Category Archives: Entrepreneurship

How To Be Like A Landlord Without Owning Rental Property

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I have a friend at work that has experience what it’s like being a Landlord, even though he doesn’t own rental property.

My friend (let’s call him Phil), has a 4 bedroom house but only 2 kids.  So one year my friend and his wife decided to rent out their extra room.

I believe this is an excellent way to creep into the Landlord/”rental property” owner role.

Here’s why:

  • You don’t take the financial risk of purchasing rental property and trying to make a profit off of it.  If you rent out a room in your house, so you should be able to be profitable each and every month.
  • You don’t have to go through the process of getting a mortgage for the room since you already either have a mortgage or you own your house mortgage free.
  • You still have to deal with collecting monthly rent, but if your tenant misses a payment, it doesn’t hurt as much since you don’t own any extra expense from renting your room out.
  • You draw up a contract between you and your room renter!
  • If you tenant leaves, you are still in great shape financially.
  • You learn to put ads in the paper for renting a room.  This should transfer pretty well to the same process for renting out a rental property.  Plus you get to learn what works and what doesn’t at a low-cost.
  • You get practice running background check!  This should give you experience when you really do take the plunge and buy rental property.

Taking it to the next level, rental property!

Another great thing about renting a room before jumping into the real estate market, is that you can save money from renting out your room, and over a few years you can use that money for a down payment on a rental unit.  This way you reduce the hit on your own personal checking/savings account since the money from renting out your room is money you wouldn’t have had anyway.

Conclusion to Renting a Room

While there are could be some negative to renting out a room in your house, I believe that this reduces that big step from not owning rental real estate to owning it!  I really believe this could make the transition much easier (especially if you are single).

Good Luck,

MR

 

Using Ebay to Teach Kids About Business

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Today I would like to share with you a story about my son, and how I’m using ebay to enhance his desire to make money.

My Entrepreneurial Son

James (randomly chosen name) started selling lemonade from a lemonade stand for 25 cents when he was almost six years old.  I thought he wouldn’t last, and while he only did lasted an hour, it was thirty minutes more than I thought he would do.

On that particular day, he made $3.46.  Since he was selling to young kids, there is always a kid or two that doesn’t have enough money, so he sometimes sells to them for less money, and that is why the money sometimes comes back with unusual amounts…

The following year, he sold lemonade too, but what caught my attention was when he decided to try to sell lemonade in late September.  It was way to cold for a lemonade stand, but he wanted to try anyway.

At first, I was going to explain to him the principles of supply and demand, but then I decided it was better than he experienced “no sales” first hand.  “Trying and failing” is sometimes a great opportunity for a life lesson!

So he went out to try to sell lemonade on a damp, chilly day.

After thirty minutes, I went out to check on him (at this point he was seven years old).  And lo and behold, the lemonade stand was unoccupied.  Then, I saw him riding his bike a few housed down yelling “Lemonade, get your lemonade here, refreshing lemonade“.  I started to call out to him, intending to making him stop yelling, but then I let him go.  I shook my head as I walked back into the house, slightly impressed with his clever advertising idea.  I thought, not too shabby for a young seven-year old…

So another 50 minutes passes, he gives up and comes in, and I’m all ready to explain why my “supply and demand” lesson to him on “why he didn’t sell any lemonade“… but he had!  Apparently, some of his neighborhood friends heard him yelling and bought some lemonade.  And while his total sales only came to $1.75, it was $1.75 more than I thought he would sell!  This is the time I decided to teach him about business, using eBay as a learning tool.

You might be thinking “Why eBay“?  Here are the  reasons:

  • It’s a fairly simple business, that you can do mostly from your home.
  • It has all the important elements of a business, such as:
    • a product to prepare and sell, and possible a vendor
    • an advertising element (the write-up for the auction).
    • consideration of business operating expenses for:
      • eBay listing fee
      • eBay final sale fee
      • buy it now fee
      • Paypal fees (if you use Paypal)
      • transportation (gas) expense
      • packaging costs
      • Postage expense
      • Shipping Insurance expense
      • Time and rate of pay calculation
      • Taxes!
    • customer relations
    • invoicing
    • collections
    • and so on…

So, while eBay is just a simple auction, it’s still a great place to start to learn about business!  All of the bullet points above are excellent business functions to learn!  The cost for the point of entry into this business is ridiculously low too!

Our Adventure as Sellers

Since my kids (I also have a daughter) were born, I’ve always tried to give them financial advantages.  During my period of reading any financial book that I could get my hand on in the library, I read about a  board game called “Cash Flow for Kids“.  Intrigued, I started to try to find it online.

All of the sites that I came across online listed the product for $40.00 or more!  Then I got lucky!!!  I found a site that sells the product for $26.00, and if your orders total over $50.00, shipping is free!  In addition, after you buy so much, you get a 40% discount on the next shipment!

I wanted the game, but I knew I had the eBay opportunity that I was looking for!  Not only would I buy the game to teach my son about business and investments, I would also teach him by selling this production on eBay for profit.  Surprisingly, on eBay, it was going for a higher price than what the online stores were listing it for…  Although, some were out of stock of the products too.

This was great because after my son and I look the pictures (this was his contribution, with help from me of course), and developed the sales pitch (this was all me, but I reviewed it with him) our entire advertising and eBay listing phase was completed.  All we needed to do was use the previous auction as for the basis for a current one!

Next, I created an auction watcher shortcut, and my son and I would check daily to see if our product sold or not.  We only sold two at a time per week  because we didn’t want to flood the market and drive the prices down.  After all, it was a narrow niche!

