2022 Annual Letter: Significant Change

I ended last year's letter saying:

"I'm not anticipating any significant changes, but if God has other plans for us, we'll try to be ready and willing to make those changes."

Well, God indeed had other plans for us; we experienced a tectonic change going into the summer!

A New Job For Jessi: Children's Ministry Director

Life was comfortable in the first part of 2021. I managed our properties and worked on Majordomo. Jessi ran her in-home pre-school, Elinor started kindergarten, and Samson went to Jessi's school.

It was great!

We planed some extended trips since it seemed like the pandemic was becoming endemic, and things were opening up. We planned to spend a few weeks in Washington with Jessi's family, go on a few camping/backpacking trips, and finish the year with a trip to Disney World with my family. Plus, we started planning bigger/longer trips for 2022.

It was the American dream: spend lots of time with family and travel the world. Right?

And then God called Jessi into full-time ministry at our church as the children's ministry director.

It wasn't an easy decision:

• Jessi would need to shut down her school.
• I would need to watch the kids a lot more. It's good, but I had other commitments, like doing property maintenance and running Majordomo.
• I also took over most of the household chores. Again, it's okay, but it also meant I'd need to work most Saturdays - when Jessi was around - work on the business. I'm not sure how households with two full-time parents pull it off!
• We canceled all of our trips (my sister had a baby at the end of the year, which delayed our Disney plans, but we were glad for it). It's incredibly tough knowing that Jessi's parents are closer than ever, but our opportunities to visit are limited.
• Jessi was looking forward to focused time with Samson since Elinor would be in school. Samson probably struggled the most in the transition.
• Ministry issues would dominate our conversations like my old job used to.

For where we were at, it was a sacrifice!

But the rewards have also been great:

• Most importantly, we know that we're living in the center of God's will for our lives.
• It was a difficult transition, but we found Romans 5:3-5 to be true: "Not only that, but we rejoice in our sufferings, knowing that suffering produces endurance, and endurance produces character, and character produces hope, and hope does not put us to shame, because God's love has been poured into our hearts through the Holy Spirit who has been given to us."
• Instead of impacting 10 kids, Jessi is now affecting many more, including their families and teachers.
• We have a whole new set of friends that we're living life with and growing closer to.
• I've enjoyed spending more time with the kids. They still like Mom more, though. :)

How Do You Know When To Make a Change?

We use prayer and wise counsel. We talked to a dozen people about this particular change and spent a few weeks in prayer.

I also think God wired us to pursue challenging and exciting things.

In The 4-Hour Workweek, Tim Ferriss notes that striving for "happiness" is too nebulous. Instead, aim for excitement! Think back to when you're "happiest," and it's likely when something exciting/different happened.

In Grit, Angela Duckworth notes that improvement - or positive change - comes from resistance. This is true of your muscles, mind, emotions, and spirit. Again, think back to how you got better at something. It was by pushing yourself in the gym or classroom. So, if you want to strive for positive excitement, you will inevitably need to step out of your comfort zone.

Finally, Hebrews 12:11 says, "For the moment all discipline seems painful rather than pleasant, but later it yields the peaceful fruit of righteousness to those who have been trained by it." This explicitly talks about a loving form of punishment as God's children. Still, I think it can also be applied to the general sense of practice and training. So, stepping out of your comfort zone will be painful in the short term. But not only will you experience positive excitement and happiness, but you'll actually experience peace, satisfaction, and joy.

How do you know when it's time for a change? Are you challenged in something? Are you seeking comfort and avoiding conflict? If so, it's time to ask God in prayer what his will is for your life and seek the counsel of people you look up to for advice.

New Schools

We also had an opportunity to switch Elinor to a nearby private Christian school, and it's been amazing! She's memorizing Bible verses, celebrating Christian holidays, and learning how to live life for Christ. And yet, she still gets to experience the realities of school: dealing with inappropriate behavior from classmates and coping with rigorous academic expectations.

Jessi and Samson have been able to serve in her classroom Friday mornings, and I think it's been good for everyone.

Samson also started at a new school three days a week. The transition was rough for him. I don't blame him - he used to spend every day with Mom! He's better now, and we're going to start sending him four days a week to prepare him for kindergarten next year.

The hardest part is that the school is 15 minutes away (her old school was 4 blocks away). I know it doesn't sound like much, but it's 15 minutes there, 15 minutes back, and ~15 minutes during the drop/off pickup transition. That's 45 minutes, twice a day! Or 7.5 hours a week! And the second one happens at 3pm, making it feel like the day was cut short.

At first, I couldn't figure out why I suddenly felt short on time. It wasn't until I did the math that I realized what was happening. Since then, I cut back on my commitments, and it's helped.

Reading Books

I read a lot of books last year. 19 total, plus a couple of others I'm in the middle of. Obviously, I'm not that busy. ;)

Actually, my trick has been to spend a little time reading each day. Here's how:

Step 1: Pick a book you want to read. I enjoy self-improvement, leadership, and strategy books - both business and spiritual. I also realized I like mainstream popular fiction; I'll probably like the book if they made it into a movie!

Step 2: Find a regular time to read. It doesn't have to be a long time. I read for 10-20 minutes most mornings. Plus, 15-30 minutes Monday and Tuesday night. I read ~1 page a minute. It doesn't sound like much, but that adds up to 5,000 pages a year! If a book is 250 pages on average, that's 20 books a year - the math checks out.

What if you only read 1 page every 2 minutes?

And you can only read 3 mornings a week?

You're still going to read 4-5 books a year. That's a big deal!

I have a secret: the more you read, the more you'll want to read, and your reading list will grow fast. I manage my reading list on Amazon, which is super helpful.

