I run a local real estate investment club, and this month I did something a little different and created a pre-recorded video. I did it for a couple of reasons, but the biggest reason was that I listened to an impactful book about poverty and discrimination in the rental business.
I read a fantastic article this weekend called, "Church, Don't Let Coronavirus Divide You." Even if you're not a church leader (or a Christian), I think this article does a great job of articulating how people ought to respond to the pandemic, especially as things start to open up. This is great advice for everyone. Below are a few parts that resonated with me.
The main problem is different convictions:
"Some will be eager to meet in person and impatient to wait much longer to get back to normal. Others will insist it’s unwise to meet at all until there’s a vaccine. Plenty will fall somewhere in between."
And compounding that is the question:
"Have you noticed how remarkably confident so many of us are in our views right now? Unfounded certainty ... is a contagion at least as viral as COVID-19 itself."
This stuck me in the heart. I definitely fell into this camp. Even at times being certain that nobody really knows anything! It makes it difficult to act civilly when there are vastly different opinions that are held as facts.
This actually sounds very familiar to politics. Though, at least for me, politics often feels like a distant discussion without much influence on my day-to-day life. The pandemic is different. So even folks like myself, who generally don't pay much attention to politics, have entered the conversation with a firm - albeit non-expert - opinion on how things should be handled.
Sacrifice
Instead, the call is to place other's interests above ourselves, to hold the posture of a living sacrifice (Rom 12:1):
"someone might find it personally difficult—even maddening—to have to wear a mask during church and stay six feet away from everyone at all times. You might think these precautions are a needless overreaction. But here’s the thing: even if it turns out you’re right, can you not sacrifice your ideal for a season, out of love for others who believe the precautions are necessary?"
and
"Likewise, those who think the lockdowns should continue should not pass judgment on those who question the wisdom of the government’s ongoing restrictions. Churches should strive to honor people on both sides of the spectrum."
Patience
What a good article! And it continues to talk about patience.
"To be sure, it is good and right to be eager to gather again... But we should be careful to not rush it. We should be careful to not go faster than governments allow, or faster than those in our community can understand. We should be patient with a timeline that might be slower than we’d prefer; patient with a reopening process that will doubtless be clunky; patient with leaders feeling the pressure of this complex situation; and patient with one another as we figure out the new normal. Those who are not comfortable with physical gatherings should be patient with those who are, and vice versa."
I'll be honest, I actually enjoyed the break, so I'm totally OK with a slow transition. Not out of health concerns, but because I enjoyed having an open calendar. I also understand I'm blessed to keep my standard of living, which is not true for everyone.
Jessi and I have talked about doing mini-quarantines going forward. It's a stay-cation: where you stop all normal activities, but you don't travel either. We do take breaks from activities, but it's usually not all at once and we have a tendance to fill that time with other activities. I'd like to institute some sort of regular family retreat/stay-cation/mini-quarantine.
Now having said that, I already know I'll struggle with being patient with "a reopening process that will doubtless be clunky." This is where I will need to regularly remind myself that they're human too and this is new to everyone.
Nuance
I appreciate the final thoughts on nuance. The idea of both seemingly opposite ideas can be true at the same time. We're encouraged to take
"the path that prizes both courage and prudence, and avoids both pollyannaish and doomsday responses. It means we can be skeptical of some aspects of the lockdown without resorting to outrageous conspiracy theories, and we can honor governing authorities (Rom. 13) while engaging them in civil pushback when necessary."
The whole article is great and articulates my sentiments well. I recommend reading the whole thing.
Perhaps the most common question I get during the COVID pandemic has been, "How's it going as a landlord?"
It makes sense I'd get asked this given that I left my job at the end of last year... just enough time to almost get settled into a new normal before everything came down.
For starters, Jessi got sick right away. It seemed like pneumonia at the time, but in retrospect, it shared very similar symptoms to COVID. However, she was never tested. When we called our doctor, he said the advice would be the same no matter which illness it was - stay home and rest - so there was no need to get tested. All that to say, our family's life ground to a halt for a couple of weeks.
And I LOVED it!
(Jessi was miserable, but I never showed any symptoms of anything.)
It was like a staycation where nobody had any real expectations for me. I got to focus on my startup and playing with the kids. I pushed back all maintenance projects and canceled all scheduled lunches, meetings, and trips. I even stopped tracking my schedule, todo list, and turn off my morning alarm for two whole weeks!
Not too bad, right?
Elinor & Vinnie, a lot of sleep happened around the house
At the end of those two weeks, Jessi was feeling better, we were all working/playing in the garden, and I was figuring out how to get back into doing some rental work... It hit that those two weeks would have looked entirely different at my old day job.
You see, my job was already 100% remote, so sheltering in place wouldn't have impacted me. However, since I was on the forecasting team, it would have been all-hands-on-deck to try and quantify the impact of COVID on the business. How bad would it be? For how long? What do the different recovering scenarios look like? Which drivers would be impacted? What happens when millions of kids are suddenly at home with school worksheets to complete? What about millions of employees not going into an office, or not working?
Those are some immense unknowns! I'm sure every medium-to-large company has a cadre of people trying to come up with plausible scenarios. They're combing through all available data, no matter how sketchy, to find some sort of useful insight. That's the job, and it can be enjoyable. But, it can also be stressful when senior managers are clamoring for answers now.
As a small landlord, I didn't need to do any of that. Either people would pay their rent, or they wouldn't. I sent out an email asking folks to let me know if they were going to have any issues so I could work with them. That was all there was to do, and by God's generous blessing, I didn't have any extra-ordinary non-payments (just the usual issues). We'll see what happens next month, but I'm choosing to trust that God will take care of us again. It also helps that each of our residents are awesome, responsible people!
I suppose, if I was actively growing my business, I'd be a lot more interested in figuring out the potential impact on the real estate market. But since I'm not looking to buy or sell any time soon, I'm not stressed out over it. I do think about it a little for Majordomo, but it's such a new company that it's really only a question of growth rates. And, the product fits well with social distancing: instead of asking contractors to go through a house to tell you how much repairs will cost, upload your home inspection to Majordomo's website and wait 24 hours for estimates.
Samson, hanging out in my garage office
So, how's it going as a landlord?
