justinsadauskas

New Blogging Strategy:  I’m not a great writer and it takes me a lot of time to write anything readable.  I’m going to keep my blogs shorter, but hopefully I will blog more regularly.

Residential Rental Investment Portfolio

Right now here is what I have:

23103 Avon – Rented $1100/month

Bought value = $50,000 Zillow value = $81,507

23430 Allor – Rented – $850/month

Bought value = $38,000 Zillow Value = 47,294

29810 Greater Mack – Rented $1000/month

Bought Value = $60,000 Zillow Value = $81,700

22624 Mylls – Rented $1050/month

Bought Value = $62,000 Zillow Value = $69,211

A lot of people say Zillow zucks.  But not me.  I love, love, love Zillow.  It’s just the best quick snapshot of what a property is worth.  As you can see, my properties values are up significantly in 1-2 years.

Real estate is super predictable.  Predicting price movement and which neighborhoods will do better than others is rocket science.  It’s not like a stock market where (theoretically) all public information is priced in.  Barring a black swan, real estate will continue to go up.

As a tangent, the actual city of Detroit  (I invest outside of the city) is an interesting speculative play.  I’ve heard a few compelling arguments recently for a super quick comeback.

Dan Gilbert, eccentric owner of the Cleveland Cavaliers and Quicken Loans, has pumped a ton of money into Detroit – a project he calls Detroit 2.0; a vision for a revitalized tech-oriented Detroit.  He’s buying up skyscrapers by the handful.

He wrote one thing about a city reconstruction that I found interesting.  You have to bring the stores and the people at once.  People won’t come without stores, and stores won’t come without the people.  You HAVE to bring them together.  It’s something I never thought about before and he’s right.  The thing is though, it’s all moot if you can’t bring the jobs.   I don’t think you can force-feed it 100%,  you need some job growth.  Anyway, it gives me hope that a super smart billionaire is trying really hard to save Detroit.  I’m still on the fence.  At times, the work seems insurmountable.

I also have my 3 land contracts, but they passed some new laws, the SAFE ACT and Dodd-Frank and nobody – not even lawyers – can interpret how many a non-licensed person can legally write.  So for me, there will be no more seller financing.  No big deal though, with the market ready to go nuts, rentals are a slightly better bet than land contracts.

I use a management company now because with the Non-Performing Notes business I don’t have a lot of time.  They take 10% plus the first month rent, but they deal with all the headaches.  They found me ridiculously quality tenants, so I’m happy with them so far.

20901 Hawthorne finally sold for $45,000 to a Chinese investor.  I made a couple bucks on that house, but nothing crazy.  It was originally supposed to be a rental, but I needed to liquidate some cash.  It’s a good lesson, that if you buy right, you can make anything work.

For my lakehouse, 4665 Green, I am having two open houses this weekend.  I’m pulling out all the stops to sell it.  If I don’t sell it, I might have to reduce the price.  That would be sad.

That’s pretty much the snapshot.  Hopefully by the end of 2013, I will have 2-3 more rentals.

Lastly, I’m no economist but I think at some point in the next 10 years, the U.S. dollar will have some pretty steep inflation.   With interest rates at all-time lows, I suggest that you get some 30-year fixed rates, since its a great hedge against inflation.  If you are thinking about buying a house, this is your nudge.   Pull the trigger.  Also, don’t pay anything down on your mortgage.  Thanks for reading.

I have been in Michigan for about 1.5 years and it’s been almost 2 years since Black Friday ended my poker career.  Whenever I look back at a block of time, depending on my perspective, it can seem both really slow and really fast.  When I look back at my time in Michigan, fast or slow doesn’t even seem like an appropriate question.  It’s more like “WTF?”

If you would have shown me a snapshot of a random day now, back in March 2011, the only possible explanation would have been that I lost it all playing HossTBF in an epic tilted bender; and I was rebuilding working for as a temp.

The snapshot would have shown me in a city I’ve never been to, in a nondescript office, with three random people I’ve never met, and hieroglyphic-like notes scribbled on a whiteboard.  Honestly, I would have told the Ghost of Christmas Future that he had the wrong guy.

Our company, New Hope Financial buys bad debt in bulk packages and figures out ways to unravel the asset from the note (mortgage).  Our company is literally a bank.  We modify loans, foreclose, short sell, deal with bankruptcies, and do other bank things.

I think we are on the “next big thing” in American real estate.  The horizon is very bright for these type of assets.  Along with that, we have two huge competitive advantages: we are very, very good at working the notes (which is not easy to learn), and we have a connection that accesses us to MANY notes at an extremely cheap price.  That’s a pretty good combination.

In the last 9 months, we started with a package of 27 notes (our own money).  Then raised money from investors twice (through the blog) for packages of 55, and 217 respectively.

Some people might say we are escalating really/unnecessarily fast, but the game doesn’t get any harder as the stakes escalate, the numbers are just bigger.  In fact the game actually gets easier – handling a Miami mansion is a lot easier than handling a Detroit crackhouse.

Another reason that we are moving so fast is that by nature there are only so many bad debt assets out there.  Eventually as the economy improves and the housing crisis unravels there won’t be piles and piles of bad notes.  Our rough estimate is that we have 2-3 years to capitalize before the bubble is gone.  Time truly is money.

