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"Something Different" - God

This blog is more for the books than it is for notifying anyone of my current situation, but I also realize that there will be some who read this news and it will be the first they've heard of it. So, bearing that in mind, I'll write this as if addressing those people even though my main purpose for this entry is to have a written record of what was going on during this time and the process that has led me to my recent decisions.

After today, Friday, December 19th, I will go on "Layoff" status at SRC. A couple weeks ago, SRC Corporate concluded that with the current economic downturns and the resulting effects that it has had on our sales numbers that we as a Corporation are over-staffed by roughly 100 people. SRC is an amazing company, though. After seeing big layoffs and plant closings making the headlines of our local newspapers at an alarming increase in frequency, it's just plain amazing to watch a company that could easily choose to take a similar route but instead stick with the high road rarely taken.

SRC blazed the trail of this high road and has since paved it with hard work, dedication, and humility in the corporate world. Being built 25 years ago by a group of people who just lost their jobs, they've sworn to make comprehensive plans that allow the company to avoid unexpected layoffs at virtually all costs. And, it's very costly for a corporation to hold job security in such high regard. But, the end result of such efforts have built a company full of men and women with a true owner-mentality.

I'm extremely proud of SRC. They have stood up and done exactly what they've always said they would do if times got tough. And times are tough. So, SRC, in avoiding a pick and choose layoff, has offered a Volunteer Layoff Incentive Program. For those who volunteer for a layoff under certain terms will receive an incentive package that should keep most of the people who take it financially secure for months on end. During a three month period, the company can call these people back to work and it will be as if they were just on vacation. If not called back, then they are officially terminated at the end of the period. They are free to find another job at any time during this period and don't have to inform SRC of any job they may take.

Ultimately, it's a way to financially stabilize the company while financially stabilizing the volunteers for a long enough period of time that they should be able to find another job. Even if it takes longer than three months for SRC to bounce back, when they do, they will start calling the volunteers to offer job openings before ever looking at a new applicants information.

I volunteered for the layoff, and after some deliberation on whether or not to allow me to do it, the ball was basically thrown back into my court and they let me make the final decision. I still decided to take it. They respected my decision.

Upon initially hearing the news that they were offering such a package, I must admit that I was somewhat intrigued by the offer but gave it no real consideration. When telling my wife about it, she seemed to think that I should consider it for she immediately saw most of the benefits if I were to be accepted for it. We briefly discussed these benefits and how they could stand to be in line with our long term goals. She then left me to consider the issue telling me that it was a decision that only I should make. So, I prayed about it. I was racked with the feeling of fear that comes with the thoughts of leaving or losing a job. But, immediately as I began to pray about it, I was hit with reassurances of my own wide array of abilities. I prayed more at several different times and was always immediately hit with comforting words, reminders, as well as new thoughts of new benefits that I had not even yet realized. The answer was clear and I knew that I must apply for the program. SRC had written a clause in the program, though, to protect itself which allowed them to choose who would and would not be approved for the program. They needed this clause so that they would not be forced to allow someone to leave whose vacancy would have a significant negative impact on the company. I figured that whatever SRC chose, for whatever reason, God was wanting me to throw my name in the hat. Later, when I asked what I would be doing in the months to come, I heard "something different". But, it had a positive spin, an excited tone, if you will.

Now, to explain what I will be doing in the meantime, for the next several months, I intend to transform my home making it appear to be a spread in Better Homes and Gardens. That will be my job. Without the interference of a full-time job, I can get major renovations done around the house and have it ready for re-appraisal and then re-financing. With the equity that we've built, we intend to purchase another home here in town and renovate it. With the housing market so low, it's the people that have money who stand to make money. Investors can buy homes now and see a significant rise in market value by doing nothing but sitting on it until the market comes back. We intend, though, to do a renovation and turn the house for a profit. Yes, that's right, flip it.

I have many friends who flip houses or who have in the past and I have learned a lot from their advice, shared secrets, and shared mistakes. Also, I have spent much time reading about the profitability of house-flipping and the factors that can help and hurt the possible financial gain. And, SRC invested hundreds of hours in me over the years sending me to classes turning me into a business person who lets the numbers speak for themselves.

