We tell our kids how to study, where to study and when. We don’t even consider their wishes and desires. Some people find it extremely difficult to see it in a typical classroom for the entire day. There are a lot of people who are learning better when they move — motion learners. There are smart and intelligent individuals who are being forced to work in an environment that does not support their unique needs. Such environments kill creativity and reduce productivity.
Paperback books and sitting desks worked for our parents. They were doing good with 45-minute study sessions. Millennials are different. We need different environments for work and studying. We need to reinvent the classrooms and offices. The new generation has new needs and we need to tailor work environments to those needs and not vice versa. It is unfair to try to fit a person into the environment and ask him or her to perform at their best. The workspace plays a huge role in the way study, create and work. A desk, a chair and coffee is not enough. We need to use technology and research to eliminate distractions.
Coworking spaces are defined as spaces, where people come to work independently or in small groups on a project. They’re great for freelancers who don’t like to or can’t feasibly work from home, and for startups, or small companies that don’t want to rent out a huge office space or don’t have the budget to do so. The fundamentals of coworking spaces and the office spaces are similar. In both settings you’re surrounded by people for long periods, in environments, you can’t control.
Networking – is one of the biggest advantages of coworking spaces. If you’re just starting out and looking to make contacts, this is a great way to meet new people and build your business directory. However, this can be also a disadvantage for introverts or the people who struggle with focus.
Coworking spaces are a great way to avoid procrastination. When surrounded by people who are also working hard, you’ll be influenced by them. If it’s a big space with a lot of people, this can create an overstimulating atmosphere — not the peaceful tranquillity required for deep focused work. This type of atmosphere can actually be a hindrance to productivity, a breeding ground for anxiety and turn your coworking experience into hell.
Everyone needs a quiet place at times, where they can get on with a designated task, without interruption or the feeling of becoming overwhelmed.
What are the downsides of coworking spaces?
Distractions. This is the major disadvantage of typical coworking spaces. Most of the people that work remotely, join coworking spaces in hopes to increase their productivity. Often times these spaces have the exact opposite effect. Some coworking spaces tend to be crowded, noisy, and distracting. While these can be ideal environments for brainstorming and networking, they are rarely good places to hunker down and get work done. When we are crammed in a room with 30 worker bees, we can’t concentrate on the job. How could we? The person in front of us is on the phone, the guy across the room is grinding coffee, and the lady to our left won’t stop popping her gum. And if you’d really like to ensure we get nothing done, throw in an office dog. Few facts:
BBC reports that open offices lower workplace productivity by 15 percent, even when people don’t have ADHD.
A University of Sydney study revealed that 25-30 percent of employees in an open office find the noise level too distracting.
And the Washington Post says, “The open-office trend is destroying the workplace.”
Lack of Privacy. Another one of the disadvantages of coworking is a lack of privacy. You may also struggle to maintain privacy and confidentiality on phone calls with sensitive clients or keep private information protected in public areas.
Internet Security Risks. When you work in a shared office, you tend to use a shared network which might lead to data leakage due to security concerns. So the firms need to take all possible measures to ensure security.
High Costs. Coworking membership fees vary greatly depending on where you’re located and what services are provided. But oftentimes, the high cost of membership doesn’t turn out to be worth the low return that you receive for your commitment and loyalty.
What do I suggest?
Design and build the space solely for deep focused work
Take the concept and best practices of co-working spaces, but remove the “co-working” part. No collaboration only concentrated focused work
Offer Internet security that coworking spaces lack
Locate it more conveniently, in the suburbs, not downtown
Work retreat. Shipping containers, converted into the office – located outside of the city. Promote on Airbnb. Escape their home office and just work. Strictly for work. Unusually high-speed internet connection.
I believe there is a huge unfulfilled need for dedicated, distraction-free workspaces for deep focused work. There is a need for a place where people can deeply concentrate on their studying or working. Such a place will be especially popular among students and creative people. CEOs, managers and executives will also find such environments extremely beneficial for their work performance.
Questions
If you were to design your “focus paradise”, what would it look like?
What technology would you incorporate?
Will it be in the city or somewhere in a remote area?
How much would you pay for a full day of productive, focused work?
How much would you pay for inspiration and new ideas?
I believe there is a trend on the rise – I call it the “space service”. There are different types of spaces: event space, coworking space, focused workspace, sprint planning space, presentation space. There is a demand for space as a service, where you can use the type of space that fits your needs, on-demand.
There is a need for coworking spaces geared towards independent healthcare practitioners. A workspace for healthcare practitioners outside of large hospitals. How can we fulfill this need?
A note to myself: offer clinical exam rooms, as well as offices with basic medical supplies for clinical professionals such as therapists, primary care physicians and surgeons. Allow customers to pay on a pay-as-you-go membership model, where healthcare professionals can sign up for month-to-month payments.
For instance, if a member needs just one room one day a week, MedCoShare offers a plan to accommodate that.
“Wherever the practitioner is in their business, we can adjust our inventory to suit their needs,” said Ronak.
ACCESS IS BETTER THAN OWNERSHIP
The on-demand business model works on a simple rule: “Access is better than ownership.” The idea is to make workspaces for different types of work easily accessible, including technology and features that the customer otherwise cannot own. Millennials don’t want to own things. People no longer buy cars, they rent them instead. Fewer young people strive to buy a house, they are happy about renting one.
I want to build a holding company that will own real estate and build specialized spaces for rent.
“You focus on your work. We take care of the rest,” is a dream come true to any parent working from home for the past several months. Our basic offer is:
24/7 secure access
Free on-street parking
High-speed secure internet
Mail Services
Unlimited printing
Unlimited coffee and snacks
I have many more ideas around technology and science to be incorporated into the design. This is all for this post. The main takeaway is that the typical office had changed and will continue to evolve. There are new needs emerge and as entrepreneurs, we need to find creative ways to fulfill those needs.
The time of the crysis is the time of opportunities.
We live in a knowledge economy that values new ideas, creativity and generating knowledge that adds value to the economy.
It is no secret that workspace design and occupancy affects not only how people feel, but also their work performance, their commitment to their employer, and the creation of new knowledge (human capital) in the organization. There are a lot of studies that make direct links between the environmental design of workspace and worker performance. I believe that workspace should be a tool for performing work, as much as say investing in a better computer and better tools for work.
There are countless stressors in the work environment that distract us and affect our performance. High intensity or prolonged distractions slow us down and reduce our ability to process and understand the complex information. What used to seem an easy task, with added distractions – impossible to complete. Environmental stressors influence physiological processes, limit motivation and performance. These physical stressors in the workplace affect our sense of control and effectiveness. I personally like to feel productive and focused, as many other professionals do. This correlates not only with my self-satisfaction but also translates into interaction with other people.
What is Productivity?
There is a concept of ‘workplace performance’. It means the workspace whose explicit objective is to support the performance of work. I want to create a performing workplace that is designed to optimize worker productivity and bring it to the next level. A good question to ask: what is productivity? I found three kinds of productivity that are influenced by environmental design:
Individual productivity. It is evaluated by how a worker’s micro-environment influences his or her task performance, which is how fast and accurately a worker performs his tasks at work. On an individual level, we can affect performance by environmental conditions such as lighting, visual conditions, temperature and humidity, furniture ergonomics and acoustics. Increased individual productivity results in improved speed and accuracy of the tasks performed.
