Chapter One What to do and how to do it
This section is still under revisions, all numbers are estimates at this time, the next edition will have completely reviewed and more definite numbers. For your convinces and to save time, because this chapter is long, I have provided a summary of results at the end of the chapter. Go back later and read this chapter if you want to understand the business plan in greater detail.
This chapter is going to detail the theory behind my business plan.
A) Buildings and assets
B) Cost and mortgages, house values and equity
C) House Refinishing
D) Mortgage Refinancing and Investments
E) Compound Interest
F) hpst High Profit Short Term housing
G) Furnishing Apartments with home made Furniture
H) Room service and Laundry
I) Car dealership
A) Buildings and Assets.
Cheap Housing
HPST Housing
I need to find up to 5 cheap houses. These are going to be made into cheap apartments, as many as possible per unit.
Ex. 8 bedroom house, 2,500 square feet. Four 2 bedroom apartment
$800/m x 4 apartments = $3,200/m (rent income)
$3,200/m x 5units = $16,000/m
20 total apartment for rent
B) Mortgage and Costs
Mortgage basics
$250,000/25 years = $10,000 a year
$10,000/12 months = $833/m
Plus interest +
Now cheap housing is going to be less then $100 sqft, so mortgage would be even lower.
Assume that mortgage would be $1,500/m.
$3,200-$1,500 = $1,700/m plus in rent profit.
$1,700 x 5 = $8,500/m in rent profit. Assuming that I could rent out all 20 apartments. Every empty apartment cost $800 in potential profits a month, but leaves open rooms for other possible profit making services.
5 units, $1,500/m mortgage each = $7,500/m to mortgages.
But 5 units makes 16,000/m in rent. As long as 10 apartments are being rented out, I will make enough to pay mortgage. $800 x 10 = $8,000 - $7,500 = $500 rent profit
Full occupancy will generate more rent profit $8,500/m
This cheap housing model is solely designed to give me places to rent out to make rent profit. Even if rent profits are not high, (not full occupancy) and rent money just pays mortgages, property will still gain equity. I am planning on refinishing all cheap houses, increasing the house value. After 5 years, I am going to refinance all mortgages, because house values have increases, mortgage payments go down.
C) Refinishing Houses
This is where my handy work comes into play. This section is what sets me apart from most landlord mongals. I am going to put hundreds of hours into this step in the process. Why? 1 month of hard labor, refinishing: House upgrades, painting, wood work, flooring, etc (Think would I enjoy living here? What would I do if I was going to live here?) It is this kind of mentality that set me apart from the rest. It is this kind of detail that is going to make my apartments more desirable, increase profits, and make my business successful. And refinishing a house will increase it’s value.
Example: 2,600 sft, 8 bedroom house at $48/sft. CH, Cheap Housing
This house costs $124,800
$124,800/25 = $4992/12 = $416/m
Even if MP mortgage payment is $800/m
8 bedroom at $200 each (more communal living) Dorm like apartments for college students. RT rent total is $1,600/m RT – RT = $800/m RP rent profit
Completes CH cheap housing model. Positive RP
House could be used as company house.
Now for the real benefits of house refinishing.
1 month of hard labor in restoration could increase the house value by $10,000. As owner, I make this money in equity. This is why 5 years later I can refinance and then really make some money.
Example 40 hours a week, 4 weeks
160hrs/m normal full time job.
$10,000/160 = $62/hr
Ownership is key here. This is the kind of work that I want to do with my life right now. I am 22 years old, and there is not much else I would rather do for work right now. But I am not going to work for someone else, making them profits. I will work harder then I have ever worked before, because I am the owner with high profits, high risk. Why work for a wage when I can work for profit.
This brings me to the importance of wage working. I am going to hire someone (employee?) to help me do this labor. I am going to pay them a wage. Even if I pay them $15/hr, pay for 40 hrs when needed during RF refinishing time
$600 for very important time saving labor.
$10,000 - $600 = $9,400 profit
This is the fraud of the capitalist system. Granted I have to wait 5 years to make my profit, but as owner I am entitled to this profit. I need to use this system to my advantage for as long as I can. This stresses the point of my mission. Must start now and be the owner. And I am working for myself. Another key point here is the person I hire will also get free housing. They will be someone that I know and could do this kind of work for me. They will be much more loyal to me because I am giving them so much more then any other employer would. I help you, you help me. Take care of the people you work with, and they will repay you with harder work.
