Blog Article 

 13-Success after Prison 

Michael Santos

Michael Santos

Preparing for success upon release requires that we think about all our strengths and weaknesses, as well as the opportunities and threats. What will work best for you?

https://youtu.be/4vqaBQDJmXg

Chapter 13 Success after Prison: Multiple Revenue Streams

Leaders taught me that I could advance my prospects for success if I lived in a world of reality rather than a world of fantasy. When authorities took me into custody in 1987, I had to live with the fact that I had made many bad decisions as a young man. While locked in the Pierce County Jail, prayers led me to the story of Socrates. From that story, I learned to think about the avatars that would influence my prospects in the future.

Instead of dwelling on the challenges that my bad decisions created, I had to think about the best possible outcome. With that vision, I could engineer a path that would take me from a jail cell, through multiple decades in prison, and into a life of success upon release.

Like most people, I wish I had made better decisions as a young man. If I’d made better decisions, authorities wouldn’t have locked me in jail. But I couldn’t deal with the world of wishes. No one advanced a station in life by wishing or complaining.

Instead, we had to act deliberately and intentionally.

Reality required that I make new decisions. By thinking about the future, I realized that if I didn’t adjust wisely in prison, I would have difficulty finding employment once I concluded my prison sentence. I accepted that the length of time I expected to serve might make it difficult to find any type of meaningful employment.

Throughout the journey, I contemplated what resources to start my life. If I didn’t adjust wisely, I wouldn’t have anything when my term ended. I wouldn’t have clothes to wear, a car to drive, a savings account, or anything. My prison term and a criminal record would always hang over my head. To lessen my vulnerability to such threats, I created several different income streams to advance our prospects for stability.

Financial Markets:

Those who read Earning Freedom: Conquering a 45-Year Term or any of my earlier books will know that the stock market influenced my adjustment through prison. After my release, I wanted to speculate on stocks, but I had priorities. Although trading in stocks opened opportunities to build an additional income stream, there were also inherent risks. I couldn’t take those risks until Carole and I had more stability.

Each person should remember the importance of setting priorities. I got that wisdom from a leader who told me: “The right decision at the wrong time is the wrong decision.” I understood that a time would come for me to resume investments in the market, but first, I had to grow stronger financially and set priorities with the available resources.

By early 2015, our asset base had grown—the real estate market across the United States had caught fire. Soaring valuations lifted our equity, and within two years, the value of our property had grown to more than $550,000. Our tenants paid their rent on time, and we used those resources to pay our monthly mortgage. Our equity in that property exceeded $200,000.

In addition to the paper equity, by living frugally and saving income that I received from speaking events, consulting, and ghostwriting, we built a high balance in our savings account, boosting our net worth to more than $400,000.

Since I’d set a goal of earning my first million by August 2018, I needed to think prudently about every risk and opportunity. I couldn’t dither. With my commitment to building a digital product strategy and the work I had to complete for clients who retained me, I didn’t have much non-productive time. I had to create podcasts, write articles, record videos, or learn how to use technology more effectively daily. 

To reach my financial goals, I would have to focus on investments that could grow in value without requiring too much time. Rather than needing more income, we needed to own more assets that could grow in value.

Saving would not be a prudent strategy to advance our goal of earning our first million.

Investment Real Estate:

The 0-0-0 credit score I had when I walked out of prison had changed. By paying our mortgage and bills on time each month, I built my score to the mid-700s. With good credit, savings, and tax returns showing an income that put us in the nation’s top 5% of earners, we planned to acquire more income-producing real estate.

We considered the pros and cons of investing in real estate. On the plus side, we saw how effectively real estate could advance our net worth. By 2015, we could see that more than half of the equity we had built since my release from prison in 2013 came from our real estate investment. That means we made more money while sleeping than we earned while working. If we had been able to purchase additional properties, each would’ve appreciated equally in the neighborhood. In other words, if we could have replicated our initial investment five times, we would already have a net worth of more than $1 million.

We wouldn’t have had to work any harder. We simply needed to control more appreciating assets in appreciating markets.

Instead of looking at the past and wishing we had purchased more, we chose to act, searching for areas where we could replicate the strategy that had worked so well with our first purchase. Real estate investments offered an excellent opportunity to build financial security.

We contemplated purchasing a house where we could live. Real estate values in the Irvine / Newport Beach / Costa Mesa areas of Southern California had appreciated nearly as much as in San Francisco. Single-family residences in Newport started at $1 million, and in nearby Irvine, prices started in the $750,000 range. We anticipated we could move closer to our goal if we used our savings to purchase additional rental properties outside of Orange County.

Searching for Opportunities:

Investment properties require us to invest 25% as a down payment, and we finance the remaining 75% with a conventional mortgage. Instead of pursuing monthly cash flow, we would continue to finance on shorter terms that would allow us to pay off debt. If the properties could generate monthly income sufficient to make the mortgage payment, they worked for our plan.

Fortunately, living in prison prepared me to understand the importance of delaying gratification to prepare for success.

Real estate values in the high-desert communities of Victorville, Apple Valley, Adelanto, and Hesperia had yet to recover from the economic recession. For the goals that Carole and I set, those communities offered better upside, with less risk for a downside, than properties in Orange County. With an abundance of properties available, investors could purchase properties that ranged between $150,000 and $300,000. Those properties commanded rents of between $1,200 and $2,000, making them attractive.

I anticipated that in years to come, property valuations in the high desert would increase at a higher proportional rate than properties on the coast.

By purchasing properties for less than $250,000 in the high desert, I anticipated that Carole and I could do well over a five-year time horizon. One key factor for us would be to find tenants who could afford to pay the rent.