Group productivity is typically evaluated in terms of the quality and quantity of group processes. Teamwork is harder to quantify and it is measured in tangible terms such as new product release time, or in the number of successful new ideas or good recommendations. Environmental determinants of workgroup effectiveness include the positioning of work areas and shared space, as well as access to shared tools and equipment (Heerwagen, Kampschroer, Powell & Loftness, 2004).
Company’s or organization’s productivity. This is the macroenvironment. Productivity on this level is affected by locational benefits and accessibility, balancing consolidation with a dispersion of different groups in different facilities, and building amenities such as fast elevators, convenient bathrooms, adequate parking, and attractive eating areas (Vischer, 2006).
In addition, there are more objective productivity indicators are:
Reduced illness rates
Increased speed and accuracy of task completion
Rate of new ideas generation
What is Comfort?
There are three types of comfort that are being defined in literature:
Physical
Functional
Psychological
Physical comfort refers to meeting basic human needs, such as safety, hygiene and accessibility. Functional comfort is defined as environmental support for employees’ performance of work-related tasks and activities. Functional comfort is also defined by the degree to which workers can perform their tasks in the place of occupancy. One of the measures of functional comfort is whether people can perform tasks easily, with difficulty, or not at all in the workspace occupied. Psychological comfort includes feelings of belonging, ownership and control over the workspace. An essential component of psychological comfort is a sense of territory. This sense comes from both: individual territory (office, workstation, micro-workspace) and group territory (team, group, midrange workspace). The territory is not simply made up of the walls and doors that enclose space. A sense of privacy largely contributes to psychological comfort.
Creating a Supportive Environment
At home, people are comfortable physically, however, in order to perform at their best it’s not enough. Physical comfort is essential and could not be neglected. To achieve extraordinary results, we need to place the person in an extraordinary environment – the environment that goes beyond physical comfort and designed to improve focus and productivity. I want to create such an environment using the latest research and modern technology.
Studies have found that people moving out of private enclosed offices into open workstations judge their environment more negatively, citing lack of privacy, acoustic conditions, and confidentiality problems (Brennan, Chugh, & Kline, 2002; Rishi, Sinha & Dubey, 2000). This is an important fact to consider nowadays. For the past several months, a lot of people have been working from the privacy of their homes, thus they will find it difficult to move into the open workspace layout. Luckily to me, most coworking space providers have an abundance of such, but lack of individual workspaces. Research suggests that office workers are uncomfortable in open-plan configurations and prefer private enclosed workspace, which may work better for individual tasks but are less successful for teamwork. The BOSTI-Westinghouse study had shown, that employees, especially managers, working in open-plan workstations felt they were more productive in enclosed offices.
Workers in open-plan workspace tend to judge noise to be a primary source of discomfort and reduced productivity (Stokols & Scharf, 1990; Mital, McGlothlin, Faard, 1992). I want to create an environment, using soundproof materials and noise-cancelling systems.
The difference between a supportive and an unsupportive workspace is the degree to which occupants can conserve their attention and energy for their tasks, as opposed to expending it to cope with adverse environmental conditions.
In order to create the optimal workspace for creativity and “flow”, we need to develop different workspace concepts that target different types of people and kinds of work they do. “One size fits all” will not work. Our workspace is not designed to be a one-time, final, and permanent ergonomic support for all office tasks. We are adaptable and ‘negotiable’ to be most supportive of our customers.
The “Ba” concept
The concept termed ‘ba’ – an environment that supports and encourages knowledge creation. The ‘Ba‘ represents a contextual place shared with others from which relationships emerge, and within which knowledge is exchanged or shared. This place may be physical, virtual, or mental or a combination of these.
“The ‘Cyber Ba’ (also called ‘Systemizing Ba’), is a virtual place (or world) in which explicit knowledge can be exchanged in a systematic way. It is usually supported by collaborative environments using information technologies, facilitating knowledge sharing between groups. This includes online networks, databases, and online platforms.”, (The Concept of ‘Ba’, 2017).
I want to create a Cyber Ba space, that is supported by modern technology and science to help people be as effective as possible. I want it to be stimulating for work and creativity. I want it to be inspiring. I want people to wish they never left.
References:
The concept of ‘Ba’. (2017). Retrieved 14 October 2020, from https://theknowledgeexplorer.org/2017/07/05/the-concept-of-ba/#:~:text=The%20’Interacting%20Ba’%20(also,peers%20through%20an%20externalisation%20process.&text=This%20is%20where%20the%20learning,knowledge%20made%20available%20to%20them.
Towards an Environmental Psychology of Workspace: How People are Affected by Environments for Work. (2020). Architectural Science Review. Retrieved from https://www.tandfonline.com/doi/abs/10.
I see the need for distraction-free dedicated space to engage in deep focused work. In order to stay active in the new, pandemic-induced business environment, leaders in law, finance, consulting, real estate and other professional services industries need a space that supports their work.
Companies will shift to permanent work-from-home models after COVID-19. Some will adopt the “hybrid” model, where the employees show up at the office a few times a month. There is no more need to own the office. Instead, I see the need for safe offices on a rental basis.
Remote work has been on the rise through the pandemic. There are senior-level professionals and executives who prefer a dedicated and distraction-free workspace. I believe despite the fact that companies close their offices, the work environment is still everything for many professionals, especially for mid-senior executives and managers.
I want to open a network of offices for professionals whose work demands privacy and deep focus. Our walls will be made from materials selected for better soundproofing. We will have the noise cancellation system that turns every office into a quiet room.
I see the demand for industry-specific office space: offices that are meant to support work-life for engineers, lawyers, accountants and other executives who require more from their workspace than just a cool place to collaborate with peers and have coffee. The old coworking model is not relevant anymore. I want to build professional coworking offices. I believe there is a need and we yet to see the rise of such places.
I don’t see my company as a coworking space. We offer more of the privacy, while in the coworking environment. We are different than most coworking spaces. Typical coworking spaces are built to encourage networking and establish a sense of community. I want to create a space, which is designed for deep focused work.
It is beneficial for businesses to have their corporate headquarters near large cities because of the greater opportunities and access to talent. The need for dedicated office space isn’t going anywhere.
The typical coworking sector is transforming. Instead of building one size fits all office, they need to implement alternative office space options for every specific industry. This need for industry-specific co-working spaces had created the demand forprofessional workspace that can be both private and flexible.
My coworking space will target typical users like freelancers, startuppers and solopreneurs, but also I aim to partner with big companies who want to benefit from using shared offices. I see large companies turn to coworking as a smarter alternative to the traditional office.
Cafes are crowded. There is no space to sit and enjoy the drink – it’s occupied by people with laptops. Students and young professionals had flooded cafes. Most of them don’t even order anything. Some don’t even like coffee. They choose this crowded space as the location for work or study. Why not a library? Why not at home? The cafeteria was not meant to be an “office”, but it is now.
Since March, most of us went to work from home. Some like the transition, some don’t, but all agree that the work environment plays a huge role in our productivity and performance. It is obvious that there is a demand for some type of space, where people can work or study. Call it a “co-working” space or an office.
Why do people choose to work from Starbucks? A typical answer sounds like this: “I like coffee and the atmosphere”. What is it about the atmosphere that people like?
What if there was a place that would combine all the benefits of working from Starbucks, a library and the office?
