Sunday, June 14, 2015

Returning to a Lower Pay Grade Like a Boss

Well everyone, I'm heading into my final week of life as a high school administrator.  Last Friday I started packing, placing some of my things, like pictures and posters, into boxes I took from the copy room.  The chore was so depressing I had to stop.  These items had been on the walls, gathering dust, for seven years!  That's right, I hardly changed my presentation to the world that stepped inside my office.  And so this drastic change, returning to teaching, perhaps is the universe's way of forcing something new unto two places: my former site and my soon to be new site.

I won't be leaving without something festive happening.  Despite all the "Certificated" (teaching) staff now gone for the summer, the administration office is still an active work station of "Classified" (techs, clerks, and secretaries) staff.  The Principal's secretary, Lupe, has organized a pot-luck for me this Monday as a farewell gesture.  Super cool of her to have done this.  I will miss her and all of the outstanding Classified staff there.

I will also not be leaving my position as an Assistant Principal for 10 years at two comprehensive high schools without having made some excellent financial strides...which continue even onto my last week!  I've been able to use my administrator's salary like a Spartan, to build a road to Rome.  Instead of living large, so to speak, and I could have easily done it, being only 28 when I first started my admin career, I maintained my level of frugality and bought assets over a decade.  I created wealth for myself, investing in the stock market heavily from 2008 to 2014, and transferring my profits away from the market into real estate, purchasing three rentals.  How many people out there get promoted and do the opposite, ramp up their lifestyle instead to match their new salary?

About a week ago, I got an email from Community promoting the services of B2R  I was immediately intrigued by the mention of investors being able to consolidate mortgages and free up equity.  That's something that I tried doing with conventional financing, to no avail!  Using leverage and built-up equity from one property to purchase another one is what's most common among real estate investors.  Ultimately, I didn't have enough equity in one property to be approved by a traditional bank for a new mortgage.

B2R is a "portfolio lender."  My man, Mark Ferguson over at InvestFourMore has an excellent article on portfolio lenders.  If you're a RE investor, you should definitely take a look.  But back to my story.

I called B2R and got a great rep.  He explained to me that B2R would lend on a rental portfolio consisting of at least three rentals worth a minimum of $400K.  Perfect...if my portfolio of three properties was valued at $400K.  It is at $315K.  The rep did begin a series of questions about my rentals that led to a solution: buy a fourth rental and put it in with these three to breach the $400K threshold.  He assigned me the homework of finding that fourth rental, and I did!

An investor relations person at Midwest Equity, a turnkey operation presented a duplex (each unit is 2 bed, 1 bath) in Iowa at $100K with the following stats:


Sales Price: $100,000 
Rent: $1400 
Vacancy Factor: $70 
Taxes: $118 
Insurance: $82 
Maintenance: $70 
Management: $112 
Mortgage: $80,000 @ 5% for 20yrs 
Mortgage payment: $527.96 
Cashflow: $420.04 
COCR: 25.20% 

On Zillow, each address is $54,500 so the price tag is fair.  What's best is the COCR (cash on cash return)...25%!  Of course, it depends in part on a mortgage rate of 5%.  The B2R rep stated that rates they give to their investors range between 5-7%.

I have a purchase agreement with three contingencies: 1) Financing 2) Inspection and 3) Tenants in place.  Other assurances include Midwest's 1-year warranty on the work their contractors did to renovate the property AND they also have a full money back guarantee if between months 4 to 6, I, the investor, am not happy with the rental, they will buy it back! (Not kidding).  

I've sent the property info over to my rep at B2R and next week I will be busy wiring earnest money, and providing financing info to get a mortgage loan disclosure statement prepared for me.  Wish me luck!

Returning to teaching is going to cost me about $25K a year in salary.  That's a huge chunk of change.  I'd be lying to you if I told you I wasn't worried about it.  Worrying about money isn't going to help you or me.  Finding ways of supplementing one's income is the only logical solution, aside from going ultra frugal.  Several months ago, I did a Google query on ways teachers can make money and found several sites with various strategies.  There was no resource or manual, however, which is what I really was looking for, of ALL things teachers can do to supplement their salaries.  A light bulb turned on in my head.  I'm proud to share with you that my latest eBook: The Ultimate Teacher's Guide to Supplemental Income is now live and for sale at Amazon.

I have put together for teachers that have realized they need to supplement their salary for multiple reasons a manual full of the best 21st Century ideas for generating extra income.  Here are some excerpts:

Why should teachers, of all professionals, live by some antiquated code of conduct that keeps them poor?

Before I began writing this eBook, I went around and asked tens of colleagues at my school, plus teachers on FB, whether or not they would buy a book titled: The Ultimate Teacher’s Guide to Making More Money.  I explained to them that the book would be a resource for teachers on ways to supplement their income.  You know what they said to me?  No!  That’s right, they said, no.  When I asked why, the response was always the same…the title sounded too gimmicky or like some sort of get-rich-quick scheme.

It was while explaining what the book would be about that I found the answer to my initial marketing problem.  I then went back to these same teachers and asked them if they would buy an eBook titled, The Ultimate Teacher’s Guide to Supplemental Income.  They said, “That, I would buy.”  You know what the hold-up was for these helpful folks?  In the case of the first pitched title, they saw themselves being dislodged from their teaching careers, and this frightened them.  They liked teaching, and didn’t want to consider a replacement job.  The word, supplemental, made them feel at ease.  Now they pictured themselves still teaching, just doing a few other things outside of their teaching day to make extra money.

Interesting? The book sells for only $4.99 and buying a copy if you teach will lead you to ventures worth more than that amount easily. Not to mention you will be supporting me and my family with my career move. It would be very much appreciated by the Gomez family if you were to get yourself a copy.

If ever you make the decision to return to a lower pay grade, maybe like me you have small children you want to spend more time with, make sure you give yourself at least a few years if possible to financially prepare. If you're a Spartan, create a sizable cash position and invest in highly liquid assets like stocks. If you're a Roman like me, buy an income producing asset like a rental. Also, look for ways to supplement your income given your skillset. I took to writing an eBook, and maybe you have something to share to the world as well? Keep working on your projects and never give up!

As always, thanks for being here. Take care.

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