Affiliate Landlord: Hitting the Streets – Tour #2

December 22, 2014 Posted by Tyler Cruz

11 days ago I published a post on my walkthrough tour of some rental properties I was interested in purchasing.

A couple days ago I went out for a 2nd tour, this time for new properties I was interested in, and so I thought I’d share how it went again.

As with the first time, I had an absolute blast again. It’s just so fun to go out and look at something physical to invest in. I’ve been working online nearly my entire working life and so the closest to any "asset" I’ve ever had was owning income-generating websites – but again that is still entirely digital.

Anyhow, let’s proceed with the 2nd tour! This time, we left a little bit earlier and set out to look at 5 properties. Inventory here right now, partly due to the season, is really low and there actually aren’t too many other rental properties available.

Property #5: The Ocean View Duplex

Funnily enough, this is another property on the same street as my favourite property from my first viewing. It’s one of the streets in my town that is infamous for being fairly undesirable to live in.

However, the street is pretty long and this property was situated at the very other end of the worst part of it. Basically, it’s the "rich" end of the street. I didn’t even know the street went that far or that the property value increased as you head along it.

The property is a Duplex priced in the low $400K’s and has only been on the market for 2 weeks.

What amazed me first and foremost was the view. While not perfect (there’s some logs floating around from the logging industry here, and partially blocked with a few trees), the property is quite high up that you still get quite the view. It’s December and was raining when we went, and yet I’d still classify it as a "million dollar view".

In fact, the view is taken advantage of with the layout of the construction. For example, the kitchen window overlooks it, as does the living room windows. It’s just a bit amazing to have such a view at this price range here.

Below is an actual shot courtesy of Google Street View of the view… but that’s taken at street level – again the property is quite high up so it really gets a much better view. You’ll just have to trust me that the view is a lot better than this photo Smile

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Setting the view aside though, this duplex was just simply awesome. Each side has its own garage, which is not very common in duplexes of this price range.

In addition, every single inch of this property both inside and out was in superb condition. I mean, walking through it I felt very comfortable and at home; I’d love to rent here myself! My agent was pleasantly surprised as well.

The property is also nicely landscaped both in the front and back, including 2 nice wooden sheds, a back privacy porch, etc.

Lastly, one of the units has an unauthorized suite on the bottom floor. It is "unauthorized" only because the property is zoned for a duplex and not a triplex… otherwise it would be okay. Normally I am against unauthorized suites for the very small risk of there being an issue in the future, but in this case the risk would be even smaller since I could still rent out both sides even if I was told to stop renting out the bottom portion. It would still suit people in certain situations, such as a family with a teenage/20-something child, in-laws, etc.

The garage (which are actually finished inside BTW… bulkheads, drywall, lighting, paint, etc.) also contain lockable doors to both the upstairs and downstairs which means that I could choose which configuration would get the garage.

The unauthorized suite is both a pro and a con… it’s a con for the small chance that the city have a problem with it in the future, and a pro for the added rent! I should mention though that there are a few duplexes right beside this one though, making any "complaining neighbours" even less likely.

Overall, I loved this place and it’s now the strong favourite on my list. I think it is a bit premature to make an offer it though since it has only been listed for 2 weeks so far, and the holidays are coming up.

It is already priced pretty good so I’m hoping it doesn’t sell before it drops… I don’t expect a drop to be until mid-January at the earliest, and more likely in February.

Oh, almost forgot – here are the numbers:

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Property #6: The 8-Plex Historical

Boy, where to start on this one…

This property has been on the market for a while and never really tickled my fancy before due to its age, but with a very limited selection out there, I decided to take a look at it as the numbers on paper appeared to be pretty good.

It is a 114-year-old officially historical home that was converted to an 8-unit boarding house in the 1960’s. It was more recently converted into rental housing for the university students here.

It has 2 floors with each floor having a shared bathroom. That’s 1 bathroom per 4 units! Surprisingly though, even though they hadn’t been cleaned for a week apparently, they were pretty decently clean!

The listing realtor met us there to give us a detailed tour of the place which was actually pretty informative and helpful. There is also a separate title for the back lot which is zoned and ready for a 4-plex.