Unlimited printing;
Unlimited tea, coffee and snacks;
Lifestream video conferencing rooms;
Soundproof booths;
Podcast recording studio;
Meeting rooms and opened coworking space;
Washrooms and lockers;
Clean and modern design.
People are looking for something where they can just have it strictly for work. One lady told me: “Sometimes, I just don’t want to do any work, because I’m so comfortable being there.”
I want to create a community hub, where people that have entrepreneurial aspirations can get encouragement, education and training. Coworking was already an option before the pandemic, however now it’s gaining the interest.
A home is an option, and of course, headquarters or the office space or whatever it might be as an option. I see coworking being a beautiful option right in the middle.
I want to provide a five-star workplace. The most professional and inspiring environment, which you will see in Google or Microsoft. You don’t have to commute long hours to the downtown office. You can work from one of our offices, which is much more convenient.
Every morning we see thousands of people sitting in traffic on their way to the office. One hour in the morning, one hour in the afternoon. Two hours of your life is being completely wasted. Coronavirus had given us the opportunity to reinvent the office. Our homes had become the office for millions of people. Luckily modern technology and automation allow us to stay productive and efficient while working from anywhere with an internet connection. But is it true that the recipe for productive work consists of only the computer and internet access? No, it’s not.
Motivated, smart people can be given all the tools, but still, underperform. The work environment plays a huge role in people’s performance.
I want to build a chain of coworking spaces across Canada. Similar to gym chains like LA Fitness and GoodLife Fitness, our customers (members) will be able to access any of our facilities in different parts of the country with a single membership. We will have offices with spaces small enough for freelancers and big enough for businesses to set up their headquarters. Office layout will be determined by location and the need for corporate office space.
It doesn’t make sense to live in one location and work in a drastically different location unless you absolutely have to. The number of people that have to make those commutes is small and getting smaller. Most people had the experience of working remotely before the pandemic, and now it makes sense for us to go permanently.
I want to build something that is more than just space. It will be an environment that encourages innovation and communication. The environment where people can focus and be productive. The place, where large companies can bring their teams together on a regular basis.
Web designers, database programmers, AI researchers, writers, podcasters, YouTubers…all kinds of professionals will have the opportunity to congregate and work under the same roof. Our onsite coordinators/office managers will help people network and connect. There’s a disconnect. I will build the entrepreneurial hubs across the country.
Coming to our office, you will see people working on their own individual projects and businesses. You will feel the energy – the entrepreneurial spirit and then, you will thrive off that energy. You will feel like, “Okay, these people are working”, and motivate you to work.
Cafes are crowded. There is no space to sit and enjoy the drink — it’s occupied by people with laptops. Students and young professionals had flooded cafes. Most of them don’t even order anything. Some even don’t drink coffee, but they choose this crowded space as the location for work or study. Why not a library? Why not at home? The cafeteria was not meant to be an “office”, but it is now.
It is obvious that there is a demand for some type of space, where people can work or study. Call it a “co-working” space or an office.
Why do people choose to work from Starbucks? A typical answer sounds like this: “I like coffee and the atmosphere”. What is it about the atmosphere that people like?
The Freedom. Working from the office makes you go to the same location every single day. No matter how great the office space is — it gets boring. There is more freedom of choice if you choose to work from the cafe. If you ever feel like you need to change the atmosphere, you simply go to another cafe. Living a remote lifestyle — you are not confined by the office walls.
Networking. Working at the cafes give you the opportunity to find brilliant talent and connect with others. You never know who you will meet the next time you’re in a cafe. You might make friends with an artist, an entrepreneur, a headhunter or a real estate agent. Personally, I’ve met a lot of interesting people and made a lot of connections which directly or indirectly helped me in business and life.
Internet. When you are on the road, it’s hard sometimes to catch a good LTE signal. Starbucks becomes a goto place if you need a somewhat stable connection.
What if there was a place that would combine all the benefits of working from Starbucks, a library and the office?
Free unlimited printing;
Free unlimited tea, coffee and snacks;
Lifestream video conferencing rooms;
Soundproof booths;
Podcast recording studio;
Meeting rooms and opened coworking space;
Washrooms and lockers;
Clean and modern design.
Well, that space exists. I recently discovered “Staples Studio” — a coworking space that includes everything from the above. Staples experiments with this new offering and according to its employees, things go really well. The daily fee is $25, which is somewhat pricey when you consider the free use of Starbuck’s space. However, you can’t go to Starbucks after hours. The music and the crowd might destruct you from your work. You can’t print anything. You won’t look professional at the Zoom meeting.
You can access the Staples Studio 24/7, any day of the week, no matter if it’s a Thanksgiving or Christmas Eve. You can leave your laptop or other belongings without worrying that anyone might steal it. Drink as much coffee as you want. There is a fully equipped kitchen with a fridge and microwave. You can even take a nap on the couch if you feel tired…
If you pay out of the pocket, you might think twice, however, if you convince your employer that you are more productive at a space like this — they will cover the costs. I certainly would, if I was an employer. I believe that more companies will start issuing their employees the “stipend” for such things as a co-working space. A membership might even be included in their benefits along with fitness allowances.
The concept of the office had changed. You don’t have to work from home all the time. You need to get out and luckily there are amazing places like Staples Studio, where you can be productive and do your work to the best of your abilities. Look up what Staples currently offers with their membership and decide for yourself. Come for a tour and see what’s inside.
Personally, I chose to work from the Studio because I like space and people. I am accomplishing more and feel productive. This is where I can focus. I didn’t get paid for this review and I did it just because I really like what Staples did with their former warehouse space. I see great potential for this initiative and I believe that the typical office will never be the same.
Tech companies are leading the way to a permanent shift to working from home. Corporations don’t need to rent large office spaces. Instead, I suggest bringing the teams together for creative engagements several times a month, but keep the staff working from home on a permanent basis. I propose a new way of organizing office work and team events. I have an idea of building new-age coworking spaces, located in the most beautiful places on earth.
Our locations will provide your team with the following:
24/7 catering service. Our nutritionists prepare meals that support brain activity and improve focus. Our menu is designed to boost your mental performance.
Breathing instructors. Daily breathing sessions to teach you how to improve your focus.
Blasting High-Speed Internet (completely secure)
Soundproof booths
Lifestreaming conference rooms
Podcast recording rooms
Video recording studios
Individual Application
Are you feeling stuck? Can’t focus?
Have you ever noticed that you are more productive in certain places? Somehow you get more things done and feel productive. You are able to focus and get more done in one hour than in the entire day filled with distractions. The environment plays a huge role in the way you think and solve problems.
Come to our high-performance creative lab. It is designed with the sole purpose to stimulate people’s minds to generate break-through ideas and creative solutions. At our “camp” you will gain the laser-sharp focus and complete your projects in no time.
We help people focus. We minimize distractions, which prevent you from performing at your best. We are the shelter for your best ideas and thoughts. We are the digital protective bubble. We designed our facility in a way to keep you calm, steady, and productive. We worked with the best researchers and scientists to develop a working space, which maximizes people’s productivity and brings it to the next level.
Nowadays ADHD is at an all-time high. Intelligent and smart people suffer from the inability to put their minds to the best use. They barely can handle the noise that bombards them from every direction. So many great ideas and thoughts are being killed by constant distractions from the outside world. All they need is a little bit of focused time. Once achieved, they become unstoppable. They generate unique and creative thoughts. They find solutions to the problems that never been solved before. They make odd connections and come up with ideas. ADHD is not a handicap. It can be your biggest gift if applied properly. To harness it, you need the right environment.
