The $0-$10K/Day Case Study: Day 103

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DISCLOSURE: THIS POST MAY CONTAIN AFFILIATE LINKS, MEANING I GET A COMMISSION IF YOU DECIDE TO MAKE A PURCHASE THROUGH MY LINKS, AT NO COST TO YOU. PLEASE READ MY DISCLOSURE FOR MORE INFO

One thing I’m a big believer in is having a plan.

But,  you also can’t have too detailed of a plan or spend too much time analyzing that you don’t take action.

It’s why I read this quote from General Patton every day as part of my morning  routines: “A good plan violently executed today is better than a perfect plan executed tomorrow.”

I have a pretty general plan in the “About $10K/day” section of the website, specifically in the “phases” section. But my most detailed planning is actually done in an Excel model that I built. Someday, I’ll have a developer build that into a web app or something.

The great thing about this Excel model is it allows me to project exactly how much money I make, spend, and have on-hand for each month for the next ~10 years. Of course, the projections for next month are the most accurate while the projections ~30 years down the line as less accurate.

I spend a lot of time studying this model and planing different scenarios. My goal has been to try and figure out how to get that 24 unit and 25 unit I’ve talked about a bunch before.

It’s precarious, to say the least.

Here are my conclusions from looking at this model:

  • Buying the first 24 unit this quarter (which is the goal) will bring my available money down to less than one month’s worth of cash. If we  buy it and I stop selling consulting work, we’re in trouble
  • If everything goes right, we should have enough to buy the 25 unit late 2020
  • My debt should be paid off in July, which will skyrocket my financial well-being
  • That will again bring me to less than one month’s worth of cash, and the edge of financial ruin. That will be four mortgages to pay without any financial safety net

This is worrisome. I don’t tend to get stressed and my general disposition is always one of “No need to worry. I know I’ll do whatever is necessary to figure it out.”

That attitude enables me to take risks, like buying these properties with just a tiny cushion. I  also know, thanks to the model, this one fact: the number of rental units we own will roughly double every year.

Look at this difference

Units we own at the end of each year (Not buying the 24 unit and 25 unit):

  • 2020: 13 units
  • 2021: 26 units
  • 2022:  52 units
  • 2023: 104 units
  • 2024: 204 units, or roughly $31K/month in cashflow at $150/unit

Units we own at the end of each year (Buying the 24 unit and 25 unit):

  • 2020: 61 units
  • 2021: 102 units
  • 2022:  204 units
  • 2023: 408 units
  • 2024: 816 units, or roughly $122K/month at $150/unit

So, it’s a difference of roughly $100K/month five years from now to go for it, which makes the math worth it.

But, it’s risky. It will keep me up at night.  It will put us at the edge of financial ruin.

If you’re reading this case study to try and understand what trying to be an entrepreneur is about, then know this: it’s fucking stressful. And, I’ve never been one to get stressed before.

What I did yesterday to make $10K a day at 30

The current phase of the plan

I’m in Phase #1:  The Job & Side  Hustle Phase.  You can read more about the phases and my plan to get to $10K/a day at 30 here.

Wake up & sleep:

I went to bed at 10:36m and woke up at 7:57 for a total of 8 hours and 57 minutes of sleep. It’s somewhat crazy to be asleep for 9 hours and still wake up feeling like shit, but that’s where I’m at.

I’m feeling like crap and Whoop also has me at 34%, so I know I’m doing something wrong. I think it’s exercise and stretching, so I’ll try to do that today.

Exercise

I hit >10,000 steps while walking around the apartment, and I did a couple hundred pushups, situps, and biceps/triceps. Overall, it was probably a ~20 minute weight workout but well worth it.

Diet

Diet was very simple. I had morning coffee while reading my morning rituals and doing the real estate scrolls. I made my fiancee pancakes (with chocolate chips!) for breakfast, had hardboiled eggs for lunch, and made a garbanzo bean, spinach,  sweet potatoe hash for dinner.

My Day Job

Saturday.

Investment real estate

I mentioned a few days ago how I found a great property for sale in Grand Forks and that I believe it was overlooked because it’s not in a “big city.” Well, it’s now under contract and that took less than a week to happen! Since someone else bought it, I’ll share some details below on why I think it’s a great deal.

Here’s the property: 1225 Stanford Rd, Grand Forks, ND 58203

It was asking $340K for 10 units, or $34K a unit. That’s right in the price-point per unit my fiancee and I play in. You can also see from the picture that the building is freshly painted,  so inviting to look at and easier to rent. You can also see that each unit has a covered garage stall, which is a huge plus. Tenants in northern, snowy areas like North Dakota very much value that.

Off to a good start.

Here are pictures of the inside. It looks good-I would very happily live there. I  see no reason to believe that maintenance cost will be high here, or that prospective tenants won’t like it.

Here’s a trick for you on that: look to see if the range (stove) has an exhaust hood over it. Anyone good will know that’s a safety requirement for a gas stove due to the fumes, and that an exhaust hood is, in general, a necessity to prevent the place from smelling like food. To my knowledge, every one of our units has an exhaust hood.

There are also always pictures of the kitchen in every listing so you can check it from Zillow. I’ve found it to be a really good proxy of inspection issues. This property has exhaust hoods.

The property is still looking good.