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The age of the property aside (it had a lot of renovations over the years and is in decent shape, although there is obviously a lot more risk with an older building than a newer one), this property was really quite shocking to me.

We saw the entire building, including every single of the 8 units. Upon "entering" the first one, I was really in a state of shock, although I tried to mask it. It was tiny! I knew the rent numbers of the units going in, so I had a certain idea in mind what to expect, but just couldn’t believe that someone would be paying that much rent for what was quite literally just a room.

The tenant was there and seemed very happy living there though. He said he loved living there and that it was "enough" for him. All the other units were the same, more or less. Some were a little bit bigger and some a little smaller, but they were all just 1 single room with a closet and tiny kitchenette (literally smaller than an RV kitchen).

It’s funny because I was briefly discussing how I couldn’t believe how small the units were in my chatroom (some by and say hi), and one regular said something along the lines of "They are young college students – they’re probably elated to be living on their own"… and that is true! I forgot that when I first moved out of my parent’s place that I was just so happy to be going out on my own that the actual place didn’t matter all that much.

I’m old now and forgot that your first place is usually not a palace. Plus, these rental rates were like 60%~ of normal rates, so that does make sense too.

Anyhow, back to the property. The units themselves all seemed in decent condition, and there is a caretaker who would like to stick with the property who deals with all the tenants, cleans, keeps an eye on the place, etc. for an extremely cheap rate.

Numbers-wise, the place cashflows nicely. Here are the numbers:

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In the end though, I think that this is a bit too much for me to tackle for my very first income property. It’s not out of the running, but I’d need it to drop in price a fair bit before I’d consider placing an offer on it.

Property #7: The Simple House

This one wasn’t all that interesting. It’s a "simple" small older house situated on a somewhat noisy street. It’s not really a real busy street, it’s just a bit loud – you can hear traffic drive by from the living room.

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This house doesn’t have a suite, so it would be rented to just one tenant, but it’s a complete house with a yard and appears to be in good shape.

I wasn’t that interested in this one on paper, but as I mentioned before, inventory here is really low so there aren’t that many options out there and I thought it wouldn’t hurt to take a look.

The numbers are actually not too bad for this property, although my realtor has some reservations as to the traffic noise insofar as resale value.

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My purchase price here, as with all the other properties, assumes a moderate reduction on the current list price.

If this property drops once or twice more, it may not be such a bad purchase… numbers don’t lie.

Property #8 – The "Full Circle" Property

Okay, so this one is a little interesting.

First off, it’s basically "slum lord" property. I don’t really like to use that term, but this is about as close to slum lording as you can get here. It’s a 10-plex property situated literally right behind a corner 7-11.

What’s interesting, and why I’m calling it the "full circle" property, is that I had actually looked at one of the units here back around 2005 when I moved out from my parent’s house and was looking for my first place to rent.

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I remember waiting for the lady (I’m not sure if she was the owner or a property manager) to meet me there and her ending up being late. She then showed me inside and I immediately regretted my decision to consider this property. It was cheap, which is why I had wanted to check it out, but then I realized why it was so cheap.

Basically, while relatively decent inside, you could tell it was a recent cheap renovation – the way I remember it is with wood-coloured vinyl everywhere – the floor and even the walls. But mainly, it was just really small. The ceilings were really low which made me feel claustrophobic and the entire unit was just simply tiny.

Still way better than the 8-Plex historical units mentioned earlier (by far), but I just wanted to get out of there. I remember asking her a few questions just to feign relative interest so that I wouldn’t "hurt her feelings", such as "I see I see… so… it is wired for cable Internet then?".

And now, nearly 10 years later, I am actually looking at this place (the entire 10-plex, in fact!) to consider purchasing as an investor. Ha! Who would have thought? My entire blog was actually started to document my journey moving out on my own and trying to make a living from the Internet.

Now, this place scares me for a lot of reasons: the quality of tenants, the age and condition of the property (it needs a new roof right off the bat my agent says), and the location.

But do the numbers work? Let’s see:

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They do. Damn. Heh. But are they worth the issues mentioned above? For me, no, they aren’t. For my first rental property, this would be pretty ambitious.

