ExtremePerspective

Final Result = Humans do not cause climate change

2011-11-13T21:42:00.003-05:00

I've argued many times on this blog that the data did not support anthropomorphic global warming. Now it seems the proof is in - Oceans control CO2 emissions.

There are several key items to get from this data

The US that the fascists want to regulate is a net absorber of CO2
The amount of CO2 emitted by humans is a fraction of that emitted by oceans and rotting vegetation
Even though Gore tried to cover it up in Inconvenient Lie (see the BBC report) - CO2 follows warming. It does not cause it

The lies and deceptions that Gore and IPCC liers and frauds have used to promote their own wealth and punish the US are now exposed for what they are. These people should spend time in jail.

Carters second term

2011-10-20T12:47:00.000-04:00

Economic Freedom in America

2011-10-12T11:53:00.000-04:00

Obama and the second great depression

2011-09-26T10:30:00.003-04:00

I read Amity Shales "The Forgotten Man" that describes all of the mistakes that FDR made during the thirties. The Great Depression was not a failure of capitalism. It was created by government meddling and punishing the private sector.

Obama has followed FDR's model quite successfully so far. He has created an atmosphere of business uncertainty, demonized business and "the rich". This is the second time in history that Keynesian economics has proved to be an utter failure.

Will the US electorate learn from history and reject Obama. FDR fooled people for a decade.

Read "regime uncertainty and the great depression"

Obama's leadership style

2011-05-31T13:05:00.001-04:00

Caroline Glick has provided the most concise summary of what Obama is doing to the US

Subversive leadership

Obama’s leadership model is the model of subversive leadership. Subversive leaders in democracies do not tell their citizens where they wish to lead their societies. They hide their goals from their citizens, because they understand that their citizens do not share their goals. Then once they achieve their unspoken goals, they present their people with a fait accompli and announce that only they are competent to shepherd their societies through the radical shift they undertook behind the public’s back.

New web sites

2011-03-31T21:31:00.002-04:00

I've been working on adding new websites with SiteBuildit.

In addition to Investing in Rental Properties I have built two new sites

Health and Fitness Monitors

Web Video for Dummies

I'm already earning more profit from these web sites then the cash flow from 5 houses without the risk or investment

Analyzing a potential rental property - what to look for

2011-02-10T15:53:00.001-05:00

If you're thinking about buying a house for an investment rental property, what factors should you consider? I give lots of guidance about due diligence and environmental issues to look out for here at Rental Property Analysis

Stopping Junk Mail and Annoying phone calls

2011-01-06T09:36:00.003-05:00

One of the best ideas I ever came across on the Internet was the location of web sites to stop junk mail, get on the No Call List and Opt out of Credit card offers. This has literally saved me hundreds of hours per year that I can focus on making money or just relaxing. Taking action is really simple and takes no more then a few minutes for each registry, but great in reducing wasted time. Most highly recommended.

Finding Money for your investment rental property purchases

2010-12-31T13:24:00.002-05:00

The banks, despite receiving billions from the Fed continue to hold onto their money and not lend to investors. This requires some creative real estate investing ideas to circumvent the problems. Here are a few ideas for real estate investors:

Seller financing

subject to financing

rent to own investing

401k loans

Hope some of these financing ideas stir your creative juices.

Investment Property Capital Gains

2010-12-31T13:18:00.002-05:00

Need to figure capital gains taxes for your investment property? Use this page on investment property capital gains to get an idea of how much to pay the IRS if you sell your rental property

Fire! Why every renter and landlord need insurance

2010-12-05T19:34:00.002-05:00

The first rental property that I purchased during my second attempt at being a landlord had a fire last week. The tenants had just moved in 5 days previously and had a fire in the fireplace. They went to sleep at 1:30 and the smoke alarms woke their kids at 4am. Luckily the previous tenants had moved and I had replaced the smoke alarms (the previous tenants had disabled them). The smoke detectors saved the lives of these tenants.

Unfortunately for the tenants they did not have renters insurance. However, I did have landlords insurance policy which covers loss of rental income. My policy also has a clause which requires the insurance company to cover any upgrades required to meet building codes. This is a lifesaver since my locality requires that any time a building permit is issued upgrades to older homes are required.