Really well. I dare say, possibly better than if I wasn't. By having a diversified income (~80 checks vs. 1), it takes a lot of the risk away, and I'm able to take time off as needed instead of doubling down on the workload during uncertain times. It's not perfect, and the monthly budget is much tighter, but that was by choice, and I'm genuinely grateful for all of the Lord's blessings in our life.
I think we all know it intellectually, but sometimes we have a moment when it smacks us in the face. For me, it happened this week.
Jessi and I have been talking about getting a trampoline for the kids. I had a 16' one (from Costco!) growing up, and I jumped on it all the time.
[Fun fact: my parents originally purchased it so my brother could learn how to fall. You see, he had broken his arms three times in 18 months, and they determined it was because he would close his eyes while falling, and not catch himself. The trampoline seemed to help!]
For a while, our kids seemed too young. Then we visited some friends who had a trampoline, and the kids played on it for a super long time! And they loved it! And they slept exceptionally well that night. Double bonus!
Well... with shelter-in-place in effect because of COVID, we started looking. This time, Walmart came through with a sale on a 14' trampoline and the ability to pick it up without having to go into the store.
We set it up - in the rain, we do live in Oregon after all - but the next day was perfect, and we all bounced. The kids loved it. I loved it! They enjoyed it when I bounced them high. We took turns doing tricks, like jumping on your bottom and then on your feet again.
I got back into my high school days and started doing flips, twists, and combinations. I got winded, like in a real workout!
Then we got off...
And my back was killing me with what felt like a muscle knot.
My shoulders and neck were sore.
My knees felt wobbly.
...Oh yeah... I'm not in high school anymore. In fact, I'm twice as old as when I was in high school!
And my body feels like it. I usually don't think about it too much, but I suppose that's because I don't try to do the things I used to do in high school.
Man, what's it going to be like when my kids are playing sports? At what level will I be able to participate?
For me, this was a good warning since my kids will soon start participating in sports, and my role isn't to be a fellow player - to chase hard after a ball and go 100%. Instead, it makes sense to trend closer to a coach (that still runs around!) Kind of like in Cars 3.
I love being a player, and it'll be hard not to be on the field with them, but like I've found joy in being a parent, and I'm confident I'll find joy as a coach too.
Oh, and don't worry: I recovered enough to get back on the trampoline the next day.
For many years I've been at a constant hustle. I don't work every night, but I do on a lot of nights. And I don't work every weekend, but perhaps 7 out of 8 weekends, for at least 4 hours.
It makes sense, when you have a day job, the only time to handle property maintenance is on nights & weekends. And bookkeeping, tenant tours, and... Majordomo development.
If I had to have a meeting during the day, I would extend my day job's work time to make up for it. As Majordomo started going, it meant my workday often end at 6. And many times I finished something at 8:30 once the kids went to bed.
The idea of a work-life balance was a joke. Though to be honest, I liked what I was doing, so I never felt the need to find a balance. Hiring an assistant last year helped tremendously, but I was still pretty busy.
Again, to be clear, I loved everything I was doing and wouldn't go back and change it. It was a conscious choice, and I never felt burned out.
2020: Conscious Times of Relaxing
But I have an opportunity by freeing up 40 hours a week. There’s the risk that my remaining responsibilities expand to fill the available time, but what if I actively fought that and took purposeful, meaningful breaks?
Also, at the end of the year, I listened to a fantastic podcast series by the Bible Project on the 7th day. They talked about the idea behind a Sabbath: to take a break and enjoy the fruit of God's labor. It doesn't mean "do nothing," but to enjoy God's creation the same way you might enjoy picking food in a garden. In fact, God is so serious about it, it's one of the 10 commandments:
'"Remember the Sabbath day, to keep it holy. Six days you shall labor, and do all your work, but the seventh day is a Sabbath to the Lord your God. On it you shall not do any work, you, or your son, or your daughter, your male servant, or your female servant, or your livestock, or the sojourner who is within your gates. For in six days the Lord made heaven and earth, the sea, and all that is in them, and rested on the seventh day. Therefore the Lord blessed the Sabbath day and made it holy. ' Exodus 20:8-11
I must confess that for the past 12 years I have not fully trusted God with one of my days. That was especially true last year with a growing rental portfolio and Majordomo development work. I have a lot of pride in keeping a tight schedule and fitting in more activities than normal.
I'd like to change that. My desire is to experience the joy found in a 7th-day rest. To trust that God will provide everything I, and my family, needs in 6 days.
So, my goal in 2020 is to consciously, purposefully, find time to relax. To pick a day of the week when I put my phone down and shut off my computer.
I don’t want to get legalistic, but I do want to set some boundaries. I want to learn how to slow down, play with my kids and simply be in the moment.
Saturday will likely become my Sabbath day. I definitely intend to turn off my laptop. And I’d like to turn off my phone too, but the chance of a tenant call is something I need to prepare for. So, more than likely I'll leave my phone in the office and use my watch's notifications to triage urgent items.
I know Sundays are often candidates for a Sabbath, but we're often serving in some capacity, which makes it harder to actually feel like we're taking a break and enjoying God's creation.
During the remaining 6 days. I intend to work hard on the rentals and Majordomo. Just in the last week, I've been able to contribute more to Majordomo than ever before, which is exciting! But as fun and exciting as it is, I really want to be conscious this year to not solely (if at all?) depend on my own level of effort for success.
I've already failed miserably the last two weekends, which is why this is something I want to learn how to do this year. I clearly won't be able to go all-in right away, so my plan is to gradually phase it in and build my week around it.
So there you go. That’s my goal: relax. Observe a regular Sabbath and unplug. And when I’m working, work hard, so that I can relax guilt-free.
Jim Rohn once said, "You are the average of the five people you spend the most time with." I completely agree with this sentiment and will add that it extends beyond in-person interactions to also include media. You are the average of the people, and their content, you spend the most time with.
So, it's not so much, "you are what you eat," but more "you are what you consume."
What do you give attention to? Do you spend time on Facebook? Netflix? News sites? Blogs for XYZ? Whether you realize it for not, each of these influence your thoughts and perceptions of the world. None of those are good or bad, but you want to be purposeful with what you choose.
One "person" I choose to spend time with is God. I want Him influencing my thoughts and perceptions. There are many ways to interact with God, but as the quote implies the important part isn't what you do, but the amount of time invested.
