RFS' Journal

Where are you and where are you going?
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RFS
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RFS' Journal

Post by RFS » Mon Jan 15, 2018 1:37 pm

If you'd like to read more about my background, here's the introduction post.

GOALS
I recently did the Self-Authoring program by Dr. Jordan Peterson, and holy crap, it is amazing! Here's how it works: There's a past authoring section, a present authoring section, and a future authoring section.
- In the past authoring section, you divide your life into seven epochs. You detail significant experiences from each era, then you analyze how each experience impacted your life.
- In the present authoring section, you identify your faults and virtues. Then you develop strategies for setting your life up in a way that minimizes your faults and maximizes your virtues.
- In the future authoring section, you describe a "heaven" and a "hell" for your life in 3-5 years. It helps you clearly imagine an ideal to strive for, and a monster to run away from.

I paid $15 for the program (they have 2-for-1 deals constantly), and it was completely worthwhile. It forced me to sit down, learn about myself, and envision what I wanted out of life. Best of all, I have way less anxiety about the direction of my life!

That said, here's some of my goals:
- Reach FI through real estate investing.
- Operate a profitable market garden
- Exercise each day
- Write each day
- Read 5 books a month

I'll break these down into 2 sections:
A) FINANCE + RESILIENCE
B) EVERYTHING ELSE

FINANCE AND RESILIENCE
Jacob, Richard Heinberg, John Michael Greer, and Jean Laherrère have got me seriously concerned about peak oil. Originally, I wanted to invest $400k+ in index funds and transition into part-time work that would cover low/as-much-homesteading-as-possible expenses. But the potential end of infinite growth and modernity as we know it has thrown a wrench into this.

I'm still trying to hash this out, but this is what I'm thinking so far:
1. Save $50k and move to a rust belt-type city with good urban fabric.
2. Use an FHA loan to purchase a value-add duplex, triplex, or 4-plex [and preferably a side lot!] in an appreciating neighborhood with 3.5-5% down.
3. Rehab and rent the other unit(s). Tenants eliminate my housing costs.
4. Start a SPIN (small plot intensive farming) operation out of the backyard + side lot. I like Curtis Stone's model. If you leave your social justice ideology at the door and combine sustainable business practices with hustle, it is possible to generate a middle-class income doing this. There are particularly ass-busting entrepreneurs that have started with less than $10k and cash flow quickly (3-6 months.)
5. Recycle the money back into cash reserves, accelerating the mortgage payoff, and/or other investments.
6. You can do 1 FHA loan/year. When I find another good deal, I could repeat the process.

With this setup, I could live extremely inexpensively AND offer goods that people need! Worst case scenario, I think, I'd have to get a job at a local school. I'm roadtripping to do some boots-on-the-ground research in Chattanooga, Cincinnati, Detroit (7Wannabe5, your posts have been super helpful!), Cleveland, and Pittsburgh in April when I have a week off work. All of them, except for Cleveland, show projected population growth and seem to be in the early stages of gentrification.

At my current setup, I could get here in roughly 2 years. I only have one income stream (my job), and I need to change that.

Here's my current financial setup:
Current net worth: $366 (I'm debt-free now!)
Monthly after-tax pay: $2600
Expenses: $400-ish/mo
- $100/mo to cover my rent + utilities, cell phone, food (I dumpster dive a lot of my food :D ), and health insurance. I live with my parents. It's a great deal, and I'm very lucky.
- $198/mo for car insurance (I know, I know. I plan to sell the car and convert to bike + bike trailers when I'm settled.)
- $30/mo for a BiggerPockets (real estate investing resource) membership. Well worth the education, access to the rental calculators, webinar archive, etc.
- $30-$60/mo gas for my Toyota Corolla.
- $30-$60/mo for whey protein. I plan to hunt and process deer to lower protein costs.

EVERYTHING ELSE
Since October, I have been weightlifting at 5:30 AM on MWF. But alas, I need to do cardio into the off days. I joined this forum to help with my writing goal, and I plan to write or reply to 1 post a day. For the five books a month, I block out 90 minutes each day to silently read.