Buying a House for Investment

2010-12-02T14:30:00.002-05:00

How do you go about buying a house for rental property investment? Basically, it is the same process for buying a house that you might live in. However, you must know local rental incomes for houses and it is best to buy what many call a "starter" home. This makes it easy to use rent to own investing to ensure that you receive the highest rental income possible.

50 Tips for Investing in Rental property

2010-12-02T14:27:00.001-05:00

I've compiled a list of over 50 tips for investing in rental property here. Many have links to more detailed explanation of what to do.

Will the banks ever lend again?

2010-06-28T10:44:00.003-04:00

During the early part of the last decade banks seemed to have unlimited money available to lend. Credit card offers poured into my mailbox, "no doc" loans for buying property were common. 100% financing for investment property was easy to obtain.

No more - during the past 18 months all of my HELOC's have been cut to zero. Funny, in my location (western NY) property values never sky-rocketed as they did in other parts of the country. And while other housing markets are seeing a big burst of the bubble, my market has continued to climb in value. Despite this, the automated valuing programs that banks use to assess property value seem to use a "one size fits all" approach.

I had several unsecured lines of credit available to me that have also been cut. In fact, every time I make a payment, the credit limit is cut some more. Despite my debt load dropping 10% during the past year and never being late for a single payment, my credit score is dropping like a rock as my balance increases relative to my total credit available.

What to do? Actually, I am reducing paying off debt and increasing the amount I send to my emergency cash reserves. It seems like not what Dave Ramsey would advocate, but if something major happens I can no longer count on borrowing from a bank.

Even Peer to Peer Lending sources like LendingClub have become more selective.

Despite what our government officials tell us, the money lenders tell us not to expect much of an economic recovery for a long time to come.

Circular Firing Squad that is the EU

2010-05-25T11:10:00.001-04:00

http://www.youtube.com/watch?v=5D0VhS8qXT0&feature=player_embedded

Real Estate Rent to Own Working Great

2010-05-14T12:51:00.004-04:00

A couple of years ago I tried my hand at flipping real estate. However, after months of being unable to sell my flips in 2007 (in hind sight just before the big real estate crash), I started using lease-options to keep the property occupied.

Now after over 2 years my rent to own strategy has been remarkably successful. I detail all of the methods I use to this strategy here at rent to own homes secrets.

I haven't had a stretch of more then a week when any of my properties is unrented.

Obama's unconstitutional theft

2010-03-22T12:37:00.003-04:00

An apt quote to think about on one of the worst weeks of US history from Thomas Jefferson

"To take from one because it is thought that his own industry and that of his fathers has acquired too much, in order to spare others, who, or whose fathers have not excercised equal industry and skill, is to violate arbitrarily the first principal of association -- 'the guarantee to everyone of a free excercise of his industry and the fruits thereof'"

Supporting GOOH

2010-01-28T10:31:00.003-05:00

My disgust with the political class has never been higher. Career politicians succumb to the corrupt influences of big government and continue to look out for their own self-interest rather then the interests of the constituents that they represent.

As such, I've joined a movement to replace all 435 members of Congress with new bodies. Tim Cox has started a group called Get Out of Our House which aims to replace incumbents with new bodies.

People worry that we shouldn't get rid of the "good ones". But even Washington had the sense to step down after two terms.

The process for selecting citizen candidates is a good one. I urge all readers to click on the link and join the fight.

The Government Bully

2009-12-24T09:22:00.003-05:00

With the Senate approval of a health care bill we come one step further to having the arrogant elitists in Washington jam something down our throats that the large majority of American citizens do not want. In NY neither my Congressman nor Senators have been even willing to listen to the concerns of their constituents in an open forum, believing that they know what is best for us.

There are major Constitutional difficulties with these bills

forcing private insurance companies to provide services at costs that do not allow them to profit
The creation of "death panels" which cannot be abolished without 67% of future Representatives voting to do this (this is the rationing board that will be established when the inevitable shortages occur)
forcing taxpayers to fund abortion *which takes away our right to "life")
preventing firms from going around the system for people that would like to get other services
forcing citizens to buy something that they may not want or need

In all my life I have never seen such a perversion of the political process. In American history only the attempt by the Democrats to open slavery to Kansas and Nebraska is as extreme. That ultimately ended very badly with the Civil War.