The Plan

We want to finish “working” the 27 and 55 lists where each asset is individually solved and sold.  We want to create performas proving that what we are doing not only works, but crushes.

Then, we want to sell the 217 note list.  We want to pay back all investors with interest as promised.

Then…….we want to raise a huge amount of $$$$$.  The same game, the same strategies – just Isildur-style.  6 games and a lot of zeros.  We have physically seen lists ready to be vetted and bought that are nosebleeds stakes with nosebleed profits.  Our team is young, hardworking and very good at what we do.  I fully expect to own those lists soon.  I will keep the blog readers updated on how things are moving as it pertains to this plan and when the door opens for funding.

Lastly, I want to end the blog on anyone that is thinking about switching careers or changing your life drastically.  At first seems impossible to start.  There will be days where you don’t know what to do or how to  begin toward your goal.  Just remember, slow motion is better than no motion.  If you just keep moving, you’ll find paths you couldn’t have foreseen.  You just have to keep moving – forward, backwards, sideways –  anything but stagnation.  If you were going to walk through a forest with no idea where you were going, you’d be better off walking than standing still.

In the last six months, the bad debt side of real estate has taken up far more of my time than the more traditional forms of real estate – rentals, land contracts, flips etc.  The regular stuff is still amazing, but due to some luck in finding the right people, the bad debt side is particularly profitable right now.

Here is a recap of what has been going on:

I had my tenant move out of 23103 Avon.  She was a webcam girl who made $85,000 worth of “tokens” on whatever porn site she was affiliated in 2011.  I figured it was an even trade, a stable income for a stable mind.  She ended up moving out because she landed in the crazyhouse – surprise, surprise.  She paid for 12 months  and moved our right away, so it worked well.  Perhaps, a more prudent landlord would have passed on a porn star, but I enjoy the stories and there were quit a few of those.  I had another tenant move out of 23430 Allor, and he stiffed me for about $2000 total.  He was an old man getting all his money from social security, and the IRS started garnishing his wages, leaving me high and dry.  He was on the borderline of income/rent ratio, I probably should have passed on him as a tenant.  In the end, even getting stiffed $2000, I still cleared a 10% ROI easily.  All the other rentals and land contracts are going really well.  The land contracts especially have been care-free and bringing huge returns.  As far as appreciation, I would say my properties across the board are worth on average 25% more than I paid for them.   The Detroit market is steadily climbing and wouldn’t be surprised to see that number hit 100% in 5 years.  As I’ve said before, while land contracts have a higher return and are very little work, they will eventually result in a pile of money after a few years.  I want to be in this business for a long time, so I am trying for a 50/50 split of rentals vs land contracts.  Also, if the Detroit market goes nuts, I will miss out with land contracts, but not with rentals.

I have one property at 20901 Hawthorne that was pretty much butchered and should be a cautionary tale on what not to do.  I was planning on renting it, but then I decided I wanted to stay more liquid for personal reasons and just threw it up on the market.  The place wasn’t particularly clean, it wasn’t finished remodeled, and it shouldn’t have been listed.  There is a saying in real estate that, “you only get one shot at being just listed.” I blew my shot and now its been listed for 120 days and selling is much tougher now that I am sure I want to sell.  I will end up making a few thousand when I do sell, but it won’t be a great return or worth the hassle.  Overall my handling of that property was sloppy, lazy real estate.  I normally preach being extremely conscious of the details when listing a house.  The property should be immaculate, staging and curb appeal being absolutely crucial.  Taking care of the cosmetics and aesthetics is very cheap and pays off many times over.  So do as I say, not as  I do.  The property was intended as a rental originally and the goal posts moved so I’m not that hard on myself about it.

As for long term goals, I definitely plan to buy more rentals.  If our lake house sells, it will probably be sooner than later.  I will be getting a full-time property manager soon, so I don’t have to spend anytime dealing with them.  Also, I have a few low-ball offers into the banks for short sales that would be very good flips.  Only time will tell if any of those offers stick.

“All people dream, but not equally.
Those who dream by night in the dusty recesses of their mind, wake in the
morning to find that it was vanity. But the dreamers of the day are dangerous
people, For they dream their dreams with open eyes, And make them come
true.”
― D.H. Lawrence

My grade school English teachers always suggested I start with a quote.  That’s my “attention getter.”

I’ve always been attracted to ambition.  I love hearing stories about people that really want something and try relentlessly to achieve it.  It makes sense to me.  You want it, you try to get it.  On the other hand when people say they “want” something but put in none of the effort required to achieve it, I find it a little off-putting.  It’s like a disconnect.  How can you want something and not try to achieve it?  A dream without a plan is a wish!  That’s what I tell ’em!  Just kidding, I don’t say it.  I just think it.

I am not hating on type B personalities, I understand that one is not better than the other, the brain is wired in different ways.  But being a serious type A myself, I relate better to other type A’s.  So sue me.

