This newsletter is my process of writing a self-help book, tentatively titled How To Make Money: Financial Advice For Poets. For new readers it’s best to understand that I don’t know what I’m talking about, I’ve done almost everything wrong in my life. Some of the topics I’ve covered previously include how to fix a sink and how to direct a feature film, as well as how to publish a book when you have no friends.
The guiding principle behind this project is that someone who has been in many failed relationships gives much better relationship advice than someone who has been in only one long happy relationship. In other words, this is advice from someone who is no better than you.
Please share this newsletter on your social media and encourage other subscribers. This is an intentionally non-political newsletter so not the kind that gets widely posted. But I would love to have more subscribers. Subscribing is free.
And paid subscribers are entitled to free consulting on any of the topics I write about. Which is a terrible deal but if you’re bored it can’t hurt. Probably.
The great news for the poets on this mailing list, you have enough time to do anything, including real estate investing. Writing poetry takes very little time. And teaching poetry is even easier. Poets who lead workshops generally don’t even read the poems prior to arriving in class. Though some do, out of a sense of guilt.
I remember teaching workshops at the Tin House Writing Retreat, which is basically a scam like all the other writing classes and academic programs while also not being a scam. Which is to say, it’s an excuse to get away from your home and surround yourself with people who also believe that writing is a valid way to spend your time. I got much of my best writing done in that kind of an environment when I was a Stegner fellow at Stanford.
Still, most of the writing programs are Ponzi schemes. They train people to teach the next generation of writers, and it’s well known among conmen the world over that the quickest way to make a buck is to sell someone their dreams back with a markup. Anyway, if you can afford it, I don’t think writing programs do harm. But that’s not what this newsletter is about.
I remember a teacher, not a poet, a very good fiction writer in fact (though not as good as Walter Kirn, who was also at Tin House reading from his memoir, and who knew better than to give a shit about any of the ritual bullshit, and who finished his reading by proclaiming “Don’t go to Princeton!” and then storming off the stage, which was at the bottom of a hill bordered by a creek, and disappearing into the woods) complaining (not Walter Kirn, the other teacher) that we weren’t even being paid minimum wage, “when you think about it.”
We were paid $3,000 to teach 5 three hour workshops and also give a “craft” talk and a reading. The weather was nice, food and lodging was included. And I remember looking at this writer who was complaining about being paid minimum wage, a nice person who would shortly be awarded a Pulitzer Prize, and saying, “I don’t know what you’re talking about. I’m making $100 an hour.”
The poets already knew how to do this, it was just the prose writers slaving over their student’s long-form manuscripts as if the integrity of their critique was what the students cared about and not how entertaining they were in the classroom.
In truth, the best writing teachers just motivate students to write more, which is the only way to become a better writer. There is nothing else to it.
But this is not about teaching writing. I am not a part of that community anymore and I don’t think Tin House still exists and if they do I don’t want to know about it. The point of this newsletter is Self Help. I will strive every time to give you something useful, whether I succeed or not. The more minor point is Financial Advice For Poets. Because despite the absurd number of mistakes I’ve made in my life, financially and otherwise, financial literacy is well below any reasonable level in the poetry community. You could even say it’s a crisis.
I tried in some of the earlier letters to explain principles of real estate in a way poets could understand, including the poets that are bad at math. I outlined the two main ways people make money in real estate: cash flow and appreciation.
The relation of those two principles is usually, though not always, inverse. In other words, real estate that appreciates doesn’t cash flow and and real estate that cash flows doesn’t appreciate (ish). The conservative investment is cash flow, the big money is in appreciation. But the real question you have to ask, as an investor and a poet, is why you don’t spend more time doing the thing that makes you the most money?
In other words, and this is also something I talked about in the first and second SELF HELP newsletters, why would a writer teach creative writing if they made more money writing books? At least on an hourly basis. Most likely because we only have so many hours of potential creativity every day, and we recognize that if we are not around people we don’t really exist. But there is also something more to it, and you have to explore it for yourself.