I also have an unlimited budget for books. So, if I'm interested in a book, I add it to my Amazon reading list. Then, when I finish a book, I review my list and pick a new one that looks interesting at the moment (Step 1). And I buy it. I don't even look at the price because I know I can afford 10-$30 for a book I know I'll read.

Discipleship

In Mid-2019, a wise, godly man started disciplining me. And I needed it. I had perfected the art of looking wise and Christ-centered. On the surface, I said and did the "right" things. I knew how to pray in a way that got the muffled "yes Lord" from others. I knew how to use logical arguments to "prove" my theology. And I served a lot, but it was because it was fun and I like feeling important.

God used everything I did for His good, but I was spiritually hollow. And what I didn't know was that spiritually mature people noticed. They're too respectful to characterize me that way, but it wasn't until after God disciplined and renewed me that people close to me started commenting. Praise God that in His kind providence he redeemed my heart!

So I'm fully mature now, right? By no means! (my favorite expression from the Apostle Paul)

I'm still working on letting Christ be the centerpiece of my life, which only the Holy Spirit can do.

Part of that journey is sharing what God has revealed to me with other men. We memorize scripture together, hold each other accountable in different aspects of our lives, and discuss a book on either doctrine or spiritual disciplines. It's been a privilege to share with other men, and this is something, Lord willing, I want to continue doing.

1031 Property Exchange

And the significant changes kept happening. On a cool February morning, I had a 6:30 meeting canceled at the last minute, so I decided to spend some time researching my rental property values. And much to my surprise - because I usually don't pay attention - many of my property's values went up.

But this created a new problem: I had a bunch of equity tied up.

Typically, when evaluating a property, you calculate your return on investment as

ROI = profit / money invested

So for a rental, it’s ROI = (annual after-tax net income + principal paid down + appreciation) / (down payment + out of pocket repair expenses)

But what if the property's value increases significantly?

According to this equation, it's a fantastic return.... on paper. You can't spend it unless you refinance or sell the property. It's similar to buying a stock that rises in value. Technically you make a lot of money, but you only realize it when you sell.

This was my problem. I had a potentially considerable ROI, but the only way to realize it was to sell or refinance.

So, I did some math and decided the best thing to do was sell 3 of my rentals - two duplexes and a single-family home - to capture that ROI and buy another one to convert that equity into future cash flow.

In rental real estate, there's an option to transfer the value gained from one property to another to defer paying the taxes on those capital gains. When you sell the final property, you pay capital gains taxes on it and any previous property's gain that you transferred to it. It can be a lot! Or, you never get out of rentals, and eventually, when it passes to your heirs, the gains reset - resulting in zero capital gains taxes paid. It's called a 1031 property exchange.

But there are a lot of rules around timing and selecting properties. I won't go into the details, but lining up all the transactions can be stressful.

Anyways, we did a 1031 of the three rentals into a set of warehouses (and an adjacent vacant lot, but it was technically outside the exchange). So now we're in the warehouse business and renting to business owners. I must say, it's nice working with companies.

Here's what it looks like:

The white buildings, plus the one under construction.

Inside one of them

The land

2021 Problems

J&J Mini-Storage

At the beginning of the year, our move-in process was too cumbersome. We figured out how to streamline and automate a lot of the process. There are still opportunities for improvement, but I would call this a success.

Majordomo

We focused on two areas: sales and scalability.

We developed an AI to read home inspections, identify defects, and select a repair to fix the defect. It took us most of the year to build it, but it worked really well and helped us scale our processing. We could use more data to train the AI model further, but it works. I jumped out of my chair in delight the first time I saw the results.

Unfortunately, sales didn't increase. We implemented an affiliate program, but it never really caught. We also tried a couple of other partnerships, but they didn't increase sales enough either.

It's a tough pill to swallow when you think you have a helpful product, but the market fit isn't quite there. We have some ideas to salvage the company, but the options are limited.

Writing

I did some writing, but it wasn't here. I contributed to the Majordomo Blog and helped write sales emails. I also started writing code, but that's about it. I still desire to write more, but running Majordomo and doing the 1031 took up most of my attention.

2022 Problems to Solve

Accounting Software

In the middle of the year, the payment platform I used for collecting rent was sold to a larger company and no longer worked for non-residential properties. So I had to jump ship. I'm not crazy about the one I'm using and am spending way too much time reconciling all my payments.

I looked into a couple of other options but didn't like any of them.

So, I'm solving my problem by building my own solution.

With the help of my brother, I sketched out what an ideal payment and accounting software would look like for me. We started building it and hope to have an MVP mid-year. I'm making it for myself, but I have a hunch I'm not the only one who could benefit from using accounting software optimized for small to medium landlords.

And who cares if nobody else uses it? At least it'll save me lots of time each month!

And along the way, I'm learning how to code in React with Tailwindcss for styling. At the very least, these are skills I'll be able to use for other projects.

Land Development

As I mentioned earlier, I purchased a piece of land next to the warehouses. It's right next to I-5 and zoned industrial. My plan is to develop it, but that's as far as I've taken it. So this year, I'd like to figure out what I want to do, how to do it, and how to pay for it. There are lots of problems to solve!

Here are my flash plans:

Closing Thoughts

So that was our year: three significant changes - a new job, new schools, new properties - and a few smaller changes. It was completely different than how I anticipated the year going! Thankfully, God didn't change and remained gracious to our family.

What's up for the year ahead? I'm not sure. Maybe there's travel, but maybe not. Maybe there will be more big changes, or maybe not. I'm taking things one week at a time while still looking ahead on bigger projects.