The most extreme version of ambition is 100% ambition, single-mindedness. To me, this is a very romantic notion.  I see it more as ultimately freeing rather than a gigantic ball and chain.  Think of waking up every day and not ever being like, “What am I going to do today?” Because it’s the same as yesterday and the same as the day before.  One goal: build a Fortune 500 company, own a sports team, win an Olympic gold medal, become the best poker player.  Each day you work toward accomplishing X.  Nothing else matters.  Every day, it’s all about X.

In my life when I have an X, I am happy.  The stronger the desire for X, the happier I am.  I am at my most miserable when I have no X.  I know it’s the way my brain is wired.  It’s not something learned.  It’s funny, I think I see signs of it in my son.  I can’t be sure, but he definitely has the spinoff traits – hatred of boredom and mental complacency.  I hope he is like me.  His mom is a Type A (although much more reasonable than me) so that gives me hope at least that he’s not the dreaded type B.  I digress.

I don’t think true single-mindedness exists in the real world.  It’s more of a hypothetical idea, but I’ve met some people that I would consider pretty close.   Haralabos Voulgaris is one: http://espn.go.com/blog/playbook/dollars/post/_/id/2935/meet-the-worlds-top-nba-gambler. Bob’s passion for the NBA and to become a great sports bettor is pretty epic.  It helps when your passion is also your job.  And by helps, I mean it’s a must.

I read a book the other day that resonated with me more than any book has in a long time.  It’s written by Hank Haney called, “The Big Miss,” and it chronicles his time as Tiger Woods’ golf coach.  Tiger Woods is one of the best examples of true single-mindedness.

****Tons of spoilers ahead.  Stop reading and go read the book.

The top of the mountain.  The golf swing perfected.

http://www.youtube.com/watch?v=meVTld5GvbM

A lot of people have heard of “Tiger Days,” a termed coined to describe his rigorous daily practice routines.

“He would begin a typical one by waking at six a.m. and working out until eight.  After he showered and ate breakfast, we would meet on the practice tee at nine for 90 minutes of hitting balls.  Form 10:30 to 11 he would practice putt, then play as many as nine holes on the course until noon. After a one-hour lunch break, we’d meet at one p.m. for an hour of short-game work, followed by another 90 minutes of hitting balls.  From 3:30 to 4:45 he’d play nine holes, and then return to the putting green until six p.m. This would be followed by an hours of shoulder exercises before retiring for dinner at seven.  If he had a week off from tournament play, he’d start over the next day.”

Yeah, we know Tiger works hard at golf.  He plays a lot.  That’s intense, but now we’re talking……

“Tiger called me back the next morning, a few hours before his starting time.  He said he’d worked two hours in front of the mirror before going to bed.  Then, when he awoke at two a.m. to go to the bathroom, he looked in the mirror and started working on his swing again.  He said he spent another 90 minutes working on the same stuff before going back to bed.  Then after rising in the morning, he did another hour of mirror work, at total of four and half hours of studying position and movement since I’d passed along my suggestions.  In the final round, Tiger went out and shot 29 on the front nine and passed Vijay. He ended up shooting 63 to win by three.”

I often feel guilty that I don’t work harder at things – and I sometimes feel that maybe I should be more like Tiger.  But I take solace from this quote in the book which I would call the crescendo:

“I also genuinely cared about Tiger as a person and knew his life wasn’t easy. I sensed that despite the assumption that he’d followed his dream, he hadn’t chosen his life as much as it had chosen him.  Giving himself over to golf instead of a more normal life had many advantages, but being a well-adjust, fulfilled person wasn’t one of them.  I admired tremendously the way he held up his end of the bargain to produce excellence.  But I’d seen close-up the cost of so much single-mindedness, and I wondered —  As much as Tiger has gained in wealth and glory, is it possible that he feels used?”

That’s the rub.  Such an unbalanced life, doesn’t seem to be necessarily happy.  One might argue that the joy is in the chase.  I’ve always felt that was just something that people say.  There is joy in the journey, but I don’t think it feels like joy in the moment.  I bet Jordan, before his titles wasn’t happy, I bet he was constantly wanting, uncomfortable.

Psychologists have studied happiness and they’ve found that most people converge on a certain level of happiness despite their life situation.  It’s a bio-defense mechanism.  An example would be quadriplegics and lottery winners rating similarly happy after a few years – the same baseline for most people.  The people that are the most unhappy were those that felt they were just below a certain threshold they wanted to get to.  Trying to “keep up with the Jones'” if you will. (Here is a link to my source.  http://www.ted.com/talks/dan_gilbert_asks_why_are_we_happy.html) Because of this, I imagine the true overachiever finding the journey angstful and only joyous in the memories well after the fact.

The real problem, though, is when you actually get to the summit.  You get there and look around and I bet it’s a lonely place.  A little bit of a “what now?” feeling, but more pronounced.  It’s weird but I think its something like this.  I love to fish.  Sometimes I’ll even go fishing by myself.  Like a true A personality, I work feverishly with my minimal skills to catch as many as possible.  I work non-stop, fish as many lines and legally allowed, constantly baiting and checking lines.  Then,  about once a summer, I’ll just stop and think, what if I catch a huge fish or a 100?  So what?  Who cares? I’m gonna throw the fish back anyway.  Sure, I’ll go brag to my friends, but that will be it. What’s the point?  It’s weird and it sucks.  I imagine that is how Tiger felt times 1000.  “I’m the best golfer in the world.” “So what?” “Did I just waste my life?”