One way of spending time with God is by reading the Bible. You can do occasional power sessions where you read entire books, but lasting change comes from the regular habit of spending time with God each day.
You can pick up a Bible and start reading. Even 10 minutes a day is great, but I find it helpful to have a reading plan.
One problem I have with most "read the entire Bible in a year" plans is that they don't give you a margin for missed days. For example, the plan I followed last year required reading every single day. What do you do if you miss a day? One option is to treat reading like exercise: you just pick it back up the next day (either skipping the previous day or taking longer than a year). The other option is to double up the next day, but what if you get 2 (or 3!) days behind?! Suddenly the discipline feels daunting.
What if you had a plan with built-in days off? That way you could catch up if needed. It turns out there is a plan called the Discipleship Journal Bible Reading Plan which does exactly that by splitting the plan into 25 days a month.
But, to be honest, I don't love the way it splits the Old Testament reading. It groups all the wisdom books together, and as a result, feels like you're flying through Psalms and Proverbs. My plan last year broke these out so you read a little bit of each every day, and I really liked it!
So... I made my own which combines the two.
It's 25 days a month of reading, giving you time to catch up if needed, or opportunities to dive deeper on days off.
Every day you read a Psalm, a Proverb, and the Gospel. Plus, a section of the remaining parts of the Old and New Testaments. I used the Discipleship Journal for the New Testament sections. And the DAB for the Proverbs (which I modified to fit 300 days of reading). For the Old Testament and Psalms, I found a website that gives each book's verse count and used that to spread out the reading evenly while maintaining natural breaks.
I then made the text small so it fits on the front and back of a regular sheet of paper.
If you're a Christian, I highly recommend a daily practice of spending time with God. Make Him one of the five people you spend the most time with. If you get discouraged by every day reading plans, check this one out. If this one isn't a fit, there are hundreds of others to choose from.
Thanks for checking it out. I'd love any and all feedback since I just made it and will be using it for the first time this year.
Last year I focused on ONE Thing, a problem to solve. And I really enjoyed the simplicity and focus. My goal, my problem to solve, was to make Furlo Family Homes a true business, one that I could leave for a year or more and return to find it running better than when I left it.
I didn't anticipate fully making the transition, but I wanted to have a plan for doing it. This involved a lot of learning, experimenting, and ultimately buying a couple more properties.
I read eight fantastic business books this year in addition to Rich Dad's Cashflow Quadrant. If you like reading, these are all worth checking out. If not... skip ahead.
SPRINT: Solve Big Problems and Test New Ideas In Just Five Days
My biggest lesson was to start with the "surface of an idea". Like in a movie, create something that looks like it and works just enough to fake it. Get feedback, then if people like it, build the real thing. For example, if you're making an app, create pictures and link them together in PowerPoint. Give people a guided tour. We did this with Majordomo, quickly refined it based on feedback, and now have something brokers love.
Raising Private Capital: Building Your Real Estate Empire Using Other People's Money
My path was boring: work, save, buy a rental every other year. If I wanted to grow faster, I would need to raise private capital. It turned out I had enough of my own money to complete both purchases this year, but this book gave me the confidence to start conversations with private investors. I do not anticipate purchasing another investment this year... but for the right deal, I now know how I could get additional funding.
Grit: The Power of Passion and Perseverance
I love this book. It's a perfect blend of psychology and practical tips. One thing I learned, of many, is that you have to do deliberate practice to improve. Improvement comes from resistance. This is true of your muscles, your mind, and your emotions. You need to view problems and setbacks as challenges and opportunities to improve. But you don't have to do that for everything, find the thing(s) your passionate about, and be unapologetic about trying, failing, and pursuing mastery.
Never Split the Difference: Negotiating As If Your Life Depended On It
I love this book too! Not only was it entertaining, but I used what I learned right away to buy my second deal. Normally I would have given in more on the price and terms, but I used what I learned to negotiate more confidently and it worked! I think this is required reading for investors, along with a landlord and deal analysis book. In fact, I recommend this book to everyone because the tools he teaches work in all situations, including with kids!
Indistractable: How to Control Your Attention and Choose Your Life
I listened to this one while painting a rental. Like a lot of people, I can go down rabbit holes on Youtube and get sucked into other non-productive behaviors. One lesson was to commit to fighting the distraction for 10 minutes, set a timer if you want. If I still wanted to do that thing (watch Youtube) after 10 minutes, fine, do it. What you should find is that after 10 minutes, the initial trigger that queued the desire dissipates, and you can get back to what you should be doing. And it's a virtuous circle: the trigger now has a little bit less control and will be slightly less strong next time.
Shape Up: Stop Running in Circles and Ship Work that Matters
I'm finding I enjoy managing projects. I think it's partly because I like organizing things. But I found myself struggling with a bigger team. This book was great in giving practical tips for leading a team. Perhaps the biggest change I've made is focusing on unknowns instead of timelines. I no longer ask, "how long will it take you to do that?" I now ask, "What do you still have to figure out how to do?" Only after all the unknows are figured out, can anyone make a reasonable estimate of time. Meetings are more meaningful and it feels less "me vs the timeline vs them", and more collaborative because you're allowed to learn and don't have to "know everything" right away.
Chop Wood Carry Water: How To Fall In Love With the Process of Becoming Great
Another audiobook, which is a collection of sayings and one-liners, pulled into a single narrative. It's short but memorable. My guess is that you've already heard a quarter of the book from other sources, but the reminders are good. My favorite quote, which the book quotes, comes from Will Smith: "The separation of talent and skill is one of the greatest misunderstood concepts for people who are trying to excel, who have dreams, who want to do things. Talent you have naturally. Skill is only developed by hours and hours and hours of beating on your craft." I love the visual of beating on your craft.
I tried something different on this book: I listened to the audiobook while following along on the Kindle while running on a treadmill. What a great experience! There are a lot of great leadership principles, but one I use all the time: look to myself first when something doesn't go as planned. How could I have been clearer? How could I have followed up? I will now say, and mean it, "It's my fault, I didn't do XYZ". And the reactions I get now are much healthier. It's not defensive, but more collaborative and willing to move forward.
I didn't intend for it to be a year of reading, but I'm glad it was. I had to do a lot of growing to feel confident to take the next step.