The Truth about Global Warming Scandal Comes out

2009-11-22T11:56:00.007-05:00

A hacker has extracted hundreds of emails that show the enormous cover-up and dishonest science that global warming extremists have used to deceive the world. Link here

The emails suggest the authors co-operated covertly to ensure that only papers favorable to CO₂-forced AGW were published, and that editors and journals publishing contrary papers were punished. They also attempted to “discipline” scientists and journalists who published skeptical information.

The emails suggest that the authors manipulated and “massaged” the data to strengthen the case in favor of unprecedented CO₂-forced AGW, and to suppress their own data if it called AGW into question.

The emails suggest that the authors co-operated (perhaps the word is “conspired”) to prevent data from being made available to other researchers through either data archiving requests or through the Freedom of Information Acts of both the U.S. and the UK.

It's been my contention for as long as I have blogged here that this whole AGW stuff was complete nonsense. Now it appears that the perpetrators of this fraud were not brain-washed but only liars.

Al Gore - the most dishonest politician in America's history - may he face criminal prosecution!

Is this the smoking code?

Data without manipulation

For those curious about what "hide the decline" means

some historical perspective

Gold, the US$ and a Train Wreck

2009-11-17T14:17:00.002-05:00

The price of g0ld has recently spiked over $1100 an ounce after sitting under $1000 for several months. Meanwhile the value of the US dollar has continued it's slide downwards. The Fed recently stated that they will continue with their easy money policy until unemployment starts to pick up. With unemployment likely to keep moving up, it means that the Fed will continue to flood the world with dollars.

What does this mean? Is this 1978 when gold will increase in price by a factor of 5 in 18 months and inflation soared to our highest levels? One can't but help to think that history is set for a repeat. If other commodities follow the price of gold, a second economic collapse might be in the offing.

The Fed is stuck between a rock and a hard place. They can't lower interest rates anymore. If they do the right thing (like Volcker - raise interest rates), it will hurt the current politicians as unemployment rises. If they do nothing, another massive bubble will blow up and create a train wreck bigger then we saw last year.

Goldman Sachs and the price of oil

2009-11-17T13:11:00.003-05:00

The more I read about Goldman Sach, the more I see them as an evil company - the type of company that gives capitalism a bad name. Heres a story about how GS and some of the oil companies are manipulating oil futures markets

GS is making these "round trip" trades without actual oil ever exchanging hands. GS will sell an oil contract to BP and BP will sell the same contract back to GS. The price goes up, other traders see the high volume of trades and jump in, driving the price even higher.

Right now the world demand for oil is very low. Oil tankers are sitting full with no place to pump their cargo, yet the price still keeps going up.

The point of the futures markets was for companies to hedge against future prices increases or drops. Now an unregulated ICE outside the US has become a dark pool where insiders can drive up the price of oil to pad their outrageous bonuses.

Will the government investigate this? I doubt it. Paulson was from GS as well as Geithner. Sometimes, I feel like a crazy conspiracy theorist.

Wall Streets War on investors

2009-08-31T19:18:00.003-04:00

Whenever I get excited about stocks I read something like this and get discouraged again. High frequency "flash trading" and "dark pools" - no wonder capitalists get a bad name.

Hope to make money in stocks?

2009-08-27T12:40:00.003-04:00

Last week I attended a GetMotivated seminar. I was hoping to see some of the great speakers I had heard years ago while in Amway - Zig Ziglar and Robert Schuller. However, both are quite along in their years and were really unable to speak very well. Zig has suffered a brain injury and just sat on stage while we watched a video of some old speeches. The most memorable speech was given by an Indian immigrant (whose name I don't recall).

I did listen to a speaker called Phil Town who was making a stock based sales pitch and ended up signing up for a 2 day seminar. This is an organization connected to Wealth Magazine. Apparently this company is owned by TD Ameritrade. The web site is at Investools.com.

I've not really done well in my stock market investing career and been somewhat ambivalent about investing in stocks Vs real estate. However, I left the seminar with a renewed interest in stock investing. While the main purpose of the seminar was to sell really expensive education courses ($5000 to $25000), it did provide some insight into key ideas that I have been missing in stock market investing. Previously, I had dismissed technical analysis, but the speaker convinced me that the market indeed gives lots of signals about what it may do in the future.

So, I'm going to use the tools for the next 9 months and see if they can at least prevent me from taking a beating during the next market crash.