I want to create a destination where people come for answers. A please where ideas are born. A place of focus – the Zone.
Our guests come with a question and leave with the answer. We don’t have the answers, but we help you discover them on your own.
Let’s build something great! Looking forward to hearing your thoughts.
Apple keeps its work on self-driving cars behind closed doors. Apple employees spread rumours about work being done on an electric autonomous car. People say different things, but what we know is that there was a project like that, however, the project’s focus has changed to developing self-driving car software instead of an actual vehicle. Few facts:
Apple might still be working on building the self-driving car
The vehicle will be deeply integrated with Apple’s software
DMV issues an autonomous testing permit to Apple
The company is testing self-driving software
Jobs AT APPLE
On their job board web page Apple added the filter named “Home Office”. If applied, you will filter out remote jobs. Search for “self-driving” or “autonomous” keywords.
Apply for Autonomous Vehicle jobs at Apple here: Apple Jobs Apply for Analyst jobs at Apple here: Apple Jobs
Also called Apolong, its bus mass production was started three years ago in 2017. Three companies work on its production: Baidu, Kinglong and SB Drive (a subsidiary of Softbank). You won’t find a steering wheel, accelerator or brake pedals in the vehicle. It drives at speeds of 20 to 40 kph and is capable of sensing and predicting pedestrian and vehicle movements. It runs on an open-source driverless operating platform called Apollo 3.0.
Recently, on August 11, 2020, Aptiv announced its autonomous driving joint venture with Hyundai Motor Group. They called the project Motional.
Motional has its offices in Boston, Pittsburgh, Las Vegas, Santa Monica, and Singapore.
Jobs at APTIV
The company takes serious precautions to prevent the spread of the COVID-19 virus. Read more about it on their career page. Also, they warn you about job scams. Nevertheless, you can apply for Autonomous Vehicle jobs at Aptiv here.
In July 2020, BMW Group, Intel, and Mobileye had joined their forces to push the needle further in self-driving vehicle development. Such a partnership will enable developing a truly end-to-end solution. Each company promises to contribute to this partnership in the following ways:
Mobileye contributes expertise in sensing, localization and driver policy. Mobileye currently plans to deliver fully autonomous cars to customers in 2022. Intel brings a comprehensive portfolio of hardware solutions. The company will supply self-driving vehicles with powerful and reliable electronic brains, capable of processing terabytes of data in a matter of milliseconds.
Bosch to Build $1.1 Billion Chip Plant for Self-driving Cars. According to Bloomberg:
Auto supplier Robert Bosch GmbH will build a 1 billion-euro (US$1.1 billion) semiconductor plant, the biggest single investment in its history, as the maker of brakes and engines prepares for a surge in demand for components used in self-driving vehicles.
Currently, Waymo operates their Level 4 robo-taxis in Phoenix, Arizona (there are drivers upfront functioning as a backup driver). Few weeks ago, in July 2020, Waymo LLC and Fiat announced their partnership to commercial vehicles. Fiat Chrysler will produce fully self-driving vehicles exclusively with Waymo going forward.
Since last year, Waymo nearly doubled its headcount from 800 to 1,500 employees. They call them “Waymonauts”. Waymo hopes that hiring of hundreds of engineers will help it achieve a technological breakthrough in developing autonomous vehicles.
Jobs at Waymo
The company warns applicants about potential scams and informs that they “…do not contact candidates about career opportunities through instant messaging apps like Telegram, email addresses from domains other than waymo.com…” Apply for Autonomous Vehicle positions at Waymo here.
At the end of July 2020, Argo AI was valued at $7.5 billion. Three years ago, in 2017, the company cost just a little more than $1 billion. The company shows significant growth, and expansion, which means more jobs and opportunities for professionals in the autonomous vehicle development industry.
The company laid off nearly a hundred employees, under 10% of the entire staff, in April. Zoox’s job openings were the same in February as they were in October, however, fallen down 31% since then. While it doesn’t seem promising for prospective employees, you still should apply and see if you win the lottery.
If you are not familiar, comma ai develops integrated third party autonomous driving solutions that retrofit into your car. The make an “open pilot”, which works by taking your car’s radar data and combs it with the camera built into comma hardware. Then the device determines what acceleration, braking, and steering events are required. The company had the mission to solve Level 3 in 3 years.
The Nuro R2 is a self-driving vehicle used only for the delivery of goods. It l transports goods instead of passengers. The vehicle is being tested on public roads in Houston, Texas. What is special about this vehicle is that its the first company to receive an autonomous exemption from the National Highway Traffic Safety Administration since its vehicles are designed to carry goods instead of humans.
Lucid Motors, Inc. is an American automotive company specializing in electric cars. The company was founded in 2007, and is based in Newark, California. The company’s CTO, Peter Rawlinson, is the former Tesla Model S chief engineer and their first vehicle is an electric luxury sedan to compete with the Model S.
Lucid is currently best known for supplying batteries to Formula E race cars.
Jobs at Lucid Motors
Good news! CEO of Lucid Motors said that the company is still hiring and moving forward with its plan to bring the Air to production. He told the Silicon Valley Business Journal:
“Leading up to the rise of COVID-19, Lucid had grown to over 1,000 employees and we are maintaining this aggressive growth trajectory even now. We have worked with the HR team to maintain interview schedules for new-hire candidates while switching them to phone calls, and we are also moving forward on talent acquisition strategies.”
The company builds autonomous trucks. From their website:
“TuSimple is a self-driving technology company making it possible for heavy-duty trucks to operate autonomously on highways and surface streets. Founded in 2015, our global headquarters is located in San Diego, and we also operate facilities in Tucson, Shanghai, and Beijing. TuSimple achieved unicorn status in 2019 and is backed by an impressive group of investors which include UPS, NVIDIA, and SINA Corporation among others.”
TuSimple recently unveiled its plans to build out a coast-to-coast freight-hauling business. Following that announcement, US truck maker Navistar had joined forces with TuSimple, to build a self-driving semi-trucks.
Pony.ai is an autonomous vehicle technology company co-located in Silicon Valley, Beijing and Guangzhou. It was founded in late 2016 by two gentlemen: James Peng and Lou Tiancheng – former developers for Baidu.
The startup aims to build reliable autonomous driving solutions. From their website:
“Pony.ai has been committed to revolutionizing the future of transportation by building the safest and most reliable solution for autonomous mobility. Pony.ai has been testing its Robotaxi pilot service, PonyPilot since late 2018 in Guangzhou, China. With PonyPilot, Pony.ai became the first company to launch a Robotaxi operation and offer self-driving car rides to the general public in China. In November 2019, Pony.ai also became the first company to roll out a public-facing Robotaxi pilot service in California, demonstrating its ambition and commitment to mobility services at a global scale.”
$400 million were invested into the company by Toyota. (Feb, 2020)
Embark is building self-driving trucks. Their automated trucks performed cross country rides, operating in rain and fog, and navigating between transfer hubs. The company’s website emphasizes the value of the team and employees, which makes it appealing to job seekers. Below is what they say:
“Embark is assembling a world-class group of engineers from companies like Tesla, Google, Audi and NASA with a professional operations team that averages over a million miles per driver. Working together, we are able to develop a system tailored to the demands of real world trucking.”