The red pin is the property. You can see it’s only a few minutes to the University of North Dakota. Still looking good, as vacancy shouldn’t be an issue.

Okay, monthly cost estimate here is ~$1,800 for mortgage, taxes, insurance. We need to mentally double this to ~$3,600. Why? This doesn’t factor in repairs, CAPEX (e.g: monthly amortization of repairing the roof every 15 years, furnace every 20, etc.), vacancy, or management.

Now, let’s look at income. Rentometer has the following rental projections:

The picture is a little fuzzy, but it says average rent for a 1 bedroom in the area is $620/month. At 10 units, that’s $6,200  a month in rent.

Therefore, our very rough math shows $6,200 in rent -$3,600 in expenses gives us $2,600 in profit per month. At 10 units, that’s $260/month in cashflow per unit. That is crazy good, especially for a property that isn’t falling apart.

Which, is why the property got an accepted offer in less than a week.

This  “due dilligence” isn’t enough to buy the property on. But, it’s enough to get on the phone with the agent, request the P&L, look into North Dakota student housing forums/Facebook groups, etc.

One quick tip: it’s worth studying the real estate market every day for years. Set up some saved searches on Zillow and evaluate the new properties on the market every day. You’ll get good at it and recognize a good deal  ASAP. I’ve been studying the real estate market for a decade, so it took me less than  10 seconds to realize this was a crazy good deal.
My hope was it wouldn’t sell with COVID, allowing us to buy that 24 unit, then circle back to this one.
One quick note,  you need to do this studying. Everyone likes to say that investment real estate is easy. But, in commercial multi-family (>4 units), you’re competing with people like me who’ve studied for a decade. I don’t want to be competing with the people who’ve studied for ~30+ years, which is partially why we avoid the coasts for now.
You can try to avoid the competition on the coasts, like we do, but even in Grand  Forks, you’re competing against me for a deal. I would have paid up to $450K for this property.
You gotta study real estate before you go in on it
Grant Cardone owns over a $1B in multi-family. If you listen to an  interview he did on BiggerPockets, you’ll see that he spent years studying real estate, all day every day on the weekend before going into it

Side Consulting

I have three projects going.

Business plan

I didn’t do any work here (Saturday with  my fiancee)

Private Equity

Ditto.

Sourcing new work

I  had someone reach out to me and hire me on the spot. They’re bringing me on for ~36 hours to validate their financials for ~$800. All total,  it shouldn’t be more than a few hours of work. I’ll take it. I got started with it yesterday evening.

Here’s a tip: always try to get a prospect on the phone.  When I just exchange emails/messages, my close rate is ~10%. On the phone, it’s ~80%

$10K/day website

I spent ~35 minutes,  according to Rescue  Time, to publish yesteday’s post.

Family

My fiancee and I had a nice day together. Morning pancakes, walk together, and then we watched the Global Citizen concert.

Miscellaneous

Nothing misc done today; it was a pretty straight forward day.

Rescue Time Daily Screenshot

I invested in Rescue Time, to help me understand where I’m spending my time vs. not, but really for the purposes of the case study. Looks like  ~3.5 hours

(I know all these photos are pixelated! Working on fixing it)

What I made today

Job: $170

Rental Income: $33

UpWork: $0

Consulting: $731.00

Affiliate: Not doing yet

Micro-SAAS’s: Not doing yet

Hotels: Not doing yet

Dividend Income: Not doing yet

Total: $934

Today’s pro-rated amount of monthly expenses

Expenses: $250

Once I pay off my debt, I’ll break out expenses into a line by line as well.

Today’s Income

Made $684.00

My plan for tomorrow

Tomorrow is Sunday. I have some business plan work, auditing those financials, and then building a deck for my private equity client.

I think probably  ~4  hours of work

About the Author & The $0-$10K/Day Case Study

Dean’s goal is to create $10,000/day in passive income through entrepreneurship. Too many people write “success porn” that skates over the struggles many face in entrepreneurship. His goal is to create something real that highlights the lack of sleep, disappointment from family, and setbacks you really face in entrepreneurship.

To read more about how this case study is set up, check out the ground rules here.

The hope is that this series of posts will inspire someone else out there to make their entrepreneurship dreams happen.

Dean Woods is currently an executive by day and a bootstrapped micro-startup CEO by night. Prior to working in startups, Dean was a management consultant. Dean graduated with honors from The Wharton School.

What I did yesterday to make $10K a day at 30

The current phase of the plan

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Wake up & sleep:

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Exercise

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Stress levels

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Diet

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My Day Job

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Investment real estate

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My Actual Business

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Side Consulting

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$10K/day website

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Miscellaneous

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Rescue Time Daily Screenshot

Today’s pro-rated amount of monthly & yearly expenses

Today’s Income (pre-tax)

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My plan for tomorrow

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Dean Woods

Dean Woods

Dean’s goal is to create $10,000/day in passive income through entrepreneurship. Too many people write “success porn” that skates over the struggles many face in entrepreneurship. His goal is to create something real that highlights the lack of sleep, disappointment from family, and setbacks you really face in entrepreneurship. The hope is that $10K a day swill inspire someone else out there to make their entrepreneurship dreams happen. Dean Woods is side hustling and working a full time job to kickstart his entrepreneurial path. Prior to this life, Dean was a management consultant. Dean graduated with honors from The Wharton School.

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