Some of the simpler secrets to making money by flipping houses that most people don't want to do are as follows. First, buy with as much cash as possible and with as little credit as possible. Credit puts you on a time line as well as raises your personal financial risk. Credit will make your profitability decrease with every month you pay interest pressuring you to sell sooner possibly at a lower cost. When you buy using credit, you must make payments that you didn't have before which takes up more of your personal budget. If something should suddenly come up that puts you in a bind financially, you stand to lose much more if you find that you cannot make payments. Second, keep a regular job to fund your personal budget. This is a big one. Your bills should be paid for by a regular job not from your profits from your house flipping business. Some people will make money doing this, but it can be hard, very risky and this tends to be the largest reason why people are unsuccessful in going into house flipping. For this also puts you on a time line. If you are living off savings while waiting for a house to sell or get finished in order to sell, you are motivated to take significantly less for it to sell it quicker as your own savings begin to dwindle.

These two secrets are the biggest ones because not following them contributes to negative motivation. If you can buy a home with cash and fix it up with cash, then it doesn't matter how long you sit on it. The only thing you pay in the meantime is taxes and insurance. You aren't motivated to sell too quickly and you can wait for market changes, a motivated buyer, or even decide to rent the property out if the market proves to need significant time to improve. If you might recall, that's how Donald Trump made his fortune. He bought up parts of lower Manhattan during the economic recession in the early eighties, properties that made millions upon millions when the market turned around only a couple of years later.

The third secret is not so secret, but I'll include it anyway. Do most of the work yourself. Contractors will work in a profit to do a job. So for every job that you hire out, you in essence share your profit with them. Contract every job out and you'll quickly find that you might just break even or possibly even lose money. One thing I haven't mentioned yet is that both of the first two secrets will motivate the owner to contract out services to get the job completed faster. But, as I just said, contractors take a cut of your profit. This is another reason that they lead to negative motivation.

To recap, buy a house preferably with cash and preferably while the housing market is down, fix it up preferably with cash, keep a job doing something else to pay for your personal bills, and do as much of the work as you can by yourself. No, this isn't easy to do. But making big profits in a short amount of time isn't easy to do and that's why so few people will do it. You may also ask, "But I don't have cash to buy a house, who does?!" Some people do. I don't, but I have been investing in my own property so much and for so long that I have built enough equity up to use a portion of it to do just this.

So, to explain why I, personally, stand to benefit from this volunteer layoff, I can use this time of financial stability and joblessness to get my house to a point in which I can effectively obtain a high appraisal and a refinanced home loan in which I can take a portion of the equity out. With the interest rates down and the housing market down, I can both get a better home loan at a lower interest rate and take the equity out only slightly raising my monthly payment. I can then go back to work for SRC if they call or I can get another job somewhere else while working on our project house that we own free and clear. I'm not going to count on SRC calling me up to bring me back on at a convenient time for me. I realize that this scenario is not likely to come about.

Sure, there is a measured risk involved, but I am confident that I'm being led down this road. After many answered prayers, I cannot deny that we are being looked after during this economic down-turn. God has blessed us immensely and we've been responsible with what He has entrusted unto us. And, I have faith that He will continue to bless us and provide a path for our every step.

P.S. Just before I was about to post this blog, Jodi called me to tell me about the house across the street. About 4 months ago the house was purchased by a woman who house flips. Her and her boyfriend spent the last few months sprucing it up inside and out. Some of the work was structural like moving a couple doorways, but most of it was simple cosmetic improvements. The woman bought the house at auction and no doubt got it pretty cheap. They said that they were going to list it at $89,900 and it went on the market about two weeks ago. It apparently sold already because people are moving in right now. Pretty encouraging, I'd say.

1 comments:

I truly respect your obedience to the Lord. He will definitely bless us because of it. Thank you for being such wise man who looks to the right One for the answers. You are very right when you say that we are being "looked after". I love it! There is such a freedom in giving it all to Him isn't there?? Aaaahhhh...

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