That being said, this place has had some pretty big price drops; it’s dropped by $100K since it was first listed, and it’s due for another drop. If I can get a deal on this place, I might actually bite the bullet and take the issues that come with a property such as this one. But I’d need to get a deal.

Property #8: The Sold Duplex

There’s really not much to say on this one.

Basically, we took a look to see it because it was on my list, but it just happened to get an approved offer that same day. We checked it out "just in case" and to give it a look-see.

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It’s fine though, as it didn’t seem too impressive to me. Nothing special…

I won’t bother including the numbers on the property here since it’s most likely sold now.

So – there you have it. Another 5 properties looked at in person. There’s really not much else out there… there’s a few more, but definitely nothing that excites me.

I really love Property #5: The Ocean View Duplex. It’s just a bit of a difficult place to be with it only been listed for 2 weeks, and with Christmas coming up within a few days. The other interesting thing to consider is that a $15,000 difference in purchase price only makes a difference of around $40-$50 a month in cash flow.

But… that’s also a 30-year difference… so that’s $18,000 in profit (not taking inflation and raised rental numbers into consideration). So, a $33,000 difference over 30 years.

Posted: December 22nd, 2014 under Miscellaneous 14 Comments

Affiliate Landlord: Hitting the Streets

December 9, 2014 Posted by Tyler Cruz

Heh, this title sounds like a reality TV show.

As you know, I’ve been seriously looking into acquiring an investment property, specifically a buy-and-hold cashflowing rental.

On Friday, after a lot of research and analysis, I finally went out with my investment agent to take a look at some of the leading properties on my list in person.

I’ve always enjoyed looking at properties in person (having only done it for personal purchases before though), and looking at investment properties was no different. It’s just extremely fun for me… I get a huge high from doing it.

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Anyhow, I thought I’d share how things went. We looked at 4 properties. For privacy reasons, I will not be including the address or any actual photos of the properties (Once I purchase a property I can include photos though).

Property #1: The Feud Duplex

On paper, this was my favourite property. It cashflowed nicely, was in a decent location, and looked like an overall good property.

However, and this is only something that could ever be learned by visiting a property in person, there appears to be an issue between the upstairs and downstairs tenants. Apparently they do not get along… at all. One of the tenants claimed that the other threatened to attack him if he kept gardening.

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The feud must be pretty bitter, considering that the tenant appeared to quickly volunteer this information after some short friendly banter from my agent.

Even though I’ll be hiring a property management company to handle any such situations such as feuding neighbours, I don’t like the fact that the tenants do not get along. I know that this situation is not really under my control and will happen regardless eventually, but it may just sway me from purchasing a property where I know that a feud is currently in place.

Anyhow, here are the numbers for that place:

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Property #2: The Hobbit House

This is a very interesting one.

Normally, I would never consider a property such as this one. It’s in one of the worst (if not the worst) areas of my city and is a very cheap property.

But looking online, there was just something about it that drew me to it. I think I saw the income potential of it – unless the photos were completely deceiving, it looked like it might cashflow nicely.

My agent was very vocal in telling me how cautious he was of this place, because of its age and location, but I still wanted to see it.

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I nickname this one the Hobbit House because the basement has a round entrance door, and the ceilings are low, and it has wooden exposed beams.

Anyhow, arriving at the house and walking up to the front door, I smelled a strong odour of marijuana. When we later went in, the smell was completely gone, so it must have been from the wonderful neighbourhood… as if to remind us where the property is situated.

The main floor was very small and basic, and I noticed some water damage with mold in the corner of a ceiling, but we’re pretty sure we know what it’s from and it should be a pretty easy fix ($200~ I’m guessing). Otherwise, the top floor was in okay condition overall though.

There is a large detached wooden garage as well.

Downstairs was interesting. It had a separate entrance, and was very small and quaint inside… just like you’d expect a Hobbit Home to be. The ceiling was low, which my realtor told me would make the suite illegal. It had a rather large bathroom (in proportion to the rest of the unit), and the whole unit was recently renovated… which was most notable in the new tile that made up the entirety of the floor. Get this though, it was all radiant floor heating! It felt so cozy!

