Tuesday, December 05, 2006

2006 Financial Year In Review

The end of the year is fast approaching and it is looking like I'm going to be too busy for the remainder of the month to get much going in terms real estate deals, so I thought I'd look at how I did in 2006.

Real Estate:

I rehabbed only one house this year. My goal was to do at least two, so I fell short there. In my defense though, I was asked by my investors to stop for a while until I could conference with them. That took me out of the market for a bit. I am still waiting on the additional funds they said they would invest, but those funds are coming from a probate trust and it is taking longer than expected for that to settle.

I had wanted to buy at least one rental property this year and I did not achieve that goal. However, I did make an investment that provided two firsts for me: my first out of state real estate investment and my first commercial property investment. I have invested in part of a $1.75 million dollar first mortgage on package of commercial properties in Louisiana. Income from that investment has been on-time and there have been no problems so far.

Personal Finance:

I increased my financial education by attending a meeting in March of other real estate investors and fellow community members. That was an eye-opening experience and actually led to the commercial investment I just mentioned.

I experimented with person-to-person lending via I've pretty much soured on that concept: two of my loans are delinquent and two are current. However, it was an interesting idea and I thought it was worth a try. I might be ok for other people, but it's not for me.

The blogosphere also taught me a new investing technique called reverse merger arbitrage. I'm two for three on these deals so far and am up about a thousand dollars. I've got two more plays in the works and I think this will be a technique I continue to use throughout the next year and beyond.

This year also saw the retirement of our only car loan, which was paid off a couple months ago. The $300 a month that was going to that is now going into our savings account to be used for our next investment. I also continued to save 15% of both my and my wife's paychecks, which will also go towards our next investment. Of course we continue to pay into our 401(k), although only enough to get the full company match.

Next year:

I have a couple of goals for next year. First, I want to rehab at least two properties. This is the same goal as last year, but this time I'm going to achieve it :-) I think I've got the contacts now of people who can get work done in a timely manner, so the only thing that may cause me to miss this goal is if the houses take longer than expected to sell.

I also want to either buy a rental property or make another real estate-backed paper investment, similar to the one in Louisiana. I haven't decided which yet. I like the rental property because of the tax benefits it gives, but the paper investment requires a lot less effort on my part. Time available to me may be an issue because my daughter is turning three and there seems to be more and more things to do with her that require my time. (That's not a complaint though!)


Anonymous said...

congrats. with the additional funds from your investors it looks like 2007 will be a good year. Your post is very inspiring.

Im amazed how you find investment ventures on when I go on there I see alot of get rich schemes or unproffesional haphazard business ventures with little details.

Shaun said...

Thanks for the kind words! I don't actually find my deals on You are right - there are a lot of things on there to be wary of. However, I have met people through there, then met them in person, and have gone on to make investments with / through them. That's a small, but important distinction.

Anonymous said...

You indicate that you have a couple more reverse merger arbitrage opportunities. Would you care to share?

Anonymous said...

Well, I didn't meet all my goals, either. I had it in my mind that I would do much more with real estate this year than I did! In fact, I just had to go dig out my list of goals for 2006 from under a fat stack of hardly-touched papers, if that tells you anything. I think I've figured out where I went wrong just now.... I didn't continue the weekly "business meetings" that Michael and I used to have to discuss our weekly progress and goals with our real estate stuff. I'm going to start that again ASAP.

Shaun said...

Anon - I've been thinking a lot about whether or not to post more reverse arbitrage deals and I think I've decided not to. Why? Well, the last one I posted about didn't work. Now, I know I gave lots of caveats, but still the bottom line is people may have blindly followed my lead and ended up losing some money. I don't like that idea. Also, I can't help but wonder why the last deal didn't go as planned - namely, why small shareholders were affected by the split when all signs pointed to them not being affected. There is a small part of me that wonders if the company suddenly saw a lot of buy orders for small amounts of stock and decided something fishy was going on. I can't claim to have a huge readership (I figure I have somewhere between 100 and 200 regular readers), but information has a way of spreading very quickly on the internet.

So in the spirit of "it's better to teach someone to fish then to give them a fish," I'll tell you how I find candidates. I go to the SEC's website, There, I click on "search for company filings" and then click on "full text search." I do an advanced search for the phrases "reverse split" and "special treatment." I usually narrow the search by using a date range of the last two or three weeks and I only search the DEF 14C forms. Then, I just read through the filings to see how the company will handle their split, the reason for it, etc. That's it.

Anonymous said...

Would you mind sharing the results once a reverse split has completed?

Great blog. Keep it up!

Shaun said...

No problem. So far, the split happened about two weeks ago. No extra shares have been handed out yet. The broker says it could take the transfer agent up to 6 weeks to mail the stock certificates to the brokerages. There has been no volume on the stock, so it hasn't really changed in price yet.

Anonymous said...

good POINT

I think it is very wise of you to not mention the actual company. Let people do the work to uncover these and make the decision on their own if it is worth the risk/reward to play.

By the way, in how many accounts did you buy this one?

Anonymous said...

if i may ask what brooker do u use?

Shaun said...

I use Schwab and Scottrade.

Anonymous said...

Shaun I guess it is ok to talk about this deal specifically since it is effective and too late to get in on right?

In that case my broker says the 100 shares/acct of PAQN will be there by next Monday. I bought 1 share in each of 9 accts, how about you?

Shaun said...

Glad to hear you got a specific date! I hope mine show up on Monday too! I called the transfer agent two days ago and asked what was going on. They said to get the round up shares, you needed to send the original PAQC stock certificates to them and they would mail the new shares out. They also said it appeared the company had not issued any release stating this and that they would contact the company and ask them to.

I then called Schwab and Scottrade and told them this info. I gave Schwab the name and address of the transfer agent. Scottrade said they had already requested the new shares. (Specifically, Scottrade said they didn't have any actual certificates since they hold the shares in street name, but they submitted paperwork that was equivalent to certificates.)

FYI, I bought 30 shares each in two accounts. (I could have done 4 accounts, but I didn't have any available cash in the other two..) I choose 30 shares because that was the lowest number specifically mentioned in their 14C, so it would give me a perfectly clear-cut example if I had to argue my case with anyone. Besides, the cost difference between 1 and 30 shares was less than $5.00.

Anonymous said...

Shaun, I dont know why PAQN is taking so long to get the round up shares. The transfer agent is PACWEST TRANSFER 1-(877) 675-3129 ask for LAUREL. The more calls she gets the more likely to get something done!

Has anyone received their 100 shares?

Shaun said...

I just called and spoke with Laurel. She told me she cannot issue the shares until she receives authorization from the company. She spoke with a company representative yesterday and said she should have authorization today or tomorrow and then she will issue the shares. I asked if she knew why the company was holding things up and she said they wanted to make sure the numbers were correct. I got the feeling the company got surprised by a larger than expected number of roundup shares to be issued :-)

Shaun said...

I'll put this info in a separate entry as well so it doesn't get missed: I just got off the phone with Laurel. She tells me she received authorization to send out the round up shares and they have gone out. Apparently, she sends them out in groups to the various brokerages. She said shares have been sent to Scottrade. She said 4,000 shares were sent to Schwab on 1/17. No shares have been sent yet to Fidelity, so if they are your broker, you might want to give them a call.

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