Here is a recent Michael Jordan article where he refers to his mindset as a “curse.”  http://espn.go.com/espn/story/_/page/Michael-Jordan/michael-jordan-not-left-building.

I genuinely felt sad for Tiger after reading the book.  Super overachievers give us the joy of seeing the full human potential realized.  People should thank them for that.

I want to share one more passage from the book – even thought it’s off topic.

Clutchness.  I’ve always had a million questions.  Here it is and thanks for reading:

“There will always be a mystery as to what makes Tiger Woods so amazing under pressure.  I still don’t exactly know, and I wonder if he does.  But what was revealed in his thought process before that putt was not a hard “this ball can only go in” mind-set, but rather a healthy, almost Zen, fatalism.  Some of it might have had to do with the Torrey Pines greens, which are notoriously bumpy, especially late in the day in the final round of a tournament.  But I found it amazing that for a person who was so bent on having control, Tiger instinctively knew when he had a better chance of success by surrendering.”

I was born and raised in Chicago.  I love Chicago.  I think Chicago is the best city in the United States.  If you attack  Chicago, the Sears Tower, Wrigley Field, or Chicago-style hotdogs, I will defend them vehemently.  I’m biased for sure but, the only city that I think is in Chicago’s league is New York City, which is arguably the capital of the world.  Maybe if I lived in NYC, I’d have a different opinion, but it’s a little too hectic for this mid-western kid – and Chicago is a way better sports town.   I never thought I would leave Chicago.  I’m still not all that happy about it.

Detroit is not comparable to Chicago – the city officials have screwed pretty much everything in the city limits.  In fact, I have heard the city is so broke, that they only have one city planner.  And, they can’t afford to pay that person five days a week!  The downtown consists of only 10 relatively safe blocks centered around Comerica Park and Ford Field.

But……..I like the Detroit.  It’s a good city.  Civic pride in Detroit is very high and I really respect that.  Detroiters will definitely talk bad about Detroit, don’t get me wrong, but in a way you might talk about your family, but only you are allowed to say it – no outsiders.  It’s a blue collar town and people get behind that.  If you say your from Detroit, itmeans you are a tough cookie.  There is nothing soft about Detroit.  They have pretty good sports teams, and their stupid square pizza is growing on me.  Their suburbs are just like anywhere else, with the possible exception of pretty crappy food choices,  except they also have amazing lakes and great outdoor activities.  The golf is world class, the boating/fishing is world class, and Michigan, as a state, has to be one of the most beautiful.  I think a Michigan city even won the award for most beautiful place in the country – somewhere on the west side of the state.

If I had one critique about Detroit- it would be that the state is racist as hell – working both ways.  Someone told me that Detroit is the most segregated city in the United States.  I’m not sure if that’s true, but it’s crazy segregated.  I hear racist words and phrases all the time.  In Chicago, if someone says a racial slur in a public place it would scratch the record player.  Not that it doesn’t happen, but its rare and generally frowned upon. In Detroit however, people don’t even blink.  It’s like a deep south city, up in the north.    I don’t have some grand point about racism or anything like that, just that it surprised me at first, and I wish it wasn’t like that.

Here’s an anecdote about race in Detroit.  There is a road named Alter Rd.  It divides the city limits of Detroit, from Grosse Pointe.  At one time, Grosse Pointe had the highest per capita income of any city in the country.  It’s where the Fords lived, an lots of rich auto-makers, old money at it’s finest.  In fact, Grosse Pointe gets used as an adjective – meaning “uppity” or a “Grosse Pointer” meaning a rich/snobbish person.

The crazy thing is that if you cross Alter Rd. you go from champagne glasses and strawberries, to the ghetto.  Twenty yards from rich to ghetto.    There is a gas station on Alter Rd, that I would definitely not fill up at because you might get car-jacked.  But if you cross the street, you are very safe.  Alter Rd is a great metaphor for race relations in Detroit.

I recently heard of a project to redevelop a park that is on Lake St. Clair that is on in both sides of Alter Rd.  The plan is to develop all the areas on the Grosse Pointe side of Alter Rd. as well as the park, but at Alter Rd. line of the park; the plan is to put a wall, separating the “good” side from the “bad” side!  Is that nuts or what?  Here is what Wikipedia has to say about Alter Rd:

“Although Alter Road itself is completely within the Detroit city limits, nevertheless it is a symbolic dividing line between the overwhelmingly Black City of Detroit and the likewise overwhelmingly Caucasian City of Grosse Pointe Park.

Like 8 Mile Road, another well-known thoroughfare of political, ethnic and economic demarcation in metropolitan Detroit, Alter Road has long been considered something of a “Berlin Wall” to separate communities. In fact, quite literally, there are places at which concrete barriers have actually been erected so as to reduce interaction between the two cities. …..In his 1987 book, Crabgrass Frontier: The Suburbanization of the United States, author Kenneth T. Jackson describes Alter Road as “[t]he most conspicuous city-suburban contrast in the United States…”.”

On to some regular real estate.   I finally sold 30206 Champine.