Make Furlo Family Homes a true business, one that I could leave for a year or more and return to find it running better than when I left it.
I'll be honest, I could not leave for a year, but I could easily leave for a month, and I could probably get away with 2 months.
And I identified two options to make it a true business:
Option #1: Hire a full-time property management company. That would remove me from the day-to-day operations.
Option #2: Expand the responsibilities of my assistant to include tenant screening and hiring contractors to do maintenance. Services like Home Advisor, Thumbtack and Porch have made it easier to find contractors. Plus, I'd need to hire someone local to handle local activities, such as tenant showings, handing off keys, letting contractors in, and taking pictures/documenting. Ideally, this person would be handy themselves so they could tackle small issues.
I'm currently headed down option #2, with myself as that local person. Given that I was able to quit my job, I don't have a problem handling most of the maintenance for now. But eventually, I can see myself buying one or two more rentals so I can switch to option #1 and be fully hands-off. And since I won't be able to get a loan for a while, being able to raise private capital will become important.
I also made some progress down the path:
I've gotten better about thinking of FFH as a separate entity.
I did a better job of outlining, standardizing tasks that need to be done. Another change was to use Notion for the repository of all tasks, templates, and reference data.
FFH grew! This summer FFH purchased a 5-plex in Sweet Home and a 70-unit storage facility, with one house in Lebanon. FFH also now has a sub-brand: J & J Mini-Storage.
I would definitely call this year a success. I took steps to turn FFH into a business and identified all the unknowns to finish the transition. I've also come to terms with hiring a property management company, but don't expect that transition to happen for a while (unless Majordomo takes off, then who knows?!)
I also liked having a focused year on a single problem. It helped give clarity each day.
I don't remember the exact genesis, but I do remember in 7th grade telling my mom:
"You know, you could buy a place for $300,000. Fix it up and sell it for $400,000. Then after doing that three times, you wouldn't have to sell the fourth place. If you kept doing that, you could make a lot of money. The only problem is I don't know how to get that first $300,000."
And my mom had just heard an interview on the radio from a new author about real estate. So in 7th grade, after homework was done, we read "Rich Dad, Poor Dad" by Robert Kiyosaki. Thus began my real estate investing path.
In October of 2006, I started this blog, Outside the Rat Race, as an aspirational log of my adventures, thoughts, and learnings. As I wrote in the description, living outside the rat race is more than just financial. It's being purposeful spiritually, socially, financially with family, work, play, and health.
We bought our first place, a duplex, in 2009. Then another place every other-ish year by spending significantly less than we earned. The goal was simple: have the rental income cover our living expenses.
Along the way, I learned to love the tangible and immediate feeling of accomplishment from doing repairs. I also learned to love helping our residents succeed and live healthy, responsible, lives. From the book Grit, I've learned that the reason behind a passion can evolve over time, and that's been true for me.
And starting today, I'm taking the next step of living outside the rat race by leaving my full-time job because our rental income now covers our living expenses. Exciting!
Farewell HP
I started as a contractor for HP on May 3, 2007, right before graduating from Willamette's MBA program. I officially joined HP on January 2, 2008, as a full-time employee, and so leaving at the end of the year feels like a neat bookend. During those 12 years, I had the chance to learn and experience so much!
I first realized I was in a professional environment when I asked for a day off, with hat-in-hand. My boss said, "I'm assuming you're asking for the day off because you genuinely need to. So take it off. Just let me know when you're not available. As long as you're able to get your work done, at the level of quality we expect, I don't really care where or when you work. Again, just let me know." Wow - that was a lot different than my Arby's experience. And he was right, HP is a professional environment with people continually looking out for HP's best interest.
I also quickly realized I was surrounded by some of the smartest people on earth when my first presentation ended within 10 minutes because of all the holes they found in my analysis. Everyone there continued to push me to be better.
When I took on a leadership role, my manager took me under his wing. He let me fail (so I could learn and build character), but stood beside me and taught me how to present, how to tell a story based on data, and how to lead others. We spent hours on the phone together crafting presentations on HP's ink cartridge sales. It was incredibly difficult, but I grew a ton!
I got to write code, create amazing spreadsheets, and deliver compelling presentations.
I also got to help launch a product and travel around the world to places like Germany, Singapore, India, and New York. I could not have asked for a better job. If it wasn't for the realization of my 7th-grade dream, I'd happily stay with HP.
The Next Season
I personally don't think of the next phase as "retirement", but simply leaving the 9-5 lifestyle. I'll be spending my time in three areas. First and foremost, I'll spend more time with my family. Right now I'm working most weekends, mornings, and evenings to keep up with everything. It's tiring. My plan is to stop all weekend and evening work.
Furlo Family Homes
Second, I'll continue to actively manage my rental properties. With 22 rental units and 70 storage units spread across 6 properties, I'll stay moderately busy. Most of that time I will be handling maintenance issues, which I still find gratifying. The 10-15 year plan is to transition the operations to a property manager, but I'll be doing it for now.
Majordomo
Third, I'll help run Majordomo with my co-founder.
Majordomo is the second half of your home inspection. In 24 hours, we analyze, prioritize and estimate the cost of repairs identified from the inspection report. It's a super cool service for real estate brokers that saves them time after the inspection, helps them negotiate smarter with sellers, and ultimately close more transactions.
We've been building the site for a while, are now live, and starting to grow sales. My role will be to continue leading the development team, helping with sales, and wearing any other hat that needs wearing.
I think of the real estate business as the means to provide for my family and Majordomo as an opportunity to help millions of people across the US.
Farewell
So, farewell to my friends at HP. It's been a grand adventure. Thank so much for all you've done for my family. I'm looking forward to the next phase, and will always be grateful for my time at HP.
I've been in a couple of spirited debates with my almost 3-year-old, Samson, over whether or not Elsa is a superhero. We watched Frozen II - which I liked, by the way - and I left the theater convinced Elsa is a superhero. Don't worry, no spoilers ahead.
Samson disagreed. "Elsa is not a superhero!"
According to him, a superhero is defined by 2 characteristics:
One, they can fly. Two, they have a sword.
Or they shoot webs and can jump. (Of course, you can't leave out Spiderman)
It's usually at this moment I point out that Elsa can shoot ice from her hands, and Samson moves onto something else in frustration.