For books this month, I've read "The 12 Week Year" by Brian Moran and "Let My People Go Surfing: The Education of a Reluctant Businessman" by Yvon Chouinard. I'm halfway through "The Long Descent" by John Michael Greer, "Extreme Ownership" by Jocko Willink, and "The Art of Tidying Up" by Marie Kondo. They're all great books.

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Kriegsspiel
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Re: RFS' Journal

Post by Kriegsspiel » Mon Jan 15, 2018 3:52 pm

Damn bro, we're very similar. I was excited about all the same things as you at one point so it's gonna be fun to see how it all goes for you. I think you're making a good play with any of those cities, they were the ones I considered (excepting Cleveland) when I was picking a place to live; I've lived in Pittsburgh, Cinci, and Detroit.

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FBeyer
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Re: RFS' Journal

Post by FBeyer » Tue Jan 16, 2018 3:50 am

Interesting. I'll be happy to see how it goes. Have fun!

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7Wannabe5
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Re: RFS' Journal

Post by 7Wannabe5 » Tue Jan 16, 2018 12:11 pm

Sounds like a plan! Your reading list looks interesting. Curtis Stone is a good model for the necessity of adding value to agricultural production. Growing food as a commodity is a losing proposition, unless you can lock in some serious subsidies. Stone makes his top marginal hourly wage through marketing activities, not farming activities. Doing your own up-processing can also work. If you can somehow produce something that is simultaneously "fresh" yet "shelf-stable" you are golden.

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RFS
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Re: RFS' Journal

Post by RFS » Tue Jan 16, 2018 7:07 pm

@Kriegsspiel - Thanks for the words! Dude, that's awesome! What were your impression of each city? (and where do you reside now, if you don't mind me asking? How is it comparatively?)

Pittsburgh and Cincinnati look similar to me, at least on paper. Dense population of around 300k, sprawl-discouraging topography, increase in expected job/population growth, governments trying to attract jobs, affordable housing, etc. I think Pittsburgh is a bit later in the growth stage, though. A shitload of building permits have been pulled recently, and the vacancy is increasing. It may be in phase 3 of the picture below:

Image

Still, real estate is a hyper-local game. While there's neighborhoods within Pittsburgh that still have great potential, Cincinnati as a whole seems a bit earlier on the curve. Even the vocabulary around Pittsburgh suggests an absolute frenzy. Robotics capital of the world. The next Silicon Valley. Holy crap! The city of Pittsburgh should spend their entire advertising budget on commercials in San Francisco with just the words "ROBOTICS" and "TECH STUFF" flashing on the screen next to a picture of someone's $600 rent check and a row of historic buildings repurposed as sandwich stores with tables outside. They'd get all the migration they wanted. Paul Graham wrote a great essay about making Pittsburgh a startup hub.

Detroit looks like it has decent fundamentals as well, and I like that it's not as dense/you're able to get some big lots for a great price. Good soil, climate, and a giant water reservoir nearby as well. But man, those property taxes (and taxes in general there) are ridiculously high! It seems like there's a lot of hassle involved with living out there. Lots of competition in the market gardening space as well. And it seems quite a bit sketchier block-by-block than Pittsburgh and Cincinnati. Am I way off here?

@fbeyer - Thank you for writing! I'm having a great time already.

@7Wannabe5 - Thank you! I read a Pattern Language because you posted about it on here, and it was an awesome read. Care to make any recommendations? As for the Curtis Stone comment, you're right on. It will require an indescribable amount of insanely intense ball-busting work.
Last edited by RFS on Sun Feb 04, 2018 4:56 pm, edited 3 times in total.

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Re: RFS' Journal

Post by jacob » Tue Jan 16, 2018 7:22 pm

THAT graph contains and exemplifies at least two general graphing ideas I've never seen before. Thank you!