Overall, I was really impressed with this property. It does needs a new roof – cost estimate is $6K-$10K, is in a bad neighbourhood, needs some basic water damage in the ceiling repaired, and has an unauthorized suite (my biggest con), but the numbers are good.

Check them out here:

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With all contingencies in place, and allowing myself a $10K budget for a new roof, the place will cashflow at $575~ a month, close to $7K a yet in profit.

However, the resale value of this property is very poor due to the neighbourhood, my agent warns me.

I’m not going to go out and make an offer on it this moment or anything, but I’m definitely watching it closely. If it drops in price again, there’s a good chance I will put an offer in. However, it did just drop last week after being listed 3 months prior, so it probably won’t drop again until the spring, if it doesn’t sell before then.

Property #3: The Frat House Duplex

This was another property where the numbers on paper were fantastic.

It is another duplex, but a larger one than the first property we looked at. It’s located close to the college here and is really quite large. The listing mentions how both sides just finished having lots of renovations.

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Good Lord! I won’t go into any great detail, but basically the renovations were absolute shit! You could tell the owner did it himself, and it was basically beyond belief. The ceilings throughout the entire unit (we only looked at one side) were completely wonky – sagging, curving, and looking like there was 500 tons of water in the attic or something. Every other reno job was just as bad. The tiling was horrible, the floors had huge lumps and crazy slants… it was really bad.

I mean, I even spotted one room where you could tell it had wallpaper before and they literally just painted over the wallpaper – you could easily see the texture underneath.

No thanks. I don’t care how good the numbers are, not interested in the place in the least.

I won’t even show you the numbers because this place is not on my list anymore.

Property #4: The Overpriced Duplex

The last property we looked at was yet another duplex.

This one was extremely clean inside (it helps that the tenants themselves were very tidy and minimalistic), and in superb shape. It was also quite large. Overall, a great property.

However, the numbers are not as great as can be seen here:

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The rents could probably be increased… but even at $1,000 per side it would only cashflow at $392.80 a month. Hmm… I guess that’s not that bad, but really what I need is for this place to drop in price. The last drop was 2 months ago, so it might drop again soon.

Also, while it’s in a nice safe neighbourhood, it’s not all that close to a lot of places, so it could possibly take a little longer to fill up any future vacancies.

Anyhow, there you have it. As expected, you learn a hell of a lot more by visiting a property in person than what you see on paper.

I have another 4 properties lined up to look at, and I can’t wait to see them! Let me know if this post was interesting and if I should do a report on the next 4 properties.

Posted: December 9th, 2014 under Miscellaneous 13 Comments

Affiliate Marketing Income Report: September 2014

November 25, 2014 Posted by Tyler Cruz

It’s time for another affiliate marketing income report!

Hmm… how should I fill the next few introductory paragraphs? I know! How about we go back in time 1 year ago and see how September 2013 did?

September 2013 was an interesting month because it was a complete shock to the system. Only 3 months prior, I generated over $52,000 in profit in June. Then September ended up bringing in a measly $467.12. You can view the September 2013 income report here.

So, was this a seasonal thing? A September curse, perhaps? Let’s find out!

September 2014 Affiliate Campaign Income:

$29,935.71

Affiliate Network Breakdown:

  • Affiliate Network #1: $22,253.61
  • Affiliate Network #2: $21.60
  • Affiliate Network #3: $294.00
  • Affiliate Network #4: $7,366.50

(This includes conversion from foreign currencies to USD)

Expenses:

$22,872.08


Traffic Source Breakdown:

  • Traffic Source #1: $17,838.40
  • Traffic Source #2: $419.17
  • Traffic Source #3: $2,583.40
  • Traffic Source #4: $1,671.33
  • Traffic Source #5: $359.78

Net Profit:

$7,063.63

Not too bad! Definitely better than September 2013 Smile

2014 Affiliate Marketing Results

First, here’s a recap of how 2013 fared for the entire year:

Year Gross Expense Net ROI
2013 $823,884.01 $555,024.33 $258,859.68 46%
Total: $823,884.01 $555,024.33 $258,859.68 46%
Monthly Average: $68,657.00 $47,085.36 $21,571.64 46%

And here’s a monthly breakdown of 2014 so far:

Month Gross Expense Net ROI
January 2014 $10,922.80 $8,908.47 $2,014.33 23%
February 2014 $25,941.97 $15,900.52 $10,041.45 63%
March 2014 $24,202.06 $15,408.95 $8,793.11 57%
April 2014 $3,486.55 $3,150.00 $336.55 11%
May 2014 $57,015.00 $38,765.01 $18,249.99 47%
June 2014 $60,753.58 $43,095.35 $17,658.23 41%
July 2014 $50,162.81 $37,073.59 $13,089.22 35%
August 2014 $27,317.35 $21,291.31 $6,026.04 28%
September 2014 $29,935.71 $22,872.08 $7,063.63 31%
Total: $289,737.83 $206,465.28 $83,272.55 40%
Monthly Average: $32,193.09 $22,940.59 $9,252.51 40%

I’m at $83K net profit so far this year after 9 months in. That puts me on pace to hit $111K profit this year – which may sound good, but would still only be half of what I pulled in last year.

Hmm… can’t be greedy though… $111K/year is still pretty good!

The Larger Picture: 21-Month Analysis

Below are my overall numbers from my campaigns since I started recording them in January 2013:

January 2013 to September 2014 Gross Expense Net ROI
21-Month Total: $1,113,621.84 $771,489.61 $342,132.23 44%
Monthly Average: $53,029.61 $36,737.60 $16,292.01 44%

Getting close to 2 years of recording my affiliate marketing stats, my monthly average sits at $16,292.01. I’m quite happy with that. It will be interesting to see what that number is in another 6 months from now.

September Recap

Nothing notable happened in September. I was pretty much on auto-pilot in terms of maintaining my affiliate campaigns with nothing too interesting occurring.

I revisited a couple of older traffic sources again, which I will often do from time to time, but they didn’t end up panning out. I will often revisit old traffic sources even if they were not so great before, because traffic sources often add new features and improvements, and competition can (although rarely ever does) actually reduce on them. As long as the source wasn’t absolute crap, I’ll almost always retry past traffic sources every 6 months or so.

And that was really all that happened. Sorry. Basically, just kept my campaigns on auto-pilot.

October Plans and Predictions

Normally in this section I list the plans I have for the upcoming month as well as predict how I think the month will fare profit-wise. However, since October has already come and gone, I will be skipping this section in this report since I already know how it went.

Stay tuned to see for yourself!

Posted: November 25th, 2014 under Affiliate Marketing 21 Comments

What I’ve Been Doing The Past Month

November 22, 2014 Posted by Tyler Cruz

Sorry for the lack of posting.

And sorry if the title of this blog post led you to believe that I had some juicy secret to reveal, because I don’t. In fact, I’ve been doing nothing extraordinary at all. I’ve simply been working as usual.

So why the lack of posts then? Well, my priority has been to focus on my campaigns and e-mail, and by the time I tend to those things I don’t feel like writing a blog post. If you go back a few years, my priority was 100% on my blog, and so I’d have great post frequency and content, but then my other projects were neglected as a result. I have a really hard time balancing things, as you can see.

Anyhow, I thought I’d provide a breakdown as to what I’ve been doing the past month since it’s been while since I last posted.

Server & Tracking Issues

I started experiencing severe server and tracking issues in late October. My server loads kept skyrocketing and I was having trouble viewing reports in CPVLab.

I spent a lot of time and effort trying to resolve this and communicating back and forth with CPVLab support and my hosting provider, but the problems still continue. I’m still investigating into this, but I believe the signs simply point to my server not being able to handle the amount of traffic I have been sending to it this month – arguably the most traffic I’ve ever run.

… Which leads me to…

Mobile Campaigns

I’ve really been focusing on mobile lately. Apart from a couple of small attempts here and there in the past, I’ve basically only run mobile for around 6 weeks now, so I’m still a n00b and have a ton to learn.