I get it, he's three. We're not going to get far, but it does make for hilarious conversations given his "logic."
Part of Wisdom is Changing Your Mind
But his "logic" is what's so intriguing to me! There's clearly some sort of logic in his head that defines what a superhero is, and I wish I could tease it out. There's something about his observations of superheroes - which is limited to a couple of kid shows, some costumes, books, and our stories - that has left a gap in his understanding. Because let's be honest, Elsa is clearly a superhero.
And then I start thinking about all the other places he only has a partial picture and has therefore formed incorrect conclusions. I wonder where he thinks water comes from. Or why we pray before eating.
I don't expect him to have everything figured out (I don't!). But I do hope and pray he has a growth mindset, and is willing to change his mind when presented with new information - that's what a wise person does.
But cognitive bias is a real thing that prevents us from objectively evaluating new information. This is why our political climate is so polarizing. Why two people can see the same thing and claim it supports their side of an argument (it's record low temperatures this winter. Proof the climate is fine. No, it's proof the climate is not fine.). Wisdom is identifying your bias and being willing to change your mind.
One thing I strive to demonstrate for my kids is to admit when I'm wrong and show them it's OK to change your mind. And not just do it, but explain, "I was thinking this, but then I learned about X, and so I changed my mind, and that's OK." I've been practicing in my job, which my co-workers may or may not have noticed, so I'm comfortable doing it with my kids. Plus, I want to be wise myself.
But Seriously, Is Elsa a Superhero?
But today, Samson and I need to settle this debate. Here's my 36-year-old logic.
IN MY OPINION, there are two parts to a superhero. Breaking down the compound word, let's start with "super."
To be super, you need to have some sort of ability beyond normal human capabilities. Flying, climbing up walls, mind control, etc. They can be natural, magical, or with the aid of some sort of biological/mechanical thing. Think Superman and Spiderman. Even Ironman and Batman count because of their mechanical enhancements. I think that means anyone can become super. I'm OK with that.
Age doesn't matter. Gender doesn't matter. Nor does socio-economic status. In fact, it's possible to have a disability, like an inability to walk (Professor X), and still be super.
The other part is "hero."
It's NOT someone who is admired or idolized. Though, that often happens as a result.
A hero, IN MY OPINION, is someone who seeks justice for others. They demonstrate courage in the face of adversity, and ideally, save the day (in big and small ways). Think police officers and firefighters. Even teachers and coaches.
It's definitely a subjective, in-the-eye-of-the-beholder, type of criteria. But that's OK. I personally don't count athletes who "save the game" with a fantastic play (justice was never in danger). But they can definitely be heroes off the field, and towards their fellow players.
Does Elsa have some sort of ability beyond normal human capabilities? Yes, she does.
Does Elsa seek justice for others and demonstrate courage in the face of adversity? Yes, she does.
Therefore, Elsa is a superhero.
And a woman. And a fantastic singer. And a royal. And a sister. Let's not get too caught up in labels. :)
This last year I've been leading a software development team on a large project. As the project manager, I started to run into the classic issues, tools, questions like many people before me.
I learned about the different types of projects: waterfall (you plan every step of the project ahead of time) vs. agile (you plan the next 2-3 weeks to allow future priorities to shift).
One risk with agile is that you might never feel a sense of completion. This is especially true in the software world: the list of things that could/should be done continues to grow. Especially as you launch incremental updates which spawn new feedback and ideas.
Then there's tracking a project. In agile the two main ones are Scrum (planning meets to start/end each cycle and daily 15-minute check-ins: What did you do? What will you do? Any barriers?) and KanBan (a list of tasks in at least 3 columns: todo->doing->done).
For my project, I went towards agile. Tracking on a KanBan board, longer Scrum meetings on Monday, shorter the rest of the week. We aim for 15 minutes on the short days but often go longer as they turn into work sessions (the team is small enough it's OK).
But along the way, I ran into a couple of issues:
How do you focus on the current cycle, yet keep your eye on the overall project?
How can you set an overall goal for a completion date when only the most recent steps are planned?
As the team gets bigger, more tasks need to be created, tracked, talked about, etc. How do you stay sane?
I reached out to a couple of successful project managers and the answer was: it's a lot of work to do it right. Plus, I need to add some elements of the waterfall back in. I didn’t need to detail every task along the way, but I do need to make time estimates of the larger blocks of work, and put them all on a calendar to see where the timeline ends. As work gets more detailed and progress happens, adjust the timeline and/or adjust the scope of the project (depending on your constraints).
It turns out I'm not great at estimating time because every week we were pushing deadlines out another week(!) because everything was taking longer. It got to a point where I stopped referencing the calendar because it was no longer near (by months!) the original aspirational launch date. Instead, we went back to asking, "Is this a must-have? Yes? OK, let's build it, and it'll be done when it's done."
This made sense when we were building the first iteration of the product. And since we intended to charge, the quality of the product and it features were important, and our appetite for funding the project was 2-3 times the original budget (it's said: work expands to fill the time given, apparently that's also true of budgets and money).
But as we prepared to launch, the nature of the work began to change. For starters, the backend part development still had "must-haves," but the frontend was starting on some "nice-to-haves." But then those nice-to-haves starting adding tasks to the backend. Ops. I didn't do a good enough job of catching those. How do you keep a project in balance when the majority of the work is either frontend or backend? One answer is to only hire people who can handle both. Not super realistic at this point. Avoid unbalanced projects and instead, aim for ones with equal work? Maybe. Hire more of one type of developer? The answer, it seems, is a little bit of yes of each.
A book I just finished, called "Shape Up" by Ryan Singer at Basecamp helped answer a few of those questions for ongoing projects. You can read it for free online: https://basecamp.com/shapeup
For starters, spend time shaping a project: what's the problem you're solving, the solution's scope, and the general functionality. Basically, get it to the point that a designer and developer would feel comfortable getting to work. This is an area I've been lax at. I tend to be too general about the directions. Or, don't thoroughly think through what needs to happen.
They recommend 6-week cycles. So, the project I shape needs to be able to be completed in 6-weeks. If it's a larger project, I need to figure out how to break it down into smaller, shippable in 6-weeks, chunks.