After all the  fees, I walked out of the closing with just under $104,000.  I was all-in for $80,000, so I netted $24,000 on my first flip.  Not bad, but trying to get that house closed was a total nightmare.  It ended up taking over 7 months and was under contract four times.  We ran into every possible road snag, from buyers dying, to bad lenders, to inspection problems,  etc.  Still, that’s a really nice rate of return and easy money.

I am trying to sell 20901 Hawthorne now instead of renting it, because I am just trying to get more liquid.  The delinquent note stuff is going pretty well and I think my highest returns are going to come from that arena – in essence I am just trading one ROI for a hopefully higher ROI.  I will sell it for $43,000.  I think it would rent for $900-$1000 and it is in Grosse Pointe Schools.  I’ve had offers at $41,000 and $40,000 from fellow investors.  If someone wants to buy it, let me know.  I’ll even find you a renter.  I’d rather to sell it to a blog reader, but either way it will be gone really soon. 

All the other rentals and land contracts are going well – no interesting news to report on that front.  I have put an offer in on another potential flip, where I know the listing broker of the foreclosed property and put in a lowball offer – so we will see if that sticks with the bank.

Outside of that, the big news is that it looks like we will be funding the 1.5 million for our next delinquent project as long as the lawyers iron out the details.  This is a really good deal and a very important one for our company New Hope Financial.  I can’t really believe how fast things are taking off, and I’m really excited about the opportunities to make money for my investors, and  of course myself.  I love the work I do – it’s challenging, interesting, and lucrative.  I really owe a lot to this blog and to the readers, I never new the people I would meet and the places this blog would take me!

Lastly, I am working on ways to talk more about the delinquent note project, but I have to clear some stuff with my partners first – but hopefully in the future, I can talk about the bad-debt aspect of real estate.  It kills me that I can’t be as forthright with the delinquent notes as everything else.   Thanks for reading guys!

1.  My senior year of college, I decided to stake a poster I never met before from the poker forum 2+2 – the contractual agreement had a corporation type setup and I contributed $500 dollars.  After the first year, my $500 dollar share was worth $481 dollars.  So I had lost 19 dollars.  The annual report was short, a few stud eight or better bad beat stories and a hand history of how he busted the WSOP main event.  I remember questioning how anyone could play stud8 or better for a whole year and not be in the black, but I believed the poster was a good player.  Since, I happened to have $1500 laying around in my Neteller account at the time I decided to increase my investment.  I yelled over to my roommate,  “Hey Eddie, I think I’m gonna stake this online guy again, do you want to get in?”  Ed was busy 4-tabling Party Poker at the time and even though he said yes, he never got around to sending the money.  This happened soon after:

2.  I have lost with quads in Texas Hold’em twice.  Both times with four 9’s.  My stakehorse and good buddy Brewer, recently won the bad beat jackpot at a local casino when his four nines lost to a straight flush.

One of my most memorable limit hands hands I ever played was against Layne Flack at 300-600 at UltimateBet, when that limit was just a little higher than I was comfortable playing. We were playing HU Omaha 8 or better and Layne was employing the pre-flop strategy of limping every button.  But he added a twist, every time I raised, he would 3-bet, and when I 4-bet, he would 5-bet, and usually I would 6-bet (UB had a six bet cap, heads up.)

It’s possible that his strategy was not ideal, and Layne was getting murdered.  In the final hand, I raised and six bets went in preflop.  The flop came KK9, six bets went in on the flop.  The turn came a 9 and six bets went in on the turn.  The river was inconsequential, and six bets went in on the river.  He was all in and showed 99xx for four nines, I showed KKxx for four kings.  He left.  I fist-pumped.  Beware the four nines.

3.  The poker hand that still haunts me  today was played in the 2008 WSOP main event.  When I’m driving alone by myself practicing my WSOP victory speech as I often do, I still think about this hand and wonder if I blew my one chance glory.   It was day 7 and the field was down to around 70 people left for the 9 million dollar first prize.  This was my second consecutive run inside the top 100 and while No Limit Hold Em Tournaments wasn’t my primary game, I felt pretty confident.  The opponent in question was from appearances a stereotypical quiet, young, white guy (as was I.)  But, notably, heavily outfitted in PokerStars clothes. Practically head to toe.  The internet is awesome, and I found a picture.

In 2012, being heavily sponsored  would signify a strong player, on a long term contract, a proven player.  But in 2008, it usually meant a player that qualified online via a satellite (a smaller buying tournament.)  Satellite winners were in general usually a lot weaker and more conservative than players that bought in directly.  Most pros on the circuit were turning down the $1000 that PokerStars would pay you to wear PokerStars clothes, because it was “cooler” to be unsponsored.  So, I had this player pegged as conservative.