With our high-desert strategy, we purchased our second investment property in July 2015. Since we had sufficient savings, we paid for the house with a cashier’s check for $160,000 and closed on the property quickly. Our tenants signed a long-term lease, paying us $1,200 per month. On the day we took possession of the property, our tenants gave us a rental check for the first month plus a security deposit, replenishing a portion of our savings.

With the property in our name, we began the lengthy process of applying for a mortgage. The appraisal showed the house had a value of $190,000—giving Carole and me an immediate paper profit of $30,000. While waiting for the mortgage to fund, Carole and I replicated our process. Once the mortgage company funded our loan, providing us with a check for 75% of the appraised value, we used those resources to purchase our third property.

Since I wanted to continue acquiring properties, I asked Lee for a loan that I could use for either down payments or acquisitions. When he agreed, we purchased our fourth property.

Cash flow from our tenants allowed us to service our debt. In December 2015, 28 months after my release from prison, independent appraisals showed that we had a solid real estate portfolio with the following assets:

  • The total value of our four properties: $1,130,000
  • The entire mortgage debt we owed: $605,000
  • Our total equity in real estate: $525,000
  • The cumulative monthly rental income: $6,800
  • Our cumulative monthly mortgage payments: $5,100
  • Cumulative monthly positive cash flow: $1,700

Our mortgage payments would incrementally reduce our debt by nearly $4,000 monthly. If nothing changed, rental income from our tenants would allow us to pay off the properties in total over the next 180 months.

Besides the debt reduction, the $1,700 monthly positive cash flow would accumulate over the 180-month plan. Over time, the positive cash flow would lead to additional savings of $306,000—more than the total amount we invested in acquiring our properties.

With those projections, even if the properties didn’t do anything more than hold their value, the tenant income would pay off the debt within 15 years, giving us property equity of $1,130,000. On the other hand, if the properties returned to pre-recession valuations, those properties would be worth more than $2 million.

Carole and I used less than $300,000 of our resources to acquire those assets. Buying real estate would advance our goal of building our first $1 million net worth. Best of all, it would proceed on autopilot while I focused on generating new revenue streams with digital products.

Many factors played into our good fortune, including:

  • Market timing worked in our favor. I got out of prison at the end of the recession. When market prices rose, the value of our assets rose.
  • Access to capital allowed me to continue acquiring properties.
  • We found good tenants that paid their rent on time.

I hope readers will connect the dots to see how carefully laid plans allowed us to create and seize opportunities. Each person should begin sowing seeds today that will bear fruit in the weeks, months, years, and decades ahead.

Awareness:

Although our growing portfolio of rental properties served as an integral part of our wealth-accumulation strategy, I remained determined to both build a digital-products business and to work toward creating opportunities to improve the outcome for all justice-impacted people. To succeed, I would use a multi-pronged strategy, including the following:

  • Inspiring people going into the criminal justice system to use their time wisely to prepare for success upon release,
  • Collecting data to show how and why mechanisms to earn freedom would serve the interests of all citizens,
  • Opening relationships with stakeholders of the criminal justice system so that we could introduce our programs to more people in prison,
  • Develop conversations with legislators and prison administrators to influence sentencing laws and prison operations.

To open relationships with more leaders, I accepted 12 speaking assignments in the fall of 2015. Those commitments kept me in different airports every week, with travel to cities between Tacoma and DC to create market awareness.

Some of those speaking events provided memorable experiences. When I made my initial sales call in Washington State, I had an opportunity to build a friendship with the state’s prison system directors. Those powerful allies helped my small business grow. 

Frequently, administrators told me that only a few people could adjust to a long-term so productively. I disagreed, reminding them of my story. When I began serving my sentence, the prosecutor said that even 300 years of imprisonment would not have been sufficient punishment for my crime. And during my first team meeting, my unit manager predicted that I would serve my entire sentence in high-security prisons. 

People may see us one way today, but if we can see a better future, we can work to reconcile and make amends, creating better outcomes. More people would work to prepare for success upon release if administrators showed incentivized them along the way.

Slowly, administrators began to believe. Leaders of prison systems allowed me to start bringing programs into institutions. Those opportunities allowed me to connect with people serving sentences in state and federal prisons across America. 

Ironically, a captain in the Bureau of Prisons that once authorized my placement in the Special Housing Unit became one of my biggest advocates, bringing our Preparing for Success after Prison course to federal prisons across America. A US Attorney issued a purchase order for us to create a reentry program for her district. Federal judges purchased our programs. We received contracts to provide our courses to every state prison in California. Further, through our relationship with digital platform companies, we expanded our distribution to jails and prisons, reaching more than 100,000 people daily.

A revenue model didn’t always accompany those opportunities, but thanks to other business ventures I initiated, we could celebrate our impact on people’s lives. It became our way of being the change we wanted to see in the world. For those results, we’re grateful.

Final Thoughts:

With this book, I wanted to show readers the relationship between decisions in prison and prospects for success upon release. In my case, those decisions didn’t advance my release date by a single day. But when I came home, opportunities opened for me to build financial success while simultaneously reaching my goals of helping other people who served time in custody.

I’ll continue striving to grow and continue documenting the journey.

I’m encouraging all readers to do the same. Work hard. Educate yourself. Reject the criminal lifestyle and focus on preparing for your success. You, too, will grow through these challenges and emerge successfully.

For those who want more information, please visit our website at PrisonProfessors.com. People in prison who want to share their success may use the following contact information:

Prison Professors
32565 Golden Lantern Street
Box B-1026
Dana Point, CA 92629

[email protected]

Last updated: November 15, 2022

Self-Directed Questions:

  1. What expenses do you anticipate needing to meet upon your return to society?
  2. What plan do you have in place to meet the expenses you anticipate upon release?
  3. How can you use time inside to prepare for your financial retirement strategy?

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