At the end of the 6-weeks, either the project ships or is canceled. That's the right, the deadline is the hard stop. It means something went wrong if you can't ship yet: maybe the scope was too much, or something was harder than expected. Either way, they recommend stopping and going back to evaluate what happened. While you evaluate, the team works on something else during the next 6-week cycle. Real consequences that everyone feels.
The nice part about 6-weeks is that it's long enough to create something meaningful, but not so long you risk a lot of time if something doesn't work out. It does a better job of spacing out the bigger planning meetings and lets the team manage the smaller tasks however they like.
(BTW, their hiring principle is to hire people who are smart and get work done. That alone solves a lot of issues!)
Another mindset I like from the book was deciding when to stop. Often we compare to the ideal product that's in our heads or on our roadmap. This can be demotivating because it's unlikely the product will ever achieve the ideal at all (let alone on time and on budget). Instead, compare to the baseline. What are customers currently doing to solve the problem? Does this project/product make it easier? If so, it's a success and move on. It keeps the focus on the customer and makes it easier to stomach removing features from the scope if time gets tight.
The book is worth reading if you're managing projects. I've already started shaping/scoping projects at a better level per their recommendations. I plan to shift our team to longer project cycles, and (this will be hard, so it won't happen right away) making the deadlines, not the ideal features, the hard stopping point. It'll provide us a level of accountability we don't currently have. I do plan to continue to track things on a KanBan board and still hold Scrum meetings.
I think it'll work particularly well with a product we're selling. Since people are already buying it, we won't feel as compelled to say, "but we have to build this no matter how long it takes. Otherwise, people won't buy it."
Then all that remains is the hardest part, which all project styles recommend, and I seem completely incapable of doing: is not adding anything else to the development team’s plate during a cycle.
I regularly get calls from MBA grad students with a similar situation: "I took a few data science classes, love it, and want to get a job doing data science. However, my resume doesn't show much, if any, related experience. How do I get a job doing data science?"
It's a great question, and it makes sense why they'd call me. I was in that exact position when I graduated. The only difference was at the time the term "data science" didn't exist and tools were still in their infancy (Google had just bought Youtube, and we were all still wondering if this "video upload" site thing was viable).
In 2010 I wrote about a general post about finding a job, which is still relevant, and here's my specific answer to aspiring data scientists.
1. Define Your Talents
The Talents
Data science, like Marketing and HR, is a broad term with many jobs and skills within. So when you tell me, a person looking to hire data scientists, you want to be a data scientist, I'm still not sure what you mean. To which I usually follow up with the profound question of, "What does that mean to you?" I typically get a bland response simply because they're still discovering what it all means themselves. Here's some guidance:
First, decide if you're going to be a specialist or semi-generalist. A specialist is easy: focus on one thing and be the best in the world at it. Get amazing at producing accurate forecasts. Become THE data cleaning person. A warning: you'll be competing against PhDs in this space.
My recommendation is to go down the semi-generalist path. Find an interesting combination of skills/interests that's helpful. You're good at project management AND forecasting? That's interesting. You crunch numbers AND can give a presentation to executives? Now you have my attention.
HBR wrote a fantastic article called Data Science and the Art of Persuasion, and I recommend reading it at least once. It breaks data science into six talents. In brief, here they are:
Project management: do you know agile/scrum project management? Can you be an effective scrum master and get product owners to define done and prioritize?
Data wrangling: can you find, clean, and structure data? Are you good at automating processes?
Data analysis: can you find meaning in data and apply it to a business question?
Subject expertise: what business model or industry are you interested in?
Design: are you good at data visualization? There's the technical side, but also the art side of it.
Storytelling: Can you write a narrative around the data and analysis? In my experience, this is the weakest talent on a data science team.
The People
If you read that list and still aren't sure, go talk to people. Actually, no matter what, go talk to people. Informational interviews are amazing. It's the lowest risk way to learn about something (which, if you messaged me to chat, and I asked to you read this first, and you are right now... good! keep going!).
Find other data scientists. Find people who work with data scientists. Find people who work in data-intensive industries.
I go into more depth in my original post, but here's the high level: come up with a set of questions to ask everyone. You may not ask all of them, but having a pre-set list will give you the confidence to reach out because you're prepared. Talk to at least 12 people, more if you can swing it. I talked to 2-3 per week while in school.
The Companies
My observation is there are three types of companies. They all have pros and cons. After talking with people and evaluating your talents, one of these types of companies may attract you.
Large companies, especially in data-driven industries, typically have a dedicated data science team (though the name might be different). Or, at least a specific role dedicated to data analysis. All fortune 500, if not 5,000 have this setup. These types of jobs tend to have narrow scopes. For example, my job at HP is to forecast how much money HP will make selling ink. Very specific. I use all 6 talents to do it, but my scope is narrow.
Small to medium size companies will have a small marketing team, but no data scientists. In my opinion, these are interesting positions. You don't need to be the best analyst in the world, but you can bring your skills and add a lot of value to the original position. For example, my internship was with a 500-person credit union. My job was to create a new checking account offering. I did competitive research, ran a survey... and did an analysis on their customer database. Nobody else on the team knew how to access this fantastic resource! Granted, I had to figure out how to get access and build my own tools (data wrangling), but I was OK with that. It was like I had superpowers relative to the rest of the team. The pay is typically less, but the variety is more, and the expectations are lower. This could be a perfect first step.
Boutique analysis consultants are super small, 1-5 people, companies that specialize 100% on data analytics. Like a typical consultant, they come into a company, learn about their problem, and do an analysis on behalf of the company. These are harder to get into, but you can learn a ton as an apprentice in a short amount of time. Be willing to do the grunt work for long hours.
You think you know what you want to do, or at least have a plan to figure it out? Great! Let's move on.
2. Cultivate Your Talents Into Skills
"The separation of talent and skill is one of the greatest misunderstood concepts for people who are trying to excel, who have dreams, who want to do things. Talent you have naturally. Skill is only developed by hours and hours and hours of beating on your craft." - Will Smith
The lack of experience on your resume is tough. Unfortunately, there's no shortcut. To get the experience, you actually need to practice data science. The good news is you don't need a job to "beat on your craft". There's almost an unlimited amount of data thanks to the internet. Pick a subject, find some data, and do an analysis.