Four years ago, in 2016, Nissan announced its self-driving system ProPilot. This ADAS (Advanced Driver Assist System), evolved over time and New ProPilot 2.0 now has 3D mapping navigation, and with its advanced sensors and cameras, it even recognizes pedestrians’ faces.
Created by former MIT faculty Dr. Karl Lagnemma and professor Emilio Frazzoli, self-driving car startup nuTonomy has been getting autonomous cars on roads from Boston to Singapore, where it has been providing autonomous taxis since 2016. NuTonomy has also partnered with Group PSA, owner of European car brand Peugeot SA, to bring self-driving SUVs to Singapore. In August 2016, it launched its autonomous taxi service using a fleet of 6 modified Renault Zoes and Mitsubishi i-MiEVs.
In June 2017, nuTonomy teamed up with Lyft to figure out how autonomous vehicles work in practice, whether they’re put toward ride-sharing or personal ownership. In the same year, in November, nuTonomy joined Aptiv and is now an integral part of Aptiv’s Automated Mobility team.
Jobs at APTIV (NuTonomy)
The company takes serious precautions to prevent the spread of the COVID-19 virus. Read more about it on their career page. Also, they warn you about job scams. Nevertheless, you can apply for Autonomous Vehicle jobs at Aptiv here.
Tesla is one of the early pioneers and leaders in the self-driving cars market. It has the self-driving system “Autopilot” and “Full Self-Driving.”
In his Tweet, Elon Musk wrote: “If you don’t have a college degree, it won’t hold you back from working for Tesla“. “Join AI at Tesla!”. The artificial intelligence team “reports directly to me [and] we meet/email/text almost every day.”
APPLY FOR AI JOB AT TESLA
Autopilot – find jobs related to autonomous vehicles All Jobs – search through all job postings
Uber’s Advanced Technologies Group (ATG) is working on developing self-driving cars. The team consists of world-class researchers, engineers, and product specialists. Company’s mission is to bring safe, reliable self-driving transportation to everyone, everywhere.
Formerly Known As Azevtec, Outrider – the pioneer in autonomous yard operations for logistics hubs, helps large enterprises improve safety and increase efficiency. The only company exclusively focused on automating all aspects of yard operations, Outrider eliminates manual tasks that are hazardous and repetitive. Outrider’s mission is to drive the rapid adoption of sustainable freight transportation by deploying zero-emission systems. Outrider is a private company backed by NEA, 8VC, and other top-tier investors.
Jobs at Outrider.ai
Apply for opened job positions at Outrider.ai here.
Torc Robotics, headquartered in Blacksburg, Virginia, offers a complete autonomous software solution for mobility applications like self-driving cars and transit by working with partners in automotive, transit and technology. The company produces an autonomous technology that retrofits to existing machinery and vehicles. Its custom products, software and automation kits have been used on vehicles in several industries, including military, mining agriculture, and automotive over the last decade.
GM Cruise, commonly referred to as Cruise, is an American self-driving car company headquartered in San Francisco, California. Cruise is a majority-owned subsidiary of GM. Cruise vehicles are purpose-built for self-driving at a dedicated GM manufacturing plant.
Self-driving cars are built on the platform of Chevrolet Bolts. The company also works on its “electric shuttle”.
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This post is about me, me, me… Why write? Why post? I believe that my job search experience can be useful for those who are in the same boat as me – in transition. This subject is very relevant because a lot of people had lost their jobs because of the COVID pandemic. I would love to hear your thoughts and if you find at least one useful sentence – I am happy.
Analysis, Data Analytics. I enjoy any kind of analysis. My mind is very analytical and always searches for hidden meanings and connections. I question every step I take. Why? To know. To understand. I analyze everything: my thoughts, feelings, actions, decisions. I break down the things into pieces and analyze the crap out of it. I have inborn strong analytical skills. My brain is wired in that way.
Research and analysis is my meditation. I get joy from such work. My recent position at Uber as an Engineer/Project manager required me to work with lots of raw data. Dry numbers and spreadsheets – boring stuff. I loved it. Whenever I sat down to extract, analyze and try to make sense out of datasets – the time flew. I don’t know why, but I couldn’t stop. I would wait to go to the bathroom, so I can dig deeper. I would hold for so long, that I would almost pee in my pants. That’s how consuming this type of work was to me. I would be afraid to lose that state of mind – the “flow state”. I would often skip on meals and drinks. Not because I didn’t want to eat, but because I didn’t want to interrupt that free fly of my mind. I was comfortable in my thoughts and ideas. I would have to force myself to close the laptop, so I can train. I knew I was exhausting myself mentally and I needed to leave the energy for physical training.
People I used to work with often said that I had a very analytical mind. My co-workers praised me for the research I’ve done on various projects. I was not afraid to approach people and ask questions. I asked a lot, a lot of questions. This might be one of the major reasons why I was able to get into the self-driving vehicle industry and learn. My co-workers would often say how disciplined I was. After the fact, I recently learned that three years ago, when I just started working at Uber as an autonomous vehicle reliability technician management saw the qualities in me that I was not aware of. Now my friend, one of the managers said that they saw how disciplined I was. I had the ability to approach people with questions or suggestions. He said that I was perceived as a very reliable person. They knew that if they were to ask me to do something, I will have it done. There was a “management aura” around me. They saw that I had not only the discipline and the skill of managing my own work and execute on the plan, but also influence others.
Discipline at everything: life and work
I always say: Discipline is Freedom. I really mean it.
Over the course of several years, I managed full-time work with triathlon training and racing. Just for the reference, the training piece typically takes two workouts a day and approximately 15-20 hours a week. I also managed to run several “side hustles” and tried myself as an entrepreneur. I read a lot, I studied, I took courses and I travelled. Oh boy, did I travel?
Because I was interested in so many things, I had to have a system that would help me manage them all. I developed the structure that made it all possible. It all started with “To-Do Lists”. I would have multiple: for work, training, packing for the trips, my dog, my car, reading or studying… Then I evolved to Gant Charts, Calendars and task management tools. I was always on a hunt for tools that would help me organize my life. I was always striving to be as efficient as possible. Why? So, I can fit in more. There are so many cool things I want to try, but I have so much time… I became pretty damn good at managing the most important project – the project of My Life. I read a lot of books in search of structure. Among them are such bestsellers as:
“The 4 Disciplines of Execution: Achieving Your Wildly Important Goals”, by Chris McChesney
“The ONE Thing”, by Gary W
“Getting Things Done”, by David Allen and more…
Every time I would learn about a new managing tool or technique – I would get excited. I am still searching… The point here is that I became very, very good at scheduling and organizing. I get a sense of joy from turning a mess into a nicely organized and structured thing. Everything in my house has its own place. Everything is organized by colour, purpose, size etc… Yes, I know, I am weird in that way, but I need it. It’s not my preference – it’s my physiological and mental need to have everything in order. I feel uncomfortable when it’s not.
The Sport
Triathlon training involves three sports: swimming, cycling and running. Three separate and different projects to manage in a way that when combined, would result in high athletic performance. This sport had though me a lot about planning, scheduling and logistics. I had learned how to self-motivate and push beyond the limits. The discipline that so many people admire in me, I got from the sport.