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Kriegsspiel
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Re: RFS' Journal

Post by Kriegsspiel » Tue Jan 16, 2018 9:37 pm

RFS wrote:
Tue Jan 16, 2018 7:07 pm
@Kriegsspiel - Thanks for the words! Dude, that's awesome! What were your impression of each city? (and where do you reside now, if you don't mind me asking? How is it comparatively?)
I liked all of them. I live in Detroit currently.
Pittsburgh and Cincinnati look similar to me, at least on paper. Dense population of around 300k, sprawl-discouraging topography, increase in expected job/population growth, governments trying to attract jobs, affordable housing, etc. I think Pittsburgh is a bit later in the growth stage, though. A shitload of building permits have been pulled recently, and the vacancy is increasing.
Pretty much correct, yea.
Real estate is a hyper-local game, though. I'm sure there's neighborhoods within Pittsburgh that still have great potential. Cincinnati as a whole seems a bit earlier on the curve, though. Even the vocabulary around Pittsburgh suggests an absolute frenzy. Robotics capital of the world. The next Silicon Valley. Holy crap! The city of Pittsburgh should spend their entire advertising budget on commercials in San Francisco with just the words "ROBOTICS" and "TECH STUFF. SERIOUSLY, IT'S KIND OF SIMILAR" flashing on the screen next to a picture of someone's $600 rent check and a row of historic buildings, all repurposed as sandwich stores with tables outside. They'd get all the migration they wanted. Paul Graham wrote a great essay about making Pittsburgh a startup hub.
Yes, Pittsburgh is more over-valued than Cinci IMO. Regarding this quote from that Paul Graham article:

"art of that is the buildings themselves. I realized a long time ago, back when I was a poor twenty-something myself, that the best deals were places that had once been rich, and then became poor. If a place has always been rich, it's nice but too expensive. If a place has always been poor, it's cheap but grim. But if a place was once rich and then got poor, you can find palaces for cheap. And that's what's bringing people here. When Pittsburgh was rich, a hundred years ago, the people who lived here built big solid buildings. Not always in the best taste, but definitely solid. So here is another piece of advice for becoming a startup hub: don't destroy the buildings that are bringing people here. When cities are on the way back up, like Pittsburgh is now, developers race to tear down the old buildings. Don't let that happen. Focus on historic preservation. Big real estate development projects are not what's bringing the twenty-somethings here. They're the opposite of the new restaurants and cafes; they subtract personality from the city."

Could be written about either city, but Cincinnati retained far more of it's great architecture than Pittsburgh did. Pittsburgh has a lot of shitty frame houses with decaying siding, whereas Cincinnati has brick houses that would look much better fixed up in non-warzone neighborhoods. Detroit also has a lot of nice looking buildings, but I think they've been abandoned longer than buildings in Cincinnati/Pittsburgh.

For neighborhoods to look at WRT urban farming + affordable property, I'd look at
- Cincinnati- West Price Hill south of Warsaw Ave, Northside, East Walnut Hills/Woodburn.
- Pittsburgh- Garfield*, the north side of the Ohio going out into Beaver County, Millvale, maybe Larimer close to Bakery Square.
- Detroit- anywhere that borders Downtown/Midtown.

*At one point I was looking into buying a bunch of abandoned lots in Garfield near the Healcrest Urban Farm from the Pittsburgh Land Bank to build a small home + urban farm on. Probably still possible.

I think Detroit is the easiest city to get around via bike/live without a car, followed by Cinci. That might just be because of personal circumstances, since in Cinci/Pitt I wanted to get around to different neighborhoods/suburbs, but in Detroit I pretty much stick to Downtown/Midtown/New Center/Corktown/Mexicantown/Eastern Market, which are all connected by bike lanes. And it's flat. Both Cinci and Pittsburgh have hills.
Detroit looks like it has decent fundamentals as well, and I like that it's not as dense/you're able to get some big lots for a great price. Good soil, climate, and a giant water reservoir nearby as well. But man, those property taxes (and taxes in general there) are ridiculously high! It seems like there's a lot of hassle involved with living out there. Lots of competition in the market gardening space as well. And it seems quite a bit sketchier block-by-block than Pittsburgh and Cincinnati. Am I way off here?
I don't deal with Detroit property taxes because I rent a high-rise for $730, but they don't seem that bad, taxes in Pittsburgh are higher (higher property values). Michigan has a higher state flat tax (4.25% vs 3.07%) but, like Ohio, allows deductions/exemptions (under the old tax system), PA taxes gross income regardless of retirement plan contributions from what I can tell. Detroit city tax is 2.4%, vs 3% for Pittsburgh and 2.1% for Cincinnati... I'm not a tax Jedi or anything.