FiveThirtyEight has its own dataset and often points to its original sources within an article. Sports data is interesting, so is political/polling data. There's census data, economic data, Zillow home sales data, stock market data, and so much more! There's data specific to an industry you're interested in. Collect your own data!
I tend to collect my own data and pick ones relevant to my life.
I ran a half marathon, and they posted the results online. So I turned it into an infographic. I'm particularly fond of this one.
I tracked my steps, weight, and food. Then I analyzed it and shared what I found.
Can you guess my talents? I like the design and storytelling side. I'm much lighter on the technical data analysis and data wrangling parts.
If I were looking to get a job, I would do at least one per week. Beat on your craft to hone your skills and gain experience. We'll talk about what to do with all this effort next.
There is one more way to gain experience: [pro-bono] freelance work. There are a bunch of small businesses and organizations that would love help analyzing their data, but they don't know how to do it (like my credit union example), and often times they can't afford to hire someone to do it. This is an opportunity!
For example, I talk to contractors and landlords all the time who would LOVE to create an annual budget but don't really know how to go about it. Volunteer to take a look and help. I created a forecasting tool in R for my church to better predict giving trends. I worked with a local broker to create a "state of the real estate market" report he could share with clients. It didn't pay much, but it led to future projects. In fact, don't do it to get paid. Do it to help, and then add it to your resume.
Another interesting option for freelance work is to signup for Upwork. It's a website that companies go to for one-time projects and/or part-time work. Often times it's remote. I've hired 4 people from the site, and it's fantastic. Tip: I've noticed that data scientists call themselves a "financial analyst" on the site. If anything, it'll give you interviewing experience.
Got a plan in place to cultivate your talents? Let's show it off.
3. Showcase Your Skills
In the graphic design world, people have portfolios. In the software development world, people have gits. But they're the same thing: a way to showcase your work. As a data scientist, you want to create the same thing.
Think about it from an employer perspective: I'm about to take a considerable risk, financially and culturally, to bring someone into my organization. I want to reduce as much uncertainty as possible. That's why employers rely so heavily on recommendations and another reason why informational interviews are so important.
Reading accomplishments on a resume are helpful, but reduce my risk a lot and SHOW me what you did. That's why designers have portfolios. I don't care what school you went to, I want to see for myself you know how to draw.
So, create a WordPress site and find a theme that works for you. Or whatever tool you want - don't overthink this. Upload your projects to Google Drive and share the folder. It's not as pretty, but I'm not evaluating you on how pretty it is.
Then, as you do projects, add it to your website. Start with every. Single. Homework. Assignment. At this point in the game, you need volume, you can add a featured section later. But don't just post the homework, take one more step that'll blow everyone out of the water: create a short video where you walk through what you did. Wrote some R code? Use Zoom to share your screen and talk through it. Embed the video using Youtube (it turns out it was viable) along with the code. Or put the code in Github and link to it.
Did you have a final project with a presentation? Record yourself giving the presentation (do it again by yourself if the presentation came and went). Then record again showing the actual analysis. Show your work. For group projects point out the work you did.
I use video all the time, and it's fantastic. When I make an offer on a property, I don't just kick over the offer and hope the seller can figure out my thinking. I record a quick video on Zoom, upload it to Youtube and share it with the document. I get comments all the time about how professional it looks. You should do the same thing. I personally choose to keep the video on so they can see me and my expressions, but you don't have to. This is especially important if your talent is storytelling.
I made a sample presentation so you can see exactly what I'm talking about. Mine was done off the cuff. In reality, I'd script out what I wanted to say a lot more... and slow down my talking. Anyways, here it is:
You can also make tutorials. You can comment on other people's work. Flowing Data is a perfect example of these types of posts. So is Edward Tufte's Twitter account. If you do the commentary, go further than they do. Go into detail on what's good and bad.
Then put the link to your portfolio on your resume.
When following up after an informational interview, you might mention a project you did, share the link, and ask for their feedback on how to make it better. Then... follow their advice to improve it.
4. The Briefcase Technique
If you do this, you'll get interviews. Now it's time to knock it out of the park. Part of the interview preparation process is researching the company. Take it one step further and do an analysis for the company. The closer you can get to what you'll actually be working on, the better. If you interview for me, look for IDC data on printers. If you can't do that, look at HP's historical revenue.
Imagine being able to say, "I was looking at IDC shipment sales, and I found that the market is shrinking. Here, let me show you. (take a paper with a chart out of a briefcase, or portfolio, whatever). I noticed X Y Z... And a question." Or, "It looks like HP is under-represented in the copier space. I recommend investing more there." Or, "why isn't HP in the copier space?"
Look, you're probably not going to teach me something or uncover some new insight. That's not the point! Your goal is to show me you care, to show off your skills, and to demonstrate you're going to take the extra step of a top performer.
Final Thoughts
I know what I'm suggesting is a lot of work, but the results will be worth it. Plus, it's a low-risk way for you to discover if you genuinely like data science without having to commit to a job to find out.
In case you didn't know this, Youtube is pretty awesome.
Specifically, I love it for education.
Especially for doing home projects.
To be honest, it's hard to imagine how people tackled home projects before Youtube. It's made my life as a DIY landlord significantly easier. And, this feels like a harbinger of the future of education in general because it works so well.
I know Youtube's search is fantastic (thanks to Google) for discovering great videos, but I also wanted to highlight a couple channels who are my go-to for most home projects. I think you'll find them helpful as well.
Shannon lives in Canada and has a huge library of videos. What I love is that his videos are complete. He shows each step, the tools required, and best practices. All at a reasonable pace. My favorite example is a 45-minute video where he demonstrates installing a pocket door. I watched the entire video, and then re-watched it step-by-step while I followed along. Perfect!
This is a recent discovery for me, and I like it because a) Jeff focuses on the technical side of projects, and b) he does a good job of showing alternatives. For example, I was replacing some drywall and was interested in improving the soundproof rating while doing. In this video, he shows 4-ways to soundproof a room, along with the quantitative costs and benefits. Plus, he actually showed how to do it. That's a perfect video.
Want inspiration for your next project? Want to know what's on the bleed edge of construction trends? This is your channel. You get the sense that the primary purpose is customer lead gen (show potential customers how awesome they are), but it's still great. I don't explicitly search for projects, but use it to learn about new technologies/techniques/materials, and then search other channels to learn the step-by-step process to do it. His home tours are particularly good. Here's an inspirational one on the possibilities with home insulation.