My opponent and I both started the hand with around 2M chips.  I raised KQ on the button, and he called in the big blind.  The flop came K-T-x with two spades, he checked, and I made a standard continuation bet.  My opponent check-raised 3 times my bet, and I called.  The turn came a the Jh, and now my opponent decided to check.   Usually after check-raising, players keep betting, so his check is a little unusual, but in this instance, I wasn’t too worried and saw it as weakness.  The standard play here would be to also check, with top pair and straight draw, to control the size of the pot.  And possibly induce a bluff or value bet the river.  It’s a play I’d make 90% if not more, especially in a tournament.  But this was day 7 of the World Series of Poker Main Event and the stakes and tension were very high.  I just didn’t think this player would have the cajones to make a big bluff in this spot.  Honestly, I don’t think I would have.  It’s just hard to play 12 hours a day for 7 days and then bluff your stack off in one weird hand.

In light of that assumption, I made a non-standard small value/protection bet.  My opponent thought for a while, then made a big check-raise all in.  This type of out of tempo raise was often a bluff.  I knew that.  The combinations of good hands he would play this way was very low.  I knew that.   Despite all this, I just couldn’t get myself to believe that he was bluffing in this spot.  Its one of those situations, where I had to weigh two very unlikely situations, him bluffing, or him having a very, very strong hand.  Both were very unlikely in my opinion, but it had to be one of the two options.  A few weeks later he told me that he had QJo.  So it was kind of neither of those options.   @#*%

At the time he was just another face to me, but I learned his name after the tournament – Andrew Brokos, online name Focault82 – and he is a very accomplished player, whom I greatly respect.  I wish I knew that then.  He writes writes one of the best strategy blogs on the internet.   http://www.thinkingpoker.net/blog.  If you like poker strategy it’s a must read.  Andrew went on to finish 35th.  I finished 59th.

4.   My wife, Katie, and I had just arrived on a beautiful summer morning to our lake house in Michigan.  Most of our Chicago friends were coming the next day to visit for 3 hearty days of debauchery.  Life was good.  Katie was going to handle most of the tasks to prepare for the party, but she assigned me one job for the entire day – clean the boat.  Like any smart husband, I thought, what’s the hurry?  I’ve got all day.  Let’s just get a few hands in real quick.  So I log on to Full Tilt Poker and next thing you know Gus Hansen sits down with me at 500-1000.

500-1000 was the highest limit I regularly played and I was pretty careful who I played at that limit.  I thought I had an edge on Gus, so I gave it a shot.  40 minutes of torture later, I was down $80,000.  That was my biggest loss ever, so I prudently logged off.  I got my bucket of soap together with my rags and started washing the boat.  I made it about five minutes of scrubbing – and still on super-tilt -I thought to myself, “Screw this, I’m just gonna go hit and run Gus for one small blind and pay some kid down at the market $500 to wash my boat.”  That was my master plan. I logged back on and before I won that $500, I had lost another $27,000.  That’s how I lost $107,000 in one hour.  The boat never got washed.

I was going to write a rebuttal of Matt Glantz’s nonsensical blog, which can be found here: http://www.cardplayer.com/poker-blogs/71-matt-glantz/entries/560971-full-tilt-poker-and-pokerstars-rumors-major-hurdle but in light of the FTP/Stars deal,  it would be like telling the Mayans they were wrong on 12/22/12.

On that note, Hooray!! Pokerstars saves the day and we will receive our FTP funds!  I don’t really have anything interesting to add on the subject, but I would like to pop a cyber bottle with my fellow poker players. 

Notice that we are still balling on a budget until poker gets regulated in the U.S.  We can break out the Cristal when we can legally play poker online again in this country.

I’ve picked up the poker itch again – it’s been a long time since I’ve had the urge to play. My plan is to  build a traditional bankroll from scratch.  I took 3k cash out of the bank, and I plan to be in Ivey’s room by next summer!  There is a soft, 1-3 PLO/NL game down the road from me, where I plan on torturing the Albanian regulars, until I get enough money to go play some higher stakes games downtown.  The biggest game is a 25-25-50 PLO game that spreads once a week at Motor City Casino.  It sounds shady, with a lot of players backing each other, but whatever,  it’s the only place to run it up.  I’m not very good at PLO, but since this is for fun, I plan on being very aggressive with my shot-taking.  Busto or robusto!! Don’t get too excited, because I might call “Uncle!!” if live poker gets too boring or if I can’t beat the 1-3.  I will definitely post my results and every bad beat I take.  In fact, I look forward to running this blog into the ground with low stakes bad beat stories.

When I started this blog, my goal was for it to be interactive for the readers with my real estate decisions.  However, things never really materialized that way.  But I’ve got a deal for you, that I’m not really sure what to do with.  My buddy, Will Hadley, knows this guy that has had his property foreclosed upon and now the property is into the 6 month redemption period.  The house sold at auction for around 30k and that would be my purchase price when the owner sells me his redemption right.  The owner said that he would sell me the redemption rights for around 25k, but we are already talking him down.  The real crux of the issue is – how much is this farmhouse worth?  I am having a hard time deciding.  What do you think.   Here is the listing: 3078 Haines, Attica, Michigan

ROOM FOR ALL…. BRING THE HORSES, TOYS, PETS AND HOBBIES TO THIS MINI-FARM JUST OUTSIDE OF LAPEER. PROPERTY OFFERS OVER 5,000 SQFT OF OUTBUILDINGS, 6 IN ALL, ON 4 ACRES AND A 3-BEDROOM COUNTRY HOME THAT SPEAKS OF APPLE PIE AND FAMILY GATHERINGS. SCHEDULE LOTS OF TIME TO SEE THE NUMEROUS UPDATES AND POSSIBILITIES THIS MINI-FARM HAS TO OFFER.

