот проект: блог семьи, где тесно живут две культуры, два языка, два взгляда на мир и историю — и при этом живут в мире, согласии и любви. Нам есть, чем поделиться с читателями — русскими, американскими, или из любой другой точки Земного шара, поэтому я надеюсь, что у нас будет много друзей.


Nature Friendly Meat Producers Organization

Posted by Kevin on August 22, 2011
Posted in Family businesses  | Tagged With: | No Comments yet, please leave one

/* Originally posted 12/4/2009 */

I’m strongly associated with a federal grant request to form a Nature Friendly Meat Producers Organization whose primary goal is to create a value-added labeling system for those producers who raise cattle in a wildlife friendly environment (e.g. on mixed warm season/cool season pastures – not 100% fescue ones). We will see if that grant receives funding, but it was my intention to push the organization towards utilizing breeds of cattle that flourish on mixed vegetation. Belties are on the top of my list for that. We have a packaging facility – Special D meats up in Macon that is interested in helping and several other sponsors, so its feeling like this might actually become reality.

I’m in the process of converting 30 acres of fescue to warm season grasses this winter. The fields were recently sprayed with roundup for a winter kill, and will be frost seeded in January. Alas, it is likely to take 2-3 years for this field to become completely established and productive. Once done, I’ll still have ~70 acres of mostly cool season pasture.

/* 8/22/2011 update */

The grant was refused several years ago, simply not enough money to do everything in the grant system.  Such grant proposals require a real human to sponsor them and that was me.  To this day, we continue to get calls and catalogs from food processing companies…

— September 5th, 2008 —

My Corporate Preparation bill came in, along with all the paperwork to file our rental companies 2007 taxes (we used a 6 month extension). $1700!!! Alas, I’m told that’s about right. I was surprised on how much detail was required, including all expenses broke down by each of our six units.

The rental company itself is just doing so-so. Everyone actually paid on time in July, but not since. We had one late payer for August, and two this month – including that one that still hasn’t paid August. They are on the short road to eviction if they don’t make good REAL soon. Seems like everything is breaking too. So far this summer I’ve replaced two water heaters, had one fixed, replaced a stove and a dishwasher, and am dealing with a leaky roof now in one unit. Good thing I’m just looking to build equity, because I’m dying cash-flow wise. At least there are people in all the units – our last one took 9 months to rent (which is a big part of why our cash-flow is horrible). Honestly, I don’t think I would have done this if I had a working crystal ball two years ago. Now that we have the farm, I know I wouldn’t. In fact, as units free up, we plan on selling, leasing-to-own, or leasing each and every one of them. Hopefully by the time I retire, we will be out of that game.

Wow.  Hard to believe its been almost 5 years since we bought our first rental house.  We still have six, but would love to get out of the business.

The rental economy has been bad.  Homes we rented for $1500/month in 2007 are going for $1195/month now.   Its rare that we have all six homes rented.  Fortunately, we can ALMOST cover the mortgages with just five full, but that leaves nothing for hot water heater replacements, air conditioning problems, or anything else that goes wrong.

Basically, for the last 4 years, we have been losing about $1000/month when averaged out over the year.  Not good.

So why are we still in it?  Most of the homes are worth less than what we paid for them.  One, in particular is worth a LOT less – like we have about $155K invested in it and street price is around $103K.

The business is also tying us to St. Louis.  Not a problem when I was employed by that multi-national company I originally mentioned.  Alas, lost that job 2 years ago.  Fortunately the banks don’t seem to care so long as they get their payments on time.

Bottom line:  The business sounded good in 2006, but it hasn’t worked out that way.

I work for a multinational company. I get a nice base salary, and bonuses if I work really hard, and if the company has a good year. Bad year for the company? No bonus no matter how hard I work. Do get that base salary though, presuming it wasn’t SO bad a year that I got fired. Nice medical, dental, 401K, and pension benefits to. Cool to be well employed.

But what happens when that ends?

Last year, my wife and I decided to take a 2nd mortgage out against the equity in our house and use those funds to buy rental properties. About a year later, we have (6), and MIGHT be able to do one more.

Why rental properties? Well… we typically finance them with a 75% primary mortgage, a 15% 2nd mortgage, and 10% down (from our Home Equity Loan). All the mortgages are fixed rates, and because of my day job, we are getting pretty good fixed rates at that. So far, we have been able to rent the units within a month or two of acquiring them, and manage to get enough rent to pay the mortgage and Home Equity Loan payments – so we are extended, but have enough cash flow that the business is more-or-less covering its expenses.

Over time, rent will likely go up, but our expenses are relatively fixed. The higher the inflation rate, the faster these units will become profitable – they are basically inflation proof. We are in deep ca ca if we enter a period of deflation, or if the economy gets so bad, that people losing their homes to foreclosure become homeless rather than renters. If the economy is great, our business profit potential suffers – until some of those smaller loans get paid off, after which the company will simply be less profitable, but should still return some profit.

Alas, there is no free lunch. We are finding each unit takes about 4 hours a month in effort to maintain. Because of that, we plan on maxing out around 10 homes. More than that and the demand would impact my day job, and thats not acceptable.

Still, in the end, we hope these units will make a nice supplimental income for us when I do retire in 15 or so years. Having such an income stream will definetly make retirement a lot easier financially.