D) Mortgage refinancing
Now that the house is worth $10,000 more, I refinance 5 years later
Example original house value $100,000 MP = 1,000/m
Refinance house with added value, plus real estate value increase, new house value $130,000. $30,000 paid to mortgage lowering MP to $700/m
$300 x 10 units = $3,000/m x 12months = $36,000/year extra because of refinancing. I am getting paid for my labor refinishing the house 5 years later. I am going to take the now $36,000 a year and invest for the next 6 years.
Take all refinancing money and invest in 12%, high yield accounts. $280,000 after 6 years, $560,000 in another 6. This brings me to the power of compound interest.
E) Compound Interest
If every house mortgage goes down average $800/m on ten units, that’s a savings of $8,000/m extra after 5 years of ownership. Could be used to pay off mortgage faster or used to invest.
$8,000/m x 12 months = $96,000/y (after 5 years + 1 year of lowered mortgage payments.
So after 6 years I have $96,000 coming in each year to invest. The only way for this business to make millions of dollars is to invest Profits for 10 plus years. This is how compound interest works.
Rule of 72: 72 divided by interest rate equals number of years it takes to double money. If I invest $100,000 a year into 12% accounts for 12 years, what happens?
$100,000 + $100,000 a year for 6 years =
total investment = $600,000
2006 Now, buy houses and get them running, as many as possible
2007 Own at lease 3 houses
2008 Own and have operating hpst housing, this profit used to increase services
2009
2010
2011Refinance time, all mortgages lowered. Start investing now at 12% $100,000 added
2012 Each year for the next 6 years, $100,000 added
2013
2014 Every year in between I spend my time running the company
2015
2016
2017 All investments made in 2011 are doubled. $600,000 added, now worth $811,516. After 6 years of contributing money, I made $211,000 in interest alone. If continued
2018 no more money added, just continues to grow. $811,000
2019
2020
2021
2022 $1,622,000
2028 $3,244,000
In 6 years I could sell all my assets, and invest the money like this. Or invest RP, of this example I just invested refinancing savings. This is why I need to get these assets just to pay for them selves, and then all I do is make money.
F) hpst High Profit Short Term housing.
All rent profit RP will be invested into this kind of housing. These are going to be nicer apartments with full room service. More like a hotel. These will cost more (higher house value areas) so mortgages are going to cost more. But these are the people that are going to use all the services provided. Using a capitalist profit model, sell these services and make the big cash profits. This is what my company will make the most money in. Also plans like full diner menu, for served in apartment dinning room. Meals cost $10-20 each. Profit used to pay cook, who also takes orders and cooks and serves food.
G) Furnishing apartments with home made furniture
Costs and benefits
The reason for renting out fully furnished apartments are two fold.
First it enables hpst leasing, to professionals willing to pay the small extra cost.
Second I am going to build the furniture myself, thus instantly selling all my products. I will include the cost of the furniture in the price of the first two years of the rent. After 4 years all furniture earns that profit again, doubling my profit. Every year profits continue from a one time building investment. This was actually the origins of my working for my self state of mind (refer to page 2 in Section One). I make the furniture and set the prices and I sell it. I make the profits. With this system, I make continued profits.
This is how this works. Still to come: Reasons to work for yourself.
1 house 4
8 bedrooms = 8 beds, 8 dressers, bench
4 living rooms = 4 couches, 4 benches
4 coffee tables, 4 bookshelves, 4 dinning booths
| Name | Price P | Quantity Q | Time to build TTB | Total time TT TTB x Q | Totals Profit TP P x Q | Per hour TP / TT |
| bed | $100 | 8 | 45 min. each | 6 hours | $800 | $133/hr |
| dressers | $100 | 8 or 16 | 1 hour each | 8 hours | $800 | $100/hr |
| couches | $100 | 4 | 1 hour each | 4 hours | $400 | $100/hr |
| Benches Small Benches Large | $25 $50 | 8 4 | 30 minutes 30 minutes | 4 hours 2 hours | $200 $200 | $50/hr $100/hr |
| Coffee tables | $50 | 4 | 30 minutes | 2 hours | $200 | $100/hr |
| bookshelves | $50 | 4 | 30 minutes | 2 hours | $200 | $100/hr |
| Dinning booth | $150 | 4 | 2 hours | 8 hours | $600 | $75/hr |
| Totals | $575 | 44 | | 36 hours | $3,400 | $94/hr |
I will mass produce these pieces of furniture for sell it to the house for the cost that I am asking. Take $3,400 and add it to rent for house divided into 12 months for 2 years.