A big bonus came in October and November!  While the number of auctions for this product increased on eBay, demand still outstripped supply, so the price of the auctions went all the way up to the $90 and $95 dollar range!  My son and I were ecstatic!

So we did this for about a year and a half, until the supplier discontinued carrying the product.  I kept one of the games for the kids to play, and then discontinued the eBay business.

What is My Son Doing Today?

Well, he must have learned something about eBay and business because now he wants to sell some of his toys on eBay instead of in a garage sale.  He has learned that the market is larger and pays more than the smaller garage sale crowd!  So this October and November, I’m going to help him with his own eBay experience!

-MR

Crushing Aluminum Cans, A Process Improvement

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Collecting Aluminum Cans, Purpose:

For a field trip, the school my son attends incorporated a program that included crushing aluminum cans in an effort to teach kids about recycling, and a quick lesson in entrepreneurship.

My son was above to save up enough cans (over 6 or more  months) to pay for his entire trip this way.  The cost per student for the trip was $40.  Of course he had to collect cans from family, friends and neighbors.

Crushing Aluminum Cans, Process Improvement

In my last post about my son’s aluminum can entrepreneur adventure, I think I may have mentioned that I discovered a process improvement that makes the task easier.

The process improvement is extremely simple, but make a huge difference in the effort to crush the cans.  The secret is to squeeze the cans just slightly so that the integrity of the can isn’t 100%.  This creates a flaw in the can and it’s crushes much easier in the can crusher apparatus.

Crushing Aluminum Cans, Performance Improvement

Prior to the process improvement, my son was able to crush cans at a rate of 5 per minute.  After teaching him the new technique, he was able to average about 13 cans per minute!  That’s a 160 percent improvement!   we were able to process the entire bag in 15 minutes versus 45 minutes it would normally take me.

Compression of Aluminum Cans

I was able to crush two large bags full of cans.  The sad thing is that they fill up less than 1/4 of the large lawn bags.  This is good from me, but my son really hoped there would be more cans in the bag.

So sadly, we had to delay the converting of cans to money at a recycling center.  Perhaps we’ll give it another go in the very nearby future.

Lessons Learned For My Son

My son learned 2 things from this last bout of crushing aluminum cans!

  1. Simple changes to the process can have huge performance differences
  2. The benefits of the compression process drastically reduces the space requirements for the cans in the bag.  A overflowing full bag was reduced to about 1/5 of the original size.  He was amazed, even if he doesn’t get paid sooner than later.

 

-MR

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Creating Opportunities To Become Rich Using eBay

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I once worked with a technical contractor (let’s call him Bill) that had the special gift of seeing opportunities that others would consider as garbage.  Not only was Bill a technical contractor, Bill was also became an accidental eBay entrepreneur!

During a four-year time span, my friend became an expert at creating opportunities on eBay which helped him become rich!  Today, I’m going to tell his story of the way he made over $100, 000 on eBay by selling what some considered junk Cisco parts and routers!

It was the year 2001, and the tech industry was coming out of a spending freeze.  A few years in the tech market is like 20 years in normal time, or so it seems.  Many of the companies had old outdated Cisco routers and now those businesses suddenly had a budget for spending on new technology once again.  So many companies pitch or sold their Cisco routers at bargain prices since most businesses considered them junk because they were older and slower than the new Cisco stuff.

Back then, Bill had a desire to learn the ins and outs of Cisco routers, so he went on eBay and started looking to buy a few routers that he could use to setup a lab to help him get Cisco certified.  He quickly found a few cheap routers and bought them.  To his surprise, he realized that the price he paid for the router didn’t take into consider the  T1 communications card.  The T1 card was worth as much as he paid for the entire router!   Also surprising was the fact that there were a huge number of these exact routers for sell on eBay.  Instantly, Bill realized the great opportunity that he had!

You see Bill only paid around $1,000 for each router, but he could take the T1 card out of the Cisco router and turn around and sell both the card and the Cisco router for around $2,000!  That is a $1,000 profit, and a 100% profit margin percentage return!  He didn’t waste any time buying and selling this Cisco cash cow that he discovered!

As he was making money via his discovery, he still got his Cisco certification with the routers that he bought to learn with.  This is when he came up with the brilliant idea of creating a Cisco Certification kit!   He would provide the configuration need to accomplish 2 types of certification and sell his new creation for a more profitable price that just selling the Cisco routers alone.  This little modification increased his profit margin percentage return to 160% on his Cisco certification kits!

Both fortunately and unfortunately, demand outstripped the amount that he could buy.  Since we worked as a contractor, he would miss deal during work hours and during night.  At least until he came up with the idea of writing a program that would detect the auctions of this particular Cisco router target, and email him.  He had his application setup so that if he replied to an email, his application would buy the Cisco routers for him!  This enabled him to overcome the supply problems because he was not buying them up as fast as they would be listed on eBay!

He actually went so far as to modify this program to automatically buy such auctions when they came online, but he only used it a few times because of the potential risk associated with a bad buy.

During these times, Bill confided to me that he was making over $80,000 a year on his little eBay business that he created.  And the beauty was that it was big bucks right from the start!  Often times a new business could take years to build up to profitability, but here he was making great money right of the bat!

Just guessing what he was making as a contractor at the time, I would have to guess that he was clearing over $200,000 per year from working as a contractor and selling his lucrative Cisco kits!

I learned from my friend to keep my eyes open for opportunities, because there are opportunities all around us, waiting to be discovered.

-MR

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