However, things have been going well. You’ll find out just how well when I post my November income report, but I’m very happy with the results so far.

I had been pushing a fair bit of volume through my mobile campaigns though, which, when coupled with my existing web traffic, may have stressed my server enough to the issues mentioned above.

I paused my mobile campaigns a few days ago while I "regroup", but hope to continue again soon.

E-Mail / Other Projects

Of course, I’m constantly dealing with e-mail and my other online projects.

I always have stuff going on the side, but have made a real effort to reduce side distractions. I’ve already sold off a good portion of my network of websites, and hope to sell the rest soon enough.

I’m also in the midst of researching, testing, and reviewing a bunch of cool services, tools, and websites which is always very time consuming.

Tiling & Home Projects

A big chunk of my time lately has been spent on various home improvement projects.

One year ago, when I still lived in my condo, I had absolutely zero handyman skills. The most I could do was change a light bulb.

Now, after a year of owning a house, I’ve already learned so much. I’m no Mike Holmes – I’m still mostly useless – but I’m far more confident in tackling new projects now and have already done a fair bit around the house such as drywall repairs, light fixture replacements, fixing the doorbell, fixing the gas fireplace, fixing the kitchen faucet, etc.

Again, all simple things so far, but seriously, all I could do 1 year ago was change a light bulb.

Anyhow, my latest project has been adding a kitchen backsplash. While relatively easy in theory, I’ve been having a hell of a time despite studying and researching how to do it properly for a very long time online beforehand.

It’s going a hell of a lot smoother now that I am 90% done setting the tile and bought a wet saw with a proper glass-cutting diamond blade, but I’ve already made countless mistakes Sad smile. In fact, the worse part is at the very beginning – you can see the progression of skill as you look from left to right, as the very beginning is pretty horrible and where I am now is pretty good.

Anyhow, while professionals can do a kitchen backsplash in like 2 days, it’s been taking me forever since it’s my first tiling job and I also don’t want to spend all day working on it, so I’ve been allocating a bit of time each day to work on it. I hope to be done within 3-4 days by now, all grouted and caulked.

Okay, so why did I bother with doing this myself instead of hiring Home Depot to do it for $500 labour costs? I’ve definitely wasted FAR more than that in tools and my own labour hours.

The main reason is so that I’d know what is exactly involved: the skill required, time investment, tile and tool costs, etc. for when I purchase my rental properties. Apart from learning a new skill, I am now in a much better position for when/if I decide to outsource the labour in the future.

Real Estate

I’ve been continuing to chug along with my real estate.

I had been waiting for my Corporate Notice of Assessments from the Canadian Revenue Agency for a while in order to give to my mortgage broker, and finally received them last week.

I am now on the verge of getting an official preapproval, but there has been another setback. Basically, I’ve learned that virtually all lenders here require a personal guarantee for corporate real estate investments. This is something I am not willing to do… at least not unless the terms are extremely tame.

I am 99.9% certain that my business would not default on the loan, but I am very adamant about separating business from personal.

So, I basically have 4 options:

  • Purchase a property with $200,000 in cash, which really limits my investment opportunities and will give me a low-end rental
  • Find a private lender willing to lend without a personal guarantee
  • Find a bank willing to lend without a personal guarantee, despite my broker telling me that this is not possible
  • Agree to the personal guarantee but don’t allow them to take my house or bank account

Health Issues

For those who care, the past few days I’ve been having some health issues. 2-3 days ago, I woke up with a plugged ear which continued off and on since. While annoying, it wasn’t too disruptive.

But then last night I started feeling really light-headed and dizzy, and this morning I woke up with a ringing in my right ear and still feel a little bit light-headed and dizzy. The ringing is still present as I write this.

I’m not sure what it’s from; when I use my wet saw I use ear protection (and eye protection and a mask), so I really hope it’s just temporary and will go away on its own soon.

Not feeling well really takes a toll on productivity!

Anyhow, there’s an overall update for you guys.

I think I’ll publish another affiliate marketing income report as my next post so that I can start to get a bit caught up with those again.

Posted: November 22nd, 2014 under Miscellaneous 14 Comments