Entrepreneurship
I have always had a lot of interest in business. I didn’t care what kind of business. If I saw the opportunity, imaginary or real, I would act on it. I’ve attempted several businesses, which are absolutely unrelated to my education or work experience. Dog grooming salon; Pool Cleaning and Maintenance company; High-performance athletic recovery center… and others. There is a lot to tell about those experiences, but the reason I bring it up is the skill I gained. Every business was a project with a lot of moving pieces. Every time I went into the new venture – I mastered this critical skill – project management. I thought I was working on my business, while in fact I was working on myself. Combined with full-time job and training I became pretty damn good at project management.
I’ve been searching
For the past three-four months I’ve been searching. I’ve been asking: What kind of work do you want to be doing? I did a lot of thinking and analysis of the past events. I’ve spoken to a lot of people, trying to get some clarity and insights into my strengths and weaknesses. I thought I figured it out – analytics. While this remains true, it’s so brought and wide opened. You can be financial analyst, business analyst, investment banking analyst. You can work as such in healthcare, aerospace, real estate, autonomous vehicles… you name it. There are so many different industries and businesses and each one offers data analyst positions. I had a direction, but still it was not clear where to go.
The more people I talked to, the clearer it got. I was able to extract the common theme – analytical, disciplined, well organized, self-motivated… How do use these personal traits in a way that bring me money and pleasure from work? Is there is a job that would require such skillset? If not, can I create such a job for myself? No need… there is one.
I have recently applied for an engineering position at very well-known autonomous vehicle company. I passed the phone screening; however, the manager had more questions. The questions seemed unrelated to position I’ve applied because he was asking a lot about my experience managing my businesses and different projects at work. He asked a lot about my experience with analysing data, drawing conclusions and presenting my findings to the broader audiences. His questions made me wonder if he was looking to put me in another position. Indeed, he was. Even knowing I’ve applied for an engineering role; the company suggested a better fit for me – Technical Project Manager.
I didn’t know much about the TPM role, so I went to people who did. I talked to my former co-workers and friends. Some of them had actually worked as TPMs and knew what it’s like from the inside. I asked questions and listened… The more they told me about their work duties the more I realized – this is it. I’ve been already doing all these things, but in my personal life, training and business. I realized that all I’ve been doing is managing different projects. Everyone Whenever I said that I was interviewing for a Project Manager position, they all said that I would be a perfect fit for that. “You were born to be a TPM”, one of them said. This is when it hit me. What is it’s my calling? What if I can get really damn good? What if this is my “superpower” – to bring the structure into the chaos? I got this euphoric feeling that I’ve found something very valuable in me.
Is this it?
I can help people and businesses to organize themselves. I can bring the order and structure. I can move the projects forward by motivating and keeping people accountable. I enjoy talking and learning new things – cross-team networking. I enjoy research – necessary to understand technical detail of the project. There is an analysis piece to this. I love to analyse data – project metrics and status updates. I love presenting the finding of my analysis, finding new ways of doing things, putting together presentations and delivering my findings. I am very good at planning and scheduling. I have a lot of technical experience and a degree in Computer Science. I have in depth understanding of the different business processes – the MBA degree. I have the energy and ability to motivate others. Holly smokes, this is it! It seems that my entire life was preparing me for this.
I felt euphoric. I have discovered what my talents are and what I am naturally good at. I also know where my skills are in demand and what’s the name of such a job. I know where I can get very good at. A have a feeling that I can get pretty good at this. I am confident! A huge sense of relief – I have found what I was searching for. I still don’t have a job, but I am calm and happy because I know exactly what I want to be doing next. I will try wearing a heat of a TPM – Technical Project Manager. And it’s a fully remote position…
What Will it Take to Create Such Passive Stream of Income?
So you want to be financially free you say? Ok cool. I want to be an astronaut. There is a gap between what I want and what I have. I am about to make you feel uncomfortable by asking straight questions and telling you the things you don’t want to hear.
To begin with – you are currently not “financially” free. Just because you say you want to be free, I assume that you are currently not.
“No-no. I am free. I just want to have more freedom” – I hear you say.
Alright, let’s define freedom. Merriam-Webster Thesaurus gives two definitions of freedom:
1. The state of being free from the control or power of another 2. The right to act or move freely
According to the first definition, freedom is a state of being. Also, it assumes that there was some sort of power or another person who was trying to control the one. Question: is the controlling force necessary for being or becoming free? If not, then definition should be the following: freedom is a state of being. Much shorter and simpler, isn’t it?
The second definition states that freedom is the right. Alright, what is the “right”? Google defines it as justified, acceptable, true, or correct as a fact.
My next question is: who is the one that justifies and defines what is acceptable, true, and correct?Who has the authority to extend you the right to be free? I personally don’t know anyone authorized to grant the right to be free. However, I know that the judicial system claims to have the right to limit or take away your freedom by putting you in jail or restricting you from doing certain things and being in certain places. So if there is no-one to ask for freedom, do we get it by default, at birth? Or maybe we need to obtain it somehow, somewhere? It’s confusing and neither of two definitions brought clarity into explaining what freedom is. Maybe other sources have better explanations.
Roget’s 21st Century Thesaurus says that freedom is the license to do as one wants and defines the following as the synonyms for it:
So freedom is a license. To be free, I need a license. Again, who is authorized to issue the license to be free? Does anyone know what it looks like? What are the requirements for obtaining one? Does it have an expiry day? How much does it cost? Again, the more I ask, the more questions I get? Let’s move on. Maybe if we try from the opposite end of the spectrum, we will be able to get to the truth.
What is the opposite of freedom? Below are the antonyms for freedom, according to Roget’s 21st Century Thesaurus:
Dependence and captivity… According to this definition, freedom is some sort of independence from some external force or power. Therefore to be free means to be in a state of independence. Let’s leave it as is and not dig deeper because I feel it’s a rabbit hole that has no end to it. Independence.
Impotence, inability, weakness…? This is ridiculous. Are there better ways to describe the lack of freedom? Let’s ask Google, he knows everything:
Financial Independence
Every person has his own magic number that will change everything and unlock the way to a beautiful, stress-free, happy life. Ha-ha… Anyways, let’s say you need about $5,000 /month to live comfortably, cover all your expenses. You strive to create a passive stream of income of $5,000 /month that will require little to no work from you. The money will simply land on your bank account while you lay on a couch and repost on Instagram the quotes about successful success. With this money, you don’t worry about where the next paycheck will come from. You think you outsmarted the entire world around you and the sky is not a limit for you. You figured it all out and now you are able to manage your time only as you decide to. No bosses, nowhere to go, nothing to do, only unless you decide otherwise. That’s cool? Sure it does.
You heard a lot of “success stories” in which people obtained that financial freedom or financial independence I should say, by investing in real estate. People often start their stories remembering the times, when they busted their asses at work, trying to squeeze as much cash as possible from their full-time jobs. Then savvy folks would pour all their savings into the rental properties for the monthly cash flow. By cashflow I mean the income you have left, after the mortgage, taxes, and other operating expenses. You hear a lot of stories like that and it seems that real investment is a way to go. You will need to build a portfolio of rental properties, which generates your passive income. Now you see the path. Pull up the pants, wipe your runny nose, grab the diet Coke – we are going to get FINANCIALLY FREE.
How much time do you think it will take you to set everything up? What did successful stories tell you about the timelines? Let’s see what it takes to build the stream of income that will generate you $5,000 /month.