Speaks of Apple Pie, imo.  You have about as much information as I do now, so how much should I pay?

Home prices in Detroit are coming back more quickly than I anticipated.  On one hand, that’s good because I own a lot of houses, but I would really like the comeback to hold off for one more year, so I can refinance all my money out, reload one more time and then reap the benefits.  There is an interesting dynamic of a ton of foreign investors buying up tons and tons of houses and renting them.  I’m not sure how that will effect the market long-term but as of right now it’s driving prices up.

I closed on 20901 Hawthorne.  There is a good chance that I will be selling it on land contract for 10k down 8% on a 3 year balloon.  I debated if this would be better than renting it, and essentially its a net present value problem.  I posted it on 2+2, but then realized its quite a bit better to land contract it right after posting.  It’s  an interest decision to determine where the break even rent might be.  If anyone wants to take a crack at it, I’ll post my thoughts later.

30206 Champine.  The deal is dead.  Literally.  My buyer passed away last Thursday.  RIP.  The deal is back under contract for 114k however, hopefully we can get this one to closing.

That’s all for now guys, thanks for reading.

I haven’t been blogging a lot lately because a lot hasn’t been happening on the real estate front.  I’ve been spending most of my time either with family, golfing, fishing or boating.  I really need to get my taxes done so I can begin the process of refinancing money out of my rentals, so I can buy some more, but taxes are a ridiculously daunting task for me.  Money is coming and going in all directions and I can’t make heads or tails of anything.  It’s pretty embarrassing.  Plus, when I look at how much my wife and I spend every month it puts me in a bad mood, so I try to avoid it.  I think I should probably talk to Suzie Orman.

Anyway, some things have happened recently.  The property on Champine has an accepted offer of 114k!  If you remember Champine, that was the property I thought I was getting for 60k, ended up being 70k and needed a new foundation and roof that put me at 80k, leaving me very nervous about if I was going to make money flipping it.  Well we had two offers of 114k the first day it hit the market.  That really shocked me.  I had to concede 3k in concession cause the basement starting leaking, but overall it looks like I will make a really good chunk of money.  I think the overall message here is that the banks don’t know what they are doing and it’s pretty easy to make money in real estate if you are in the right market.  I jacked that deal up 10 different ways and it worked out with room to spare.

20901 Hawthorne finally got approval.  The bank wasted about 2 months of my time while it was mysteriously “under review.” But, hopefully by next week it will be mine. The final bill here is around 30k, I am hoping to rent it for 900-1000.  I also might have to kick up to 5k into it to get that price.  Either way, it easily fits under my 2% rule.

I have been rounding up money to try to get into the asset package game as well- namely delinquent notes.  I have an investor buddy, Jamison, and we really excited about it.  I don’t really love the structure of the company though.  50% of the profit will go to investors, and the other 50% to employees (2-4 investors, 2 agents).  My main problem is that it’s really hard to pitch to outside investors because they have to give up such a high % of their profits.  I’m an employee also, so it doesn’t hurt me too bad, and I know it will make a huge return, but it’s a huge % to the employees.  And its not that they don’t deserve a good chunk, because it’s a lot of tough work. Kicking people out of their house or negotiating those deals is not easy, and giving them straight commission on houses that are like 20k isn’t worth anyone’s time, but if we plan to make 100% returns (realistic, imo) it might equate to 50k checks for 6+ people, which is high.  And our primary snag is that we don’t have enough money raised.  We need to get around 800k and the more we get the better the packages we get (buying in bulk will get us a larger discount.)  I’m really not that important of a piece in this whole thing so I haven’t fought the structure too much, but I think I might try and get things rearranged a little, because right now I’m not comfortable pitching it to any investors under the current structure.

The other thing that is pretty interesting is that their is a huge foreign investment contingent that is looking to buy rented properties in and around Metro Detroit.  They buy them sight unseen for around the Spex rule of 2% monthly rental income/purchase price.  So for a house that is rented for $800 you can sell it to the Chinese or Scandinavians for 40k.  The beauty of this is that getting $800/mo (especially if you can rehab cheaply) can cost you a lot less than 40k.  I know one investor that is doing 15 of these currently and hasn’t lost money on any of them.  You can dip into lesser neighborhoods as well and they don’t seem to care as long as they get their price.  That really increases the profitability and I normally don’t mess around with questionable neighborhoods cause the extra % is not worth the headache of managing risk/headaches, but it’s great if I can just flip them off my hands. The main problem is that I have no direct relationship with any of these buyers and I don’t know exactly how I’m gonna establish one.  But I definitely plan on trying soon.

Also, I have had a few rental headaches lately.  The Elmira land contract guy missed his first two 1500 dollar payments, another was short some money, a few AC units breaking down, plumbing issues, and squirrels in the attic.  Just typical stuff when you have a bunch of houses.  I don’t want to give the impression that REI life is all just cashing checks, there are days I’m definitely doing stuff I don’t want to do.  Like today I’m going to fix this girl’s sink ($20 dollar fix, 1 hour drive – cause I’m too nice).  That stuff is boring for a blog, but I know many of you are thinking about maybe one day getting into this type of real estate, you should be aware that its a combination of business and B.S work like that.  You can hire that out of a property manager, which at some point I will do, but this being my first year, I figure I’d learn it hands on first.  That usually costs 10-12% off the top.