Sometimes all you want is an overview of a project. You don't need the step-by-step yet, but kinda want to know what's involved. For example, in this 5-minute video, you get a clear idea of what it takes to install solar panels. There aren't enough details to start the project, but enough to dive deeper with more specific technique/tools/material questions.
Thanks to these 4 groups for taking the time to share your knowledge (for free!) with the world. I've benefited from your generosity and really appreciate it.
And a bonus: this was the first video I watched when I realized how powerful Youtube was to teach me how to do home projects. I heard someone say you could remove an aluminum window without removing siding, I wanted to know how to do it and came across this gem. Enjoy.
If you're going to invest in rental real estate, follow this one rule so you'll actually make money.
Pay no more, including repairs, than 100x the potential monthly rent.
So, if you think you can rent a place for $1,000 a month. Don't pay more than $100,000 for the property.
If the property requires $20,000 of repairs, don't pay more than $80,000 for the property.
Follow this rule, and you'll make money. It's that simple.
What's the name of this rule?
Some people call it the "1% Rule" because you can multiply the value by 1% (or divide by 100) to see what the rent "should" be. I like to think of it as the "100x Rule" and start with the rent.
What about all those property calculators and spreadsheets? Surely more analysis is needed.
Yes, you can get more detailed and calculate an accurate bottoms-up analysis of the property and calculate a precise return on investment (ROI = annual profit divided by your cash contribution). And yes, larger multi-family properties, especially if multiple investors are involved, requires a higher level of rigor to validate the numbers. And flips are a different type of investing which need a different kind of analysis.
But you know what you'll find when you do the detailed analysis? In general, you won't want to pay more than 100x the rent.
I've analyzed a few hundred properties, and it's shocking how consistent this rule is.
Why is this rule so important?
The primary reason for investing in rentals is to generate income over a long period by renting a product. A product that requires maintenance, working with a customer, and complying with laws. These all require time and money. And if you don't meet the rule, you'll find your margins are too thin to do all the repairs you want to do. And you won't be able to afford to hire someone else to manage the property or do the maintenance.
So instead you'll spend your time doing it all and making so little money, you'll be more rooted in the rat race. All the while telling yourself that the value is going up, or eventually, the mortgage will be paid off. When in reality, you should have put the money in an index fund and spent your time with family, or generating income some other way (overtime, freelancing, second job, side businesses, etc.). You would have been able to retire sooner because you'd have a higher return on your time.
It's sad when I talk to a landlord who's tired from working all the time and don't feel close to retirement despite owning a million dollars worth of rentals. Had they used this 100x rule, they would either be close to retirement, or able to afford to hire someone else to manage the property.
What if I provide a higher down payment to ensure a positive ROI?
You can, but you'll find your ROI drops to the point that you're better off putting the money in an index fund and keeping your weekends free.
But I can't find any properties that meet that rule?
Then wait or look somewhere else. Don't buy just because you have money burning a hole in your pocket. Yes, real estate can be a good investment, but only if you buy at the right price. Which is no more than 100x the monthly rent.
It took us 18 months to find our first deal that met the rule. Our annual ROI is 50%.
Some investors use a higher standard. They only buy places that meet a 50x rule. You can find them in the midwest. It's rare to find those ratios on the coast.
Fair warning: to mee the rule, you'll have to look at properties that need some work. Not necessarily a lot, but some. But that's fine because you're not looking for your dream house. The properties also tend to have been owned for a while, and the current owner is looking to sell for reasons beyond maximizing the sale price. So prepare yourself mentally.
What if I love the neighborhood? Or any other reason other than the ROI?
That's fine, but be honest about it. I get the appeal of wanting to buy your neighbor's house so you can control who lives there. But you might have to be OK with losing money and/or making less than if you put the money into an index fund.
But property values go up over time. So it's OK if I lose money, right?
That's speculation. Ask people who purchased in 2007 how that turned out. Plus, and here's the crucial part: Housing prices tend to rise slower than the stock market. I laugh when people talk about how their house price doubled over the last 10 years, implying they're a financial genius. Cool. So did the stock market without the costs of taxes, insurance, and maintenance.
Think about this: if you live in an area where houses don't meet the 100x Rule, not only do you want to avoid buying rentals there, you're better off to rent yourself. That's right, if you did a detailed analysis of living costs, you'd find that it costs more to own a home than to rent when this rule isn't met.
If your goal isn't to minimize your living expenses - perhaps you want to guarantee your kids go to a specific school - then be honest about it. Jessi and I bought the place we're currently living at for multiple non-financial reasons and happily pay the higher mortgage and taxes.
What if I currently own a place that doesn't meet that rule?
Is your goal to maximize your ROI? Be honest. If so, sell it and buy something that meets the rule.
If I came across a property with a possible ROI higher than my lowest performing rental, I'd trade up. Yes, there are advanced strategies to minimize tax liabilities (such as a 1031 exchange), but stay focused on the big picture: If the goal is to maximize your ROI, you should sell a property if it's not performing, especially if it's equal to an index fund. Why bet on a possible future when you know you can get a better return today?
The 100x rule
It's not a perfect rule and doing a detailed analysis is good to do once you're further along. But if more landlords followed this rule, they would have the margins to properly maintain the property, make a significant contribution to their retirement, and avoid many problems that can arise later (like putting up with a bad tenant for too long because you don't want to lose the rent income).
It'll also give the margin to afford a property manager if life changes, and you no longer want to do it all yourself.
That's why we follow this rule when investing in rental and why I think you should too.
We just came back from a trip to the magic kingdom, celebrating Elinor's 4th birthday (Samson is 2). It was a lot of driving, but worth it. We spent most of our time meeting characters and my mom and sister were able to join, which was great. Here are some of my favorite pictures.
We met a lot of princesses.
Plus a bunch of other favorite characters.
Plus some dudes for Samson.
Plus a few rides and other fun things.
I would say 2 years old is the minimum age and 4-7 is perfect to introduce your kids to Disneyland. Two days was also plenty of time because they were worn out by the time we left. We'll be back in a few years and I'm excited for when they're a little taller and can go on some of the bigger rides. Fun times!
