July updates and outlook.

 Keep in mind I am no guru, but I have been running businesses and making investments for 45 years.

 Interest rates: The Federal reserve will be keeping interest rates at artificial lows for an extended period of time. They are worried about slowing down the anemic recovery and they are worried about deflation. Home loan rates are at forty year lows and the banks are able to borrow from the fed at historic low rates near 1% . I think the rates may stay down for two years, we shall see.

Business loans are harder to come by because the banks are worried about getting repaid and bank auditors are looking everything over twice, so more paperwork is needed to justify the loan. Businesses are squeezed by the lack of bank loans and a reduction of credit availability from credit cards, plus the higher interest rates the credit card companies are charging. More of the small businessman's suppliers are demanding pre-payment (by credit card) so the 30 day float has vanished. It is not easy running a small business. 

I am changing banks to save on fees. We are reexamining every bill for cost creep and trying to save wherever we can. Big companies are trying to push their cost off on you, keep your eyes wide open.

1099's: Starting in 2011 businesses must send a 1099 form to all businesses they pay more then $600 to during the year. That is pretty much everyone they do business with. The old rule was the 1099 where sent in only on non companies, individuals, sub contractors and the like. Now it is everyone including banks, corporations, insurance companies etc. Lots more paperwork and expense for the business owner. The feds think there is more taxable dollars not getting reported and this is suppose to help them find it. We will start updating our records this fall to be ready.

Sales: Via our web sites Patiostore.com and Homeimprovementkits.com we sell products all over the USA so our sales pretty much track the nations. (We even have to report to the consumer price board every month) Sales are and have been very unpredictable. In June sales where down 25% all month and then on the last day we had a surge of orders, we ended up down 9%. July's sales are down 15% year over year. Year to date for 2010 we are up 16% over all. For August my projections are “ I do not know what to expect”. Try doing a budget for that projection. When gas prices declined below $2.50 a gallon I knew our sales would be down. As an online retailer, I like high gas prices because people stay home more, and shop the malls less. Home improvement sales have been up all year but down for July. I credit July's sales decline to more people being gone on vacations this year. I predict sales will remain sluggish for another year, maybe longer. We have just hired a new internet marketing person to improve marketing, if we start now we should see good results by spring.

Gem Rentals: The new real estate venture I started this year, is progressing. The little blue house was rented at $650 a month and the payment we make is $368. That will give us a $3,384 positive cash flow per year, a return on our $10,000 cash invested of 33% a year. Someone mentioned to me that $3,384 is not much money. I informed them that this was but one rental unit, we have six so far and will have 200 with in five years. Any return of 20% a year is good and 33% is extra good. Our goal is 200 units, each with a positive cash flow of $2,400 a year, for a total of $480,000 a year. Any properties that get me to those two numbers is fine with me. You can read more about this real estate venture in the Gem rentals articles. I will update the blue house article later in August when all the cost are in. This is the only place on the web where you can follow along as someone makes a million dollars.

The remodeling project on the five rental units we purchased in January is trudging along. We are paying cash for the remodeling of this property so it is slow go. The kitchen cabinets arrived last week, the siding is scheduled for the first of September. The Window installations were completed last Tuesday. We are not rushing this project as we want a nice job that will appraise well, so we can re-finance to take out some cash to buy more properties. This is a stepping stone project, that is a property you buy to build equity fast to finance your next property.

There is opportunity everywhere. Look for it. Read the paper, read Forbes, read Money, read this web site for motivation and how too. Start small but get started. Only you can make yourself rich.