Turning Doodads into Assets
3 May 2009
The more creative you can be with your real estate investments the more money that you can earn from your investments. Usually this means that you are finding interesting ways to increase the income of traditional rental properties by adding additional streams like vending machines or unique and inexpensive improvements that will bring more rent. However, you should not limit yourself to these well-known areas because there is really no limit what you can do. In this article I will discuss how I turned some real estate doodads into income producing assets in the hope that my stories will inspire you to think of ways to do the same. If you turn any of your doodads into assets, please let me know at dean@utahDean.com. I love to hear success stories!
If you have read Robert Kiyosaki’s “Rich Dad, Poor Dad” series of books like I have then you know that he defines a asset as anything that makes money for you and a doodad is something that you have that does not bring in any net income and may even cost you money on an on-going basis. After reading these books and evaluating my situation, I was inspired to find ways to turn my doodads into cash.
Time Share Week
Mrs. utahDean and I were not always the savvy real estate investors that we now are, and yes, we bought a timeshare week at a ski resort in easy driving distance of our home. Mrs. utahDean doesn’t even ski, but the salesman made the timeshare trade option sound soooo appealing. The first time that we tried the timeshare exchange we got a great place in Hawaii and we really enjoyed that trip. After that we could never seem to get what wanted even though our week had a lot of “trading power” and those trading company annual fees are not cheep. The maintenance fee is not all that fun to pay every year either when you aren’t getting to go where you want. First we decided to put our week into the resort’s rental pool, but after paying the resort’s outrageous 30% commission and sharing the vacancy rate with others in the pool, we sometimes would not even get enough to cover our maintenance fee. To add insult to injury, we would not get that money until months after our unit was rented. We tried some other brokerages that did not work out very well and then a friend told us about www.vrbo.com.
VRBO was the ticket! It is the largest site for vacation property owners to advertise their properties, and from the start we began making serious money on our week every year. We typically net 10% to 12% every year of the purchase price of the week, plus we get the money months in advance of the week that we have. On top of that, other owners at that same resort have asked me to advertise their weeks. I charge them a fee for adding their dates, but I only get paid if I get their weeks rented. I also provide advice for how to rent their weeks that I have learned through trial and error. I must be providing good service, because a number of my clients have had me advertise their units year after year. The very best part of this is that I have turned an expense of renting my unit into a profit! I usually make a few more dollars on advertising than the page costs me at this site. Even though I don’t make much on the advertising, the fact that I turned this expense into income makes me as happy as the money that I make on renting the unit itself!
Now for a word of caution: I do NOT recommend purchasing a timeshare week as an investment! This would be highly speculative and the chances of making money are small. I just got lucky in having purchased at a place that is highly desirable and does not have a lot of competition. On the other hand, I do not want to discourage anyone from purchasing a timeshare week if it is right for him or her. We own other weeks that suit our vacation needs quite nicely. Since timeshare units are deeded real property that I know something about, I plan to write an article devoted to them in the future.
Did you know that horses develop a real ornery entitlement mentality when they are getting fed every day, but only ridden once in a while!? After we moved to Utah and found that you could buy horse properties here in a reasonably priced subdivision, we jumped on the opportunity since we liked riding horses and needed to buy a place to live anyway. So we bought our lot, built our house, then paid good money to build a barn and put horses in it. We really enjoyed riding regularly, but then baby utahDean came along and the frequency of riding went way down. After a rodeo or two, we decided to sell those nags -- excuse me -- magnificent beasts, and then that nice barn sat empty. It also increased our property taxes and I had a lot more grass to mow. Ouch!
Again after reading Kiyosaki I decided to do something about this since I knew that people would pay for a place to keep their horses. So I talked to some of my neighbors who still liked their horses and talked to the guy in charge of renting stalls at the county’s equine center that is only a few miles away. Through this and other investment activities I have found that people are almost always willing to talk to you about what you are thinking about doing, even if you are a potential competitor. I’ve found that most investors see the world as a place of plenty, are interested in what they invest in, and like talking to others about it. Giving advice to a potential competitor who is just starting out gives many of us a feeling of importance. So the moral of this story is to talk to people about what you are considering – you’ll be amazed at what you can learn. In this case I found that the county equine center always has a waiting list and that the stall rental guy there would even be willing to give my name and number to those on his waiting list!
In all, my barn rental experience has been a profitable one and I no longer have to cut the grass in my pasture because the horses eat it! There have been some bumps in the road like my first tenant who liked to scream profanities at his horses for all of the neighbors to hear, but I have learned how to avoid problems over time and make the experience pleasant as well as profitable.
Virginia Forest Property
My dad bequeathed me this property in the Blue Ridge mountains of Virginia in his will because of the good times that we shared hunting and hiking on it as well as the sweat (forced labor) that I invested as a teenager helping to maintain the private road to it. There are other reasons as well, but this is not the proper forum to air the family’s dirty laundry. Since dad bought it in 1976 this property has probably increased in value 20 to 40 times what he paid for it. So in that sense it was very generous for him to leave it to me. It should also be ready for a timber harvest about the time my son is ready to start college, but in the mean time it costs money in taxes and road maintenance every year. I no longer provide any labor, but the owners of neighboring properties are happy to get my check every year for the road. The amount that I am likely to get from a well-advertised timber sale will probably more than make up for the on-gong expenses, but that money is not guaranteed.
In this case the on-going benefit is not monetary. You see, where I live in Utah is a long way from my mom in West Virginia, so I’m not able to help her as much as I would like. However, a number of relatives and friends of the family still like to hunt on the property and those people are always willing to give my mom a hand when she needs it. They would probably help her anyway, but it is really nice to be able to repay their kindness. The point here again is that by being creative, you can find ways to turn a doodad into an asset.
What Doodads do you own that can bring in some cash? I wish you all the best in your investments and finding ways to make your doodads and investments pay you.