“People who make $90,000 a year, actually earn more than 87% of the U.S. population.”,
(Keshner, Feb 4, 2019)
Let’s say you are an educated, hard-working middle-class citizen, who annually makes approximately $100K. Day in, day out from 8 to 5 you grind your way to success working the full-time job. Your life is simple, you don’t overspend and have pretty good financial behaviors that allow you to set some money aside. You saved quite a bit and you are ready to step on the real estate investing path. You are about to buy your first property and already feel like a complete success. Life is great and easy, you figured things out. Everything goes as planned. Few months of house hunting and you finally bought your dream house. A bit of renovation, marketing and you have the tenants moved in. The house brings you about $500 a month of hustle-free cash flow. You feel on top of the world, you nailed it. Indeed, that’s great cash flow. To become financially free you only have left $4,500 /month. No problems, just repeat what you’ve done 9 more times and you can retire. The only problem is that you are out of cash after your first purchase. It’s hard to buy a property without a downpayment. Let’s do some napkin math to see how much time it will take to buy 9 more houses and get your freedomlicense.
If you are fortunate to live in Canada, please pay 27% taxes on your annual income. Taxes are a whole nother topic, which deserves separate attention. However, stay on the track, we are not getting into taxes here. Deduct the basic expenses from your annual income. They are different for every person (I don’t include the stacks of toilet paper you purchased during COVID-19 pandemic. Let’s keep it as your little secret). Deducting :
Food (one person)
Entertainment (movies, 1-2 nights out, nothing crazy, really conservative)
Pet (a small dog shares miserable existence next to you)
Commute ($7-10 /day)
Car insurance payments
Rent (So cheap because you try to save money and live in a shithole. It also includes utilities)
Travel (Once a year you fly out to a warm country. You work hard, you deserve it (sarcasm))
You don’t buy new clothes, toys, electronics, gadgets. A new iPhone is just a dream you can’t afford. No Christmas or birthday presents to yourself. Cancel Netflix and Spotify subscriptions. No kombucha or Starbuck coffees. No cab rides. You don’t pay for that cute chick at the bar, sorry honey. No new books or journal subscriptions. You don’t get sick. No dental treatment, no out of pocket medical expenses. You live a monk’s life, literally. From 8 to 5, day in – day out. You have a goal and you are committed to achieving it no matter what it takes. You’ve decided that you want to be free and this is the way to get that freedom. The napkin math showed you clearly – 10 houses – $5,000 /month.
A year later you saved $40,000. You look a little tired, but that doesn’t matter. Well done boy! Now let’s put this money to work and buy a second house. You’ve found a beautiful property listed for little over $300K and your ass got lit on fire. You expect to add another $500 to your monthly cash flow. $1,000 a month, doing little to nothing. No kidding, sounds great, let’s pull the trigger on it. A typical down payment is 20%, which equals $60,000 on a $300K house. What a bummer, you can’t buy it, because you have only $40K saved. You will need to work another six months to make up the difference. You realize that it takes approximately a year and a half to put aside enough money to buy a $300,000 property. Don’t forget that you will need to live the monk’s life and say no to anything that you can’t eat. How long do you think it will take to save up enough cash for ten of those $300k properties? Do you think you will still want that freedom by the time you reach it? By the way, how long do you expect to occupy this planet? Silence…
Ha-ha! Exactly! Don’t freak out yet… Such variables, like appreciation rate and investment income will make things look slightly better. Let’s add them to the equation.
According to Remax: “Healthy price increases are expected next year, with the RE/MAX 2020 Housing Market Outlook Report estimating a 3.7 per-cent increase in the average residential sale price.” According to the Royal LePage Market Survey Forecast: “The aggregate price of a home in Canada is forecast to rise 3.2 percent year-over-year to $669,800 in 2020”.This is a conservative number and it greatly varies, depending on the area of your purchase. We will use it for our financial projections. The number of 3.7% means that the house you purchased for $300,000, next year should increase in price for about $11,100. Will put appreciation to the side for now and run the numbers only including the rental income.
I assume you are being a good boy and don’t touch the monthly $500 you get from your rental property. You are not selling the house, therefore we don’t account for appreciation and use only the money you saved from the monthly cash flow. Annually the rental generates you $4,380 ($6,000 minus 26.8% tax deductions). This extra cash will save you about 3 months of hard work at your full-time job. You will need to hassle for 16.2 months (70.4 weeks) to save $60,000 of a down payment on your second house. (It’s almost 2 months faster having the cash flow of $500 /month from the first property).
One year and a little over 4 months, since you’ve become the landlord, you pull the trigger on the second property. Now, you are the happy owner of two properties which generate you (hopefully)$730 / month ($1,000 /month minus taxes) on top of your annual savings of $40,000. You continue living on the edge of starvation for another year and six weeks to save enough money to purchase your third house. Same deal, $300,000 purchase price, $60k downpayment. Rental income from the two houses you already own allows you to set aside $60,000 a little bit faster. To be exact, 2.7 months faster since the purchase of your first house. Great job, you’ve got the third house. All three properties bring you $13,140 in cash flow annually which correlates to $1,095 /month. It’s been a while since you stepped on this RE journey. Let’s do a quick check-in. How do you feel living the way you did? Because you were able to save $40k every year, I assume life has been very steady for you. No emergencies, no unexpected expenses. You didn’t get sick, nor met a loved one. No kids were born and your parents stayed healthy and well. All your tenants paid on time. No convictions. The vacancy rate is down to zero. No maintenance expenses, whatsoever. What a stress-free life! By the way, how long did it take you to come to this point, where you build such a passive income stream of “whopping” $1,095 /months?
2nd Home = 16.2 months 3rd Home = 14.8 months
Time Spent =31 months = 2 years 7 months
For the past 2 years and 7 months, you lived like a monk. Skinny, tired, but determined to make it work. $5k /months is your dream and nothing can stop you. Great! I like the persistence with which you dig yourself into the grave. Now, please sit down for a second and answer the following questions:
With three behind your belt, how many more houses will it take to get you to your goal?
How long will it take to obtain those properties if you continue down this path?
Let’s run some numbers:
It will take 9 houses to generate almost $40,000 /year of income after paying taxes.
Yellow line all the way down indicates the point at which your rental properties generate you $5,110 a month. This will happen 12 years later when you rent out 14 houses.
Just think about it, it will take you somewhere about 12 years of living like a monk, busting your ass day in – day out at the full-time job to finally get to the point where you can quit. How realistic is it to maintain such a lifestyle? Is it worth it? Are you ready to pursue this for 12 years? What are your thoughts?
Numbers above don’t include a lot of important things, such as:
Renovation/Maintenance Expenses. Houses break, the roof will leak, AC will break, the basement will get flooded. None of those unexpected experiences were included;
Evictions. Tenants don’t always pay rent and you will have to deal with courts, late payments, and evictions. Rooms stay unoccupied – rent doesn’t get paid;
Life Situations. People want new clothes, people want ice cream from time to time. People get married, get sick, and die. People make babies. People divorce. People lose jobs, people find better jobs. None of those were included in calculations. Not a single calculator in the world can predict and account for the life situations that WILL happen to you;
Property management fees. It will be hard to manage 14 houses without some sort of property management assistance. Especially if you are working at your full-time job. Especially if you want to make this income as passive as possible. As a baseline, expect to pay a typical residential property management firm between 8 – 12% of the monthly rental value of the property, plus expenses. Some companies may charge, say, $100 per month flat rate. 10% on your monthly rental income of $5,110 is $511. That’s an extra house for a second… Now you will need 15properties to keep you afloat;
House appreciation. Typically, over the years, your house will be worth more than you paid for it. This extra value can be refinanced and put towards the purchase of the next home. It can be a huge help and dramatically speed up the process at which you get to your goal. It is really hard to predict how much the property will cost over time and the further you shoot, the more off you will be;
Over the course of 12 years, you have saved and re-invested $840,000 worth of down payments (14 houses x $60,000) to buy 14 homes. Let’s see how well your investments paid off.