I think there are a lot of restaurants that source from the local urban farms, so maybe if you grow something they don't to fill out the supply chain... Detroit is definitely sketchier than either Pittsburgh or Cinci as a whole. I live by downtown and don't really go out into the neighborhoods, like I said above. There are some sketchier neighborhoods in Cincinnati (Avondale, Evanston, the more western areas of OTR) and Pittsburgh (Homewood, Hill District, Beltzhoover, Knoxville, Mt. Oliver) that you'll probably want to avoid.

7 could probably offer a better opinion about Detroit.

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Re: RFS' Journal

Post by Smashter » Wed Jan 17, 2018 3:35 pm

Have you thought about adding Milwaukee as a stop on RFS's Rust Belt Road Trip?

I'm curious because that's a potential post FI destination for me. It seems like there is a lot of cheap, well-built housing. Plus there's the lake, culture, sports teams, etc. I've been downtown and enjoyed it, and I've heard good things from folks who live there.

Keep in mind that I'm biased because I have friends and family in that area.

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RFS
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Re: RFS' Journal

Post by RFS » Wed Jan 31, 2018 9:24 pm

@Jacob - You're welcome! You have exposed me to so many new ideas, it feels good to return the favor.

@Kriegsspiel - Thank you for such a thoughtful and informative reply. I genuinely appreciate the neighborhood suggestions.

@Smashter- I haven't thought about Milwaukee for this trip, because it's a bit too far out of the way. I think you're spot-on with the Milwaukee observation, though. It looks like an excellent FI destination, and definitely one of the overlooked emerging rust belt cities. Cheap housing, a grid layout perfect for bicycles, increases in population growth, the lake, financially conservative state government, etc.

I'm trying to stay away from the huge metropolises, though. Anytime I'm in a giant (500k+) American city, I usually get a feeling of "holy shit, there's too many organisms furiously trying to get resources here." Everything seems overpriced, it's crowded, there's nearby 16-lane highways blasting your ears with noise pollution, etc. I worked in Stockholm for a little while, though, and I really enjoyed it. Except for the expensiveness. If a giant American metropolis is Mordor, Stockholm is Lothlórien. It was like a grand cathedral with a choir softly singing hymns turned into a city.

Logistically, it's just as much of a pain in the ass to live there. But I do think it's important to consider the built environment's effect on you when choosing a place to live. The only midwestern/rust belt city I've visited is Chicago (if that even counts), which I liked. My experience is limited mainly to the Southeast US, which has the worst urban planning known to mankind. Maybe a bigger city with the right urban fabric wouldn't be so bad after all.

Another thing to think about: As energy supply problems get worse, won't smaller cities be better equipped to weather the changes? Especially places that have distinct rural edges, some relationship with local food production, water transport, etc? It seems like the smaller cities and towns are intrinsically better scaled for future energy realities.

JANUARY REPORT

Net worth: $2900
Expenses: $372
Housing, Food, Health Insurance: $100
Car Insurance: $200
Gas: $30
BiggerPockets Membership: $30
Restaurant: $12
Whey Protein: $0 (I used a gift card.)

Books read:
Let My People Go Surfing: Confessions of a Reluctant Businessman- Yvon Chouinard
The 12 Week Year- Brian Moran
The Long Descent- John Michael Greer
Extreme Ownership- Jocko Willink
The Magic Art of Tidying Up- Marie Kondo
Green Wizardry- John Michael Greer
On Becoming a Person- Carl Rogers

February books:
The Fighter's Mind- Sam Sheridan
Emerging Real Estate Markets- David Lindahl
On Writing Well- William Zinsser
The Meditations of Marcus Aurelius
Shoe Dog- Phil Knight
The Market Gardener- JM Fortier

I'm trying to read these books, but I can't find them at the library and am having trouble finding a deal. If anyone would like to do a book swap, please let me know :mrgreen:
Anything by Joel Salatin
Small, Gritty, and Green: The Promise of America's Smaller Industrial Cities in a Low-Carbon World - Catherine Tumber
Last edited by RFS on Sun Feb 04, 2018 1:35 pm, edited 6 times in total.