Fishing this year has been going well –

Thanks for reading.  Plan on blogging more soon.

It’s World Series of Poker time and for the first time ever I don’t have the nagging feeling that I’m missing the best party of the year. I have been to every WSOP since they were holding it at the Horseshoe downtown.  The last four years, I have only played the Main Event – with moderate success.  The first two years, I finished 80-something and then 50 something.  I used to call it, “swooping in to pick up my World Championship.”  The last two years, I’ve called it, “Swooping in to drop off my 10k.”  This year, I will not be going to Las Vegas.  I can’t explain why I don’t really want to play.  I definitely feel out of the clique – and while I’d rather be in the clique, I don’t really care.  The fields have gotten much tougher, but that’s it either.  I think I’m just content with my life and my departure at this point from poker.   I’ve never really chased anything in tournament poker.  If I had a poker dream, it would be to return to Las Vegas once in a while and play mixed games in Ivey’s room, eat tuna sashimi all day, and post $200 ante’s in games I can’t even spell.  I think being the rich fish would be a great and a nice poetic full circle.

A couple random thoughts on the WSOP – they should move the tournament out of the summer.  It sucks having to give up one of your three good months (if you live in a cold-weather city) to go to a city that is 110 degrees.

The second is that the whole aura of the WSOP feels very Hallmark to me.  I want to believe that its some great thing to win a bracelet or to get your picture on a banner, but it just feels like some crap that somebody created to make money.   The WSOP felt phony, hollow, and just a bunch of smoke and mirrors, although I’ve never met anyone else that’s ever expressed a similar sentiment.  Playing at a random table at the Bellagio against a bunch of unknowns until 6am, racking up a winner, and leaving inconspicuously seems one hundred times more romantic to me.

I’m not totally disconnected from poker though.  Some mornings I teach a Russian friend of mine HU Omaha8.    I’ve only taught two people in my life.   The first was one of my best friends Kevin and that was more a friend helping a friend, than a financial undertaking (eventhough it worked out well financially, nice work Kevin!).  I never planned on teaching anyone else, but this Russian kid kept bugging me in chat day after day.  It was actually pretty funny.  I must have told him “No!” ten times.  Finally, I cracked and gave him a price that I thought no one would ever pay.  I’m embarrassed to say here, but it was 1/4 of his bankroll upfront, plus a piece of his future winnings.  He snap accepted!  I was afraid to teach mostly because I wasn’t sure I’d be any good.  I wasn’t sure if I could teach what I knew or why I was a winner.  And at that rate, I would have been a fraud if I couldn’t deliver.   Secondly, I really believed my information was unique and proprietary.  It was not written anywhere, I created my own playbook, and I didn’t want it getting out there.  Overall, it’s been extremely rewarding.   And an ancillary benefit is I really enjoy still seeing Omaha8 hands, even if I’m not the one playing them.  Makes me feel part of the action.

The Brad Booth video on 2+2 is pretty crazy.  http://www.youtube.com/watch?v=6zbNieYoaos

I played with Brad a lot on UB and he has a ton of talent and has always been a ridiculously classy online persona, but you could feel the compulsion in his play.   When he was “on,” there were times I wouldn’t even play him at 08, but I usually didn’t have to wait long for him to be “not on.”  I’ve never met him but I’ve heard some stories of his degeneracy and know a few other players with similar tendencies.  I’m not going to say I can really relate or make a comment one way or another on gambling compulsion and character, but I really feel for him in this video.  I hope he wins a bracelet and pulls himself back out of the hole.

Switching topics, I have never waivered in my faith in Tiger Woods.  Even in the Tiger’s darkest times, I’ve always thought he was going to smash Jack’s record.  Tiger just needs to taste that run-good again.  And I think you can draw a lot of parallels to a downswinging poker player.  Even when a truly great player goes through a rough patch, it will shake them.  It will get them off their game.  We’ve all played a session wondering how in the world we would win that day – and then a stretch comes along where you just rush like hell and remember how to dominate again.  Tiger will start rushing, and when he does every Johnny-come-lately will go back to crumbling around him.

This blog is getting a little long, so let’s get to real estate.  30206 Champine will be listed for sale tomorrow.   Come out and buy it!!  It’s a real peach.  LOL.  I am in for 80k.  Yikes!  More than I planned on.  Hoping for 100k.   We will see.

Closed the land contract part of Elmira.    Exact terms were 60k at 10% 5 year amortized.   I didn’t get a down payment but he will pay extra in the early months to give me a down payment.

Other than that, I was working on getting some delinquent note packages.  I had to sign a non-disclosure agreement (how cool am I?), so I can’t really comment, but I think the deal is falling through anyway.  You will definitely be hearing about those soon one way or another.

Lastly I want to give a shout out to my twin sister Viki and my wife Katie – love you guys, but only if you read to the end!