Capitalization Rate
Cap rate is the crucial piece of information that investors use to make their decision. You need to know for two main reasons:
Analyze the performance, or expected performance, of your rental properties. For example, if there are three houses in your price range for sale, calculating the expected cap rates for all three can help you determine which is the best investment.
Determine your property’s fair market value (FMV). This is important if you’re selling a property. If you know how your property’s net operating income and the industry average cap rate, you can determine your property’s fair market value. Market value = net operating income / cap rate.
Cap Rate is the ratio of the property’s net income to its purchase price (or current market value). While the purchase price remains the same, the market value of the house raises year over year and gives more accurate calculations. $500 /month of cash flow results in a cap rate of 7.3%. What’s a good cap rate, you might ask? On the right are the averages according to CBRE’s North America cap rate survey for the first half of 2019. 7.3% is a good investment. Also since we included mortgage repayment into these calculations it can be considered a cash-on-cash return. Mortgage repayment is the variable that differentiates the two.
Inflation, The Rule of 72, and Home Appreciation
In light of recent, or I should say current events surrounding the COVID-19 pandemic we begin seeing the combination of inflation and low mortgage rates. What does it mean to real estate investors like us? High compounded rates of home appreciation. As a tenant or a typical consumer – you lose, because increasing rates of inflation are not very helpful for your consumer purchasing power of basic goods and services like food, utilities, gas or transportation prices. However, if you own the property, you should smile, because the best traditional hedge against inflation is, was, and probably always will be – the Real Estate. This is true because home values tend to increase at least as much as the reported annual rates of inflation. Let’s play around with numbers and calculate how soon your investments will double in value. We will use The Rule of 72. The use of it is very simple: you divide the number 72 by an estimate of annual appreciation gains. A home that appreciates at 10% per year (72 divided by 10 = 7.2 years) may double in value every 7.2 years. Another home that appreciates 7% each year can double in price every 10.2 years during a relatively strong economic time period. Or, as in our case, home appreciating in value at 3.5% per year is quite likely to double in value every 20.6 years. However the rule of 72 is not 100% precise, it gives a quick glance at the real estate market condition.
As the house owner, you should also be familiar with Compound Interest. It refers to the idea that when you earn interest on an investment, that earned interest is rolled back into the investment and starts to build on itself. Let’s look at an example on the left. We know that the average annual appreciation rate on your house in Ontario, Canada is 3.5%. Therefore we assume that your $300k house appreciates in value by 3.5% at the end of the first year of ownership. You just made $10,500 out of nowhere it’s put into your home’s value. The next year you’re earning 3.5% on the new property value of $310,500. At the end of the following year, you’ll actually earn $10,868, which is $368 more from the previous. Your earning has gone up, even though you haven’t done anything more than just leave the money in place. If you have enough patience and allow the power of compound interest to do its magic, the house you bought for $300k will double in value in about 21 years.
Inflation is the counterforce and works in the opposite direction. You probably remember as a kid, buying a can of Coke for $0.50? The increase in prices over time is inflation, and it basically means that a dollar today simply does not buy as much as it once did. According to Statista.com, in 2018, the average inflation rate in Canada was approximately 2.24 percent. So let’s use that as the example here. Things don’t look so bright anymore. After keeping your property for 25 years, it will increase in price only by $105,165. Inflation just ate $279,834 of your money…
To make things worse I’ll remind you that you haven’t paid your taxes yet. According to the Government of Canada: “When you sell your home, you may realize a capital gain. If the property was solely your principal residence for every year you owned it, you do not have to pay tax on the gain. If at any time during the period you owned the property, it was not your principal residence, or solely your principal residence, you might not be able to benefit from the principal residence exemption on all or part of the capital gain that you have to report.” This means that if you are considering selling your principal residence, you can be reassured that you likely won’t have to pay any tax on your home provided that you meet certain conditions. However, if you are considering selling one of your investment properties, the tax implication can be a bit more complicated. There are two streams of income you would need to pay tax on:
Capital gain. Say you purchase a property for $300,000, and you sell it for $405,165 in 25 years. Capital gain = $405,165 – $300,000 = $105,165. In Canada, 50% of capital gain is taxable, hence 50% of $100,000 is taxable = $52,582. If you own the property in your own personal name, this $52,582 is added on top of your other income and is subject to the marginal tax rate for the respective tax brackets you are in. For example, let’s use the tax rate we used in previous calculations – 26.8%. Hence tax liability is roughly $52,582 x 26.8% = $14,092
Recapture. You are allowed to claim the wear and tear on the property to defer your rental income. The wear and tear are called capital cost allowance. Assume that 90% of the value belongs to the building and 10% of the value belongs to the land, the capital cost of the building is therefore 90% x $300,000 = $270,000.
Where am I getting with all this?
Conclusions
It will take time. A loooong time to build the income that will support your lifestyle and allow you to retire. And if you start late enough, you might retire around the retirement age. The example used in this study is just one of the ways things might unfold. It is steady but very freaking slow to build your way out of the 8-5 system. Now I am going to ask you:
Does it worth spending 12 or even 10 years of your life living only on rice and beans?
Do you think, 12 years later, when you get that $5,000 check it will all seem worth the time and effort you put in?
Will you be able to hold on to your full-time job for at least another decade? Or find another boss, who will pay you at least the same salary.
I am pretty sure that those questions got you thinking. Here is a thing, if you want to break free from the hamster’s wheel, you have to get creative! There are ways to speed up your way to the goal of yours. Some, but not all of them are:
Reinvest Positive Cash Flow;
Re-finance;
Keep the full-time job. If you quit your day job early you will lose your steady and secure income stream and lenders may refuse to lend to you because they believe you cannot support the repayments that the loan requires;
Tax Advantages of Real Estate Investing. Real estate is one of the most tax-advantaged investments compared to other investments.
1031 exchanges
Tax-free or tax-deferred retirement accounts
Appreciation;
Equity Build-up;
Team up with others.
Syndications
Partnerships
Simply saving every dime won’t get you far… Saving is definitely better than spending, however, it will not make you rich. Don’t spend your cash on stupid stuff, but realize that it’s better to make more, rather than save more. Doesn’t matter how savvy you are, you can not save your way to wealth. In 99% of cases, your full-time job’s salary will be enough only to meet your basic needs. See below the Maslow’s hierarchy of needs:
You will live a pretty comfortable life:
Always fed, never hungry;
Live in a comfy warm little cave;
Healthy, with access to quality medical treatment;
Happy in your relationships with friends and family…
Indeed, that’s a great life to live. However, there are a lot of people I know who live such lives, but they don’t seem to be very happy. There are people who are different breeds. Those folks stagnate in the certainty and safety that the modern world brings. They strive for a challenge, they are hungry for achievement. Those people strive in crisis and hardships. When it comes to your life – you are the ultimate decision-maker.
You decide, either navigate for miles on woods roads or play it safe take a short trail.