For instance, one of the people I interviewed for this project is a dentist who owns maybe 12 properties. He said he would quit his dental practice when he owned 20 properties. He was already doing better in real estate than his dental practice. Perhaps he could only borrow money so fast, bank loans often take months, and he had to fill his time somehow. But that seemed unlikely. More likely there was something he wasn’t telling himself about himself. Something that a stranger could have figured out fairly quickly but that would take a long time for him to figure out on his own. Something his friends and family couldn’t be bothered to tell him because they thought it was unimportant or didn’t really care.
So this is how a dentist is like a poet. The great poets, Bolano, or Ginsburg, know the importance of lying on your back and staring at the clouds. But how many of us have so much confidence in our abilities that we’ll watch the sky move and wait for inspiration while our family starves? And the even greater poets, Anne Sexton, Sylvia Plathe, were struck with madness and suicidal. It’s a madness most writers would happily trade for, choosing creativity and creation over joy and connection. But they don’t because they worry they might not be great poets. And a mediocre poet who lies on the side of a hill staring at the clouds is just a bum (though I admit I find it totally relatable, mediocrity is not a sin, at least I hope not, anyway you need to know your own limitations to excel within them).
By now I’m way too far along to make the SELF HELP point I want to make and expect you to remember it. Hopefully this poetry talk is inspiring to you. I think inspiration is the greatest thing in the world. I would take it over anything. Non-the-less what I wanted to tell you about is investing in real estate, the BRRRR method.
BRRRR stands for Buy, Renovate, Rent, Refinance, Repeat. It’s the most common strategy among the very uninspired people populating the real estate blogs. (Sleep specialists say it’s hard to fall asleep while staring at a screen, but I’ve always wondered if they just weren’t staring at the right screens?) BRRRR is easy to understand, hard to mess up, very boring, and if you do it enough times you won’t have to work anymore at some point.
The basic idea is buy a house that needs work. Let’s say for $80,000. Where do you get $80,000? That’s the tricky part of course. Though in many areas of the country you can even do this for $30,000. You won’t be able to get a mortgage on these properties but there are other types of loans, like hard money loans, or commercial loans, depending on your credit and liquidity.
You rehab the property for $40,000 and ideally it is now worth $160,000. You’ve put $120,000 total into the property and when you go to refinance, if it appraises at $160,000, you’ll get your entire nut back. That’s because now that the property is livable, and you’ve placed a tenant, the bank will loan you 75% against the value of your investment property (80% if you pretend to live there).
Effectively you have a house for free, but you have to pay down the loan. Let’s say it’s renting for 1% of the cost, which is very reasonable, then you’re billing $1,200 a month while paying down the loan and after maintenance and whatever else you’re probably making $300 with a property manager doing all the work or $400 a month without and it didn’t cost you anything at all and then you go and do it again.
The rent will go up over time, so you’ll make more. And, the money to pay down the loan, part of that is against principle, so that’s also yours eventually. You get a tax break on the interest, so that’s a little more in your pocket. Plus inflation works in your favor as you owe the same but the money is worth less. The equity building in the property will come in very handy in five years as your journey to financial independence accelerates. But you can see how this is a slow process. If you get a great deal on the property that helps a lot obviously. More often than not 75% is actually less than you put into the property, so you don’t get all your money back, but maybe you’re making $500 a month after expenses and it ultimately only cost you $10,000 of your own capital (you have to factor in needing a roof in ten years and a new water heater in 15, etc.). It helps if you can create a basic spreadsheet.
Once you’ve done this 10 times, if you’re just average at it, you won’t have to work anymore. But you also won’t be rich. Also, it’s meaningless, kind of soul sucking. And you can see, it’s quite boring. And slow. It’s much easier than it sounds (almost everything is). However, the important thing is that you find meaning in your life. And meaning comes from creating art (sometimes) and relationships (always). Once you have your basic needs met relationships are the only things that matter. Which is unfortunate.
Because relationships are much more difficult than real estate.
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