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Re: RFS' Journal

Post by sky » Wed Jan 31, 2018 9:48 pm

I have always thought of Detroit as an expensive city, due to taxes and insurance costs. I wanted to live there but was not able to find a job at the time I was looking.

You might want to look at Grand Rapids and Kalamazoo, although they both are booming at the moment. For potential upside, Muskegon has Lake Michigan beaches and has the best harbor on the lake. There are many smaller towns around these three that may be better choices. For some reason the economy in west Michigan is booming, which is something we are not used to. There are still cheap small towns which are probably boring but are not too far from the cities with universities and more interesting culture. Up and down Lake Michigan it is expensive within a mile or two of the lake, and becomes somewhat cheap as you move away from the coast. Some of the locals are savages tho.

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Kriegsspiel
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Re: RFS' Journal

Post by Kriegsspiel » Wed Jan 31, 2018 10:06 pm

Chattanooga is the only one RFS listed that is a clear winner WRT taxes. Unless TN piles extra school bonds/levies/fire/police shadow fees on top of their property taxes, those are pretty low too. Detroit's auto insurance rates lead me to sell my car a month after I moved here, which is what RFS plans on doing also so it's a moot point. Or did you mean home insurance?

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Re: RFS' Journal

Post by sky » Thu Feb 01, 2018 6:58 am

Yes, I meant car insurance. At the time I was looking to move there (late 1990s), there were very few stores.

About 2 years ago, I bid on a tax sale house in West Village about a block in from Jeff. I bid about 10k, and it went for 75k.

I was shocked, things sure have changed.

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RFS
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Re: RFS' Journal

Post by RFS » Sun Feb 04, 2018 1:45 pm

@Sky - Thank you for the suggestions. I did some research, and there's a variety of things pushing economic growth in Western Michigan. The recent drilling boom (especially in the nearby Marcellus shale) has lowered power prices, its economy is more diversified than Eastern Michigan's, and Gov. Snyder both lowered business taxes and signed a right-to-work law.

Detroit is indeed an expensive city. It also has plenty of pain-in-the-ass regulations/expenses for landlords, cutting into already tight profit margins. The eviction process is one of the most complex in the country. It seems like doing business would be easier in more conservative areas/states like Indiana, Ohio, and Wisconsin. But then again, laws can change dramatically by municipality. Every market has someone kicking ass in it, too.

I spend about 1 hour/day evaluating locations and categorizing the data in a handy OpenOffice spreadsheet. When I narrow down good overall markets, I zero in on submarkets/neighborhoods. Here's the criteria I'm using:
Population
Job creation
Population increase and expected growth
Buildings proposed (permit pulls)
Government planning
Affordability
Absorption rate and vacancy rate
Property taxes
Landlord laws
Growing season/zone
City policy with regard to agriculture
Water
Good urbanism?

What am I missing?

Cities on the list so far (in order of population).
- Greenville, SC
- Columbia, SC
- Chattanooga, TN
- South Bend, IN
- Dayton, OH
- Birmingham, AL
- Fort Wayne, IN
- Toledo, OH
- Cincinnati, OH
- Pittsburgh, PA
- Cleveland, OH
- Detroit, MI

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Kriegsspiel
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Re: RFS' Journal

Post by Kriegsspiel » Fri Feb 09, 2018 12:41 pm

Kriegsspiel wrote:
Wed Jan 31, 2018 10:06 pm
Chattanooga is the only one RFS listed that is a clear winner WRT taxes. Unless TN piles extra school bonds/levies/fire/police shadow fees on top of their property taxes, those are pretty low too. Detroit's auto insurance rates lead me to sell my car a month after I moved here, which is what RFS plans on doing also so it's a moot point. Or did you mean home insurance?
Make sure you do your research on non-property tax fees:

https://www.wsj.com/articles/how-are-ci ... 1517913001

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