justinsadauskas

I’ve only had one job in my life outside of poker – ice cream truck driver.  While I kicked ass at selling ice cream no doubt, Crazy Ray, will tell you I just had a good route.  The day I brought in the single day record shattering haul, he famously mumbled under his breath while shaking his head in disbelief, “Those Mexicans sure love their helado.”    Maybe he had a point, maybe my success was due entirely to my demographic, but I like to think I knew how to push a Choco Taco on a 3 year old better than the next guy.   If was all about the hustle.  If you weren’t playing, “Pop Goes the Weasel,” at full volume most of the day, you weren’t trying. I’d mix in a little “Entertainer” for variety but only at ear drum breaking volume.  It was a war of attrition – kids against their parents.  You play those chimes long enough, the kids keep asking for a buck. Every parent has a breaking point.  At 20% commission, you take no prisoners.  The assumptive upsale.  If a tiny tot comes out with a twenty dollar bill, you assume he or she wants 20 ice creams until told otherwise.  I was good, Crazy Ray wasn’t, and the Mexicans did love their helado.  That’s all there was to it.

As prolific as my summer as an ice cream truck driver was and as impressive as my $780 mark would be to a prospective employer – the rest of the resume was blank.

The good thing about not being able to get a real job was that at least I never had plans for one.  I’d always had an interest in real estate investing and everyone starts somewhere right?  Fake it til’ ya make it.  Like the first time I saw a 10-20 limit holdem game when I thought that everyone at the table was either Johnny Chan or a millionaire – eventually you sit down and realize no one knows what the hell they’re doing – at anything.  I’ll fit right in.

I’m hoping for a lot of feedback on this blog, so I’m just going to lay out what’s going on and you’ll see every deal I make – good or bad – and hopefully maybe you’ll steer me clear of some lemons and get me into something good.  We’ll choose our own adventure.

So here’s plan.

The mission:  To develop a self-sustaining investment portfolio generating enough passive income after taxes to provide a comfortable life for my family.

The model:

http://forumserver.twoplustwo.com/30/business-finance-investing/ask-me-about-real-estate-investing-99351/

I didn’t know where to start out, so I used this thread on 2+2 as my guide.  It’s a great guideline for me and other beginners to get thinking about real estate in a reasonable way.  I would recommend the “spex” method to people starting out because it’s very disaster proof.

The Porfolio (aka what I got so far) –

23430 Allor

– acquired for $31,000 + 7,000 in additions = $38,000 total investment. Currently rented – $800/month

23103 Avon

Acquired for $50,000 + 3,000 to pass inspection = $53,000 total investment – Currently rented – $1000/month

29810 Greater Mack – Under Contract 

– investment $61,000 (roughly) –  projected rent – $1100-1200/month

Land Contracts – two purchased for $44,000 – receiving $1045/month total

$25,000 Promissory Note – receiving 15% interest

Vacation rental (not bought as an investment originally) http://www.vacationrentals.com/vacation-rentals/94605.html?promoType=none

This used to be my second home, and it’s worth about 50% of what I bought it for in 2007.  I don’t use it as much as I’d like so I was thinking about selling it . On the advice on my CPA, I decided to turn it into a vacation rental for a little while before I sold it to catch a big tax-break.  I listed it on the first site I googled not expecting any action.   Shockingly, my phone’s been ringing off the hook.  It might end up being a nice surprise.

I have one new land contract that will close soon that I will blog about separately because I think they are a very interesting type of investment.  So that’s what I’m working with.

On April 15th, 2011, I logged in to play poker as I normally would on a Friday but my session was interrupted with this infamous message –   I didn’t even read the text the first time (tldr, ldo) and restarted Pokerstars assuming it was weird bug – after all I had logged in successfully 100,000 times before that morning.  When it popped up again, I took the time to read it and the reality of the message began to set in.  While other professional poker players were feeling a combination of shock, anger and despair – I felt relief.  It was over.

I had been playing poker – poker beyond 5 card draw – ever since the movie “Rounders” came out in 1998.  My first game of Texas Hold Em was against my roommate in college for 10 dollars with toothpicks as chips, I was Matt Damon and he was Teddy KGB. I won when my A5o beat his K9s.  By the time I was 20, I was making more money in a semester than my parents.  I was a millionaire by 25.  And there I was, staring at the message of death – sad for all the lives that I knew would be rocked – but relieved that I had to move on.

I had lost more than $50,000 in one day more times than I could remember in the year and half preceding Black Friday including that day previous.  People always ask how I got “the balls” to risk so much money in poker.  The reality is I didn’t have balls, not compared to other people, and that might have been part of my success.  The most painful poker loss I ever stomached was a $200 beating my sophomore year in college.  I laid in bed for hours thinking about how I must be a degenerate gambler to lose that much money.  Money that would last a month in college.  The truth is you get used to the amount of money at risk. You win, you risk a little more.  You win again, you risk a little more.  Balls  have nothing to do with it. But almost everyone reaches a threshold of comfort – more accurately a threshold of pain.  Mine was $10,000. Some people hit it at $1,000. Some people hit it at $100,000. A few sickos never feel it.  I could win $10,000 in the morning and forget I had won that much by the evening, but I would never forget a $10,000 loss.  It would ruin my day.  A $50,000 loss would ruin at least a week if I didn’t win it back.  I could win $20,000 in the morning and lose $20,000 at night and be devastated.  I knew it was silly, I knew it was detrimental to my health and my poker game, but I could never trick my brain into thinking otherwise – and it wasn’t for a lack of trying. The phenomenon is not unique to me, actually it’s very universal.  It’s an evolutionary function of the brain – but that’s for another blog.  This inability to forget losses made for a very stressful life.  On one hand I was making a bunch of money, on the other, I was miserable most of the time.  My overall results were around break-even for the year, but you couldn’t tell it by my mood.  My wife is a saint for putting up with me during some of those days – we can laugh about those days now, but only because they are over.

The stress was exacerbated by the way the poker economy was shaping up in 2010-11, the most profitable games were extremely high stakes and the middle limits (where I felt the most comfortable) were almost non existent.  So you really had to risk a lot to find good games.  They would be built around an amateur and 5 world class players, and playing a $20,000 dollar pot was pretty common. I could have dropped way down in stakes and played for a modest, stress-free living, but I had put myself in a position where my bills/month were very high – so that constant pressure to play and produce on a monthly basis would have been overwhelming.  If you had asked me what I would have been doing at 31 when I was 25, I might have said retired, but I had lost a good portion of my bankroll when the economy tanked in expensive houses that were no longer worth what I bought them for, the stock market crash, and poor spending habits.  While I tried to be extremely careful not to spend too much, when you are making money hand over fist it’s an easy trap to fall into.  I take solace in the fact that smarter people than I have succumb to the same trap.

By Black Friday, I was an expert at a game nobody played.  I’d even call myself  great at a few games no one played.  An icicle salesman at the North Pole.  I was a dinosaur by poker standards and had lost the passion needed to learn a new game.  I didn’t have it in me to start at square one.  A couple of my close poker friends had already switched expertise and were adapting nicely with the changing times.  For me, I knew that black pop-up message didn’t mean it was time to move to Mexico or Canada or Vegas, I knew it was time to move on.

This blog is going to be mostly about real estate investing, my current passion.  I know this post is dramatic and self-aggrandizing to be sure but I know a lot of poker players will probably read this blog, so I hope they can relate to the story and my struggles and triumphs as I try something new.