Example if base rent is $800/m for each apartment times 4 for house
$3,200 house rent x 12 months x 2 years
$38,400 x 2 = $76,800 total house rent for 24 months
Add furniture cost to total and divided back out to monthly rent.
$76,800 + $3,400 = $80,200/2y = $40,100/12m = $3,341month/ 4 apartments = $835/m. So for $35 more each month, I have sold $3,200 in furniture. And every 2 years I made another $3,200. Four years later I make $6,400. Continued profits. Thou I do not get paid on furniture for 2 years. It is an investment of time and money. This is how I am going to spend a lot of time on. 40 hours for each house makes $1,600 a year in furniture. $1,600/40 = $40/hr. I think I will take that job. It is what I have been wanting to do for some time now. And after 2 years that 40 hours makes me $80/h. Its just too beautiful. Making so much doing something I want to do. If I spend 40 hours a week working some where else, making $20/hr, I would only make $800 total. Or I can work for myself and make twice that or 4 times that. Which job would I rather have? Work for someone else or be the owner and make the profit for myself. If I can work like this every week for the next few years, my company will become very profitable. There is no limit to what I can achieve. Real Estate ownership continually makes money. The apartments rent pays mortgages. I don’t have to do anything, except pay one employee to maintain the houses.
Work like this every day and I will make a million dollars.
H) Room service and laundry
Cleaning and laundry service will be provided to the hpst housing. I will pay one employee to clean rooms and do laundry. 5 houses, 4 hour days, each house has scheduled day for cleaning and laundry. 20 hours a week (or how long it takes to finish job), $7/hr, $140/week, $560/m, plus
free housing. $560 x 12 months = $6,720
Five houses, 4 apartment each = 20 apartments to clean. Each apartment pay $10/w for service. $10 x 4 weeks = $40 month added to rent for laundry service.
$40 x 20 = $800/m
$800 x 12 months = $9,600 a year.
$9,600 – $6,720 = $2,880 Profit from room service. I get very satisfied clients, one really happy employee, and I don’t have to do anything but get it all lined up.
| Base rent | Laundry | Cleaning | Furnishing | Rent w/ services |
| $800 | $10 | $10 | $35 | $855 |
| $1,000 | $10 | $10 | $50 | $1,070 |
| $1,200 | $12 | $10 | $75 | $1,297 |
| Total | $32 | $30 | $160 | |
I) Car Dealership
By the time I own a few houses (in 1 year, 2 hpst, and 3 cheap housing.) I will be ready to expand the hpst housing services. I want to buy 10 company cars. All cars show cased on property. Also all cars are for rental for hpst customers. And full driving services also available. If a client needs to be picked up at the airport, I will have a driver pick them up. This is the ultimate service. If I provide this free, I am essentially picking up clients and bringing them to my business to spend money.
My company will become well known for its fantastic upscale living, fully furnished, with full room services suites for rent. I am going above and beyond what most land lords and hotels offer. This will increase the clientele. So demand for my apartments goes up, increasing rent profits. With more money to spend, more cash making services will be provided.
I am looking for professionals who will be happy to pay high rent prices for excellent services will be happy to rent cars if they are from out of town. Models just like house mortgages.
And services like these are going to attract the high profit customer base. This will lead to more profits.
Summary of Results:
Real Estate land values in
Benefits to renting out fully furnished apartments with room services: enables short term, high profits leasing, apartments more desirable and I sell my furniture and pays for one employee. Plus I make continuing profits on furniture. Building furniture pays over $50/hr.
My time is so much more valuable then it used to be. I can work like this for the next several years, plus equity and investments, I will make a lot of money. Start investing a sizeable amount of money into high interest accounts within a few years, and in 20 years, I will have more then 10 million dollars. This is what I want to do with my life right now; this is how I want to spend my time working, making profits from building furniture and house refinishing. House restoration also increase house value significantly when refinancing time comes.
This plan is to provide me with housing, I save on my monthly rent, and I get to make money doing what I want to do. I am not going to make personal profit on the renting themselves, but I am going to make a lot of profit on the furniture and all the other services that I want to be able to provide my customers. Think of it like the Monopoly Board game. I want my piece of property, to charge people rent every time they come. First, I am going to build houses, and then someday when I get more money, I want to build each on into more like a hotel. And you know who always wins at Monopoly, and it’s not the guy who just rents. I want to be the owner.
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