The Ant and the Grasshopper

"The Ant is working his butt off at his job. He is putting his money in his 401K, but if he read his company's 10k report, he would know it will never payoff. But he is a good employee, shows up on time, does his 40 hours per week and thinks he is an "investor"because of his 401k. He takes vacations in the summer with his kids and puts it all on his credit card. He has the newest SUV for which he has a loan, he is STILL paying off his student loans, but hey, he has a degree which makes him a more valuable employee. He has a home mortgage and really thinks that this is an investment. His salesman at the car lot called his car an investment too. His wife, Mrs. Ant, does volunteer work for the community. But she is thinking about quitting because she may need to take a job to save for the little Ant children's college education. They need to be prepared to get a good job. They spend years and years being diligent...Then there's the Grasshopper. The Grasshopper disdains having a job. He wants to be an entrepreneur. His neighbors, the Ants, think he is a lazy bum and that the word "entrepreneur" just means he doesn't have a job. He tries to explain to his neighbor, the Ant, about leveraging money, leveraging credit, and collateralized enhancement. The Ant thinks theGrasshopper is crazy. The Grasshopper goes to his Real Estate Investors meetings, seeks out mentors for more information about entrepreneurship, and learns aboutpaper assets. He buys a duplex with a downpayment tha the borrowed from a family member, and it doesn't appear on his credit report. It appreciates in value. His tenants are making the payments. He takes cashout, gets another duplex. Finally, he has four duplexes. He uses a 1031 tax exchange to get anapartment building. He learns more about paper assets as well, and becomes a member of a corporation set up by one of the Grasshopper relatives. His portolio grows and grows. He continues to leverage his money,but likewise his debt grows. His neighbor, the Ant, thinks this is too scary because the Grasshopper is thousands of dollars in debt even though he is now a millionaire and moves to a better side of town.FINALLY... One winter, the Ant learns that his 401K has crashed because of mismanagement by his fund manager, his job got outsourced overseas, and his home is in foreclosure. It was bought by the Ladybug whotook a real estate course taught by....You guessed it!..... The Grasshopper. The Ant and his wife are now homeless and thinking about getting a job flipping burgers. The kids decided not to go to college, andjust want to party with their friends. They see theirparent's advice was not too good, but don't know what else to do, and they are also convinced that theGrasshopper is nuts...The Grasshopper is attending a banquet where he is getting the Award for Insect of the Year from his community. All his friends are there to toast his hundreds of thousands of dollars in debt, and the good he has done for his community. The Grassphopper wipes away a tear as the crowd cheers and acknowledges him. He's actually remembering the "lean years" and what it took to get here. He lifts his Champagne glass as he looks over the banquet table ladened with food and sees the smiling faces all around. He thinks, for a moment, about his old friend the Ant and wonders where he is today...."

Balllllllllllllin'- Poker player getting 7 Aston Martins

Professional poker player "BigJoe2003" who plays on PokerStars is on pace to receive 3 Aston Martins(http://www.astonmartin.com/home) in 2007 as "bonuses." For people who read this blog who don't play online poker, at PokerStars you get rewarded in points for how much you play/rake that's paid. You can then redeem your points for items in the PokerStars store. You can get things like: poker books, entries into tournaments, ipods, tvs, etc... Even cars for some of the guys who play a ton. 'Joe" plays a LOT, so he gets a lot of points to redeem. He has said in his blog that if he does well at the WSOP this summer, he will be getting 7 Aston Martins, and getting the license plates to be: "MONDAY", "TUESDAY", "WEDNESDAY", etc.... which would be pretty sick. I think Aston Martin's are worth $100k+. So in the next 12-18 months he should have almost $1 million in Aston Martins if he ends up sticking with that plan. SICK.

As someone commented in his blog: 'I would suggest you get an eighth aston in case you are staying overnight somewhere away from your garage. You'll look pretty stupid driving home in a Tuesday aston on Wednesday.'

Well said.

tax sales

Been thinking about a lot of different real estate strategies that I'm considering. Been debating a lot on what I want to focus on most.(I'll talk more about that in another post) One of the areas I've been looking into quite a bit lately is getting into some cashflow deals. You can't really cashflow here in Arizona, so I've been looking into some other areas.

In one of the areas I've been looking into pretty strongly, my friend passed on some information to me of a guy who was investing heavily in that area, and was going to be bidding on properties at a tax sale there next month. The information that I received was that he was looking for investors who wanted him to bid for him at the auctions. He buys a few houses for himself, and bids for others for a fee. So in those transactions, he basically works as a bird dog for you. He does the research, and even the bidding for you. I decided to give him a call.

We spoke for over an hour yesterday. He currently owns 17 properties in that area, and has been investing there for 5-6 years, so he knows the area very well. He buys the properties for cash, which is why he can only buy a couple at a time. The good news is, they are very cheap to buy. They do need work done to them though. My exit strategy would be to flip the property if I thought I could make $15k+ on it, and if not hold for cashflow. Based on the numbers he was talking about, I should be able to have positive cashflow of around $300/month after fix-up. He goes down a couple weeks before the auction, and does all his homework on the properties. He even hires people out to bid for him at several different auctions throughout the area. Often, the auctions require you to pay with cash right there at the auction, so I'm sure this lowers the competition from homeowners, which is good for investors.

I am thinking of buying one or two properties there with him, leaning towards probably just one this time to see how everything works out with him, and the deal. I would want to be there myself to bid on the properties, so I may fly out next month. I don't usually like carrying a lot of cash on me when I travel. When I fly somewhere where I think I'll play poker, I sometimes have a bunch of cash on me, and am always afraid I'm going to lose it somehow while traveling. The good thing about flying with cash, is that I probably won't get robbed since no one can bring a gun/knife through the airport. This would be much more cash than I'm used to carrying though, so I'll have to think of a good/safe way to travel with it if I decide to go. I heard a great story a few weeks ago from one of my friends about a situation traveling with a lot of cash. I'll post the story sometime this week.

my blog

I am a 24 year old professional poker player and entrepreneur currently living in Tucson, AZ. I graduated college 2 years ago, and I knew that spending my life working for someone else wouldn't make me happy, and wouldn't make me rich; so I chose a unique path, that's worked out pretty well so far. My blog will include parts of my life as a professional poker player, as well as some of the current investments/business opportunities I'm involved in, and some other things that people may find interesting.