Best Real Estate Advice

2009-08-19T13:21:00.003-04:00

Some have written and asked why I rarely write about real estate now. The reason is that there is not much to write about. All of my properties are always full and I get above market rental income. How I did it is detailed in Rent to Own.

So what have I been doing? Building a website with all of my real estate information in one place. It's something that I had wanted to do for a long time. I have always thought that the $2000 courses that real estate guru's teach is way overpriced and wanted to share that information free.

So for the best free real estate advice website go to Investing in Rental Property.

How did I create that website? Visit SBI and find out for yourself. It was fun and relatively easy to do it.

Some also ask why I write on political stuff. The answer is simple - there is no bigger danger to the efforts any entrepreneur may face then government intervention. The success of people in the US is based on property rights. Any thing that the government does to undermine property rights erases the work that I do. Whether it is imposes massive tax increase based on the hysteria of global warming or the attempt to create a single payer government run health care system. It all undermines my work - putting a gun to my head and stealing my money.

You're a right wing nut job if....

2009-07-20T11:01:00.003-04:00

you believe creating trillions of dollars in new debt will not save us from going bankrupt
you think that the free market would provide better health care than the government run options
you think that punishing US energy consumers with higher prices is a bad idea given that India and China won't reduce carbon output
you don't think that Bush was Hitler II
you think it is wrong to screw bond investors at GM and Chrysler while rewarding the Unions
you don't believe Obama is "almost a god"

Obama and Cloward Priven - Crisis to Communism

2009-07-09T15:10:00.004-04:00

I recently became aware of something called the Cloward Priven Strategy that explains most of what has been going on in politics. The basic idea is to create a crisis and force change on the Country. I always wondered how Democrats could impose so many crazy ideas on the nation that seemed so contrary to logic. Now I know. They aren't dumb - just evil.

Things like Global Warming, the banking crisis and voter registration fraud are intential attempts to disrupt the existing system and "spread the wealth around" as our great Messiah Obama has declared.

The global warming hoax which I have written about extensively has no basis in science. It's intention is to foist this Cap and Tax scheme on us to undermine industry and destroy the economy.

The $787 billion stimulus is not intended to make jobs, it's intended to prolong the crisis so that the leftests can take over more and more of the economy.

The Community Reinvestment Act which led to the banking crisis was a plan to destabilize the nations monetary system.

ACORN's voter registrations efforts has the goal of overwhelming the democratic process and make it illegitimate. In the end we will beg for a dictator to save us since we can't trust elections.

Saul Alinsky wrote:

"Make the enemy live up to their (sic) own book of rules," Alinsky wrote in
his 1989 book Rules for Radicals. When pressed to honor every word of
every law and statute, every Judeo-Christian moral tenet, and every implicit
promise of the liberal social contract, human agencies inevitably fall short. The system's failure to "live up" to its rule book can then be used to discredit it altogether, and to replace the capitalist "rule book" with a socialist
one."

Alinsky advocated the politics of personal destruction which took down Bork, tried to take down Clarence Thomas and now Sarah Palin.

Will the electorate wake up in 2010?

Karl Marx reincarnates in San Francisco

2009-07-01T20:31:00.003-04:00

"From each according to his abilities, to each...." Well if you're a landlord in SF you'll be giving your money to your tenants.

San Francisco laws bar rent over 33% of income

Well... its all part of Obama's plan to redistribute the wealth

Al Gore's religion refutted - Say bye to global warming!

2009-06-05T14:35:00.001-04:00

Climate Change Reconsidered: A rebuttal to the Al Gore crowd via Powerline

The book is replete with detailed statistical data and arguments of the sort that global warming alarmists refuse to engage in. It contains far too much data to summarize, but here are the "key findings" in Chapter 3, titled "Observations: Temperature Records."

* The IPCC claims to find evidence in temperature records that the warming of the twentieth century was "unprecedented" and more rapid than during any previous period in the past 1,300 years. But the evidence it cites, including the "hockey-stick" representation of earth's temperature record by Mann et al., has been discredited and contradicted by many independent scholars.

* A corrected temperature record shows temperatures around the world were warmer during the Medieval Warm Period of approximately 1,000 years ago than they are today, and have averaged 2-3ºF warmer than today's temperatures over the past 10,000 years.

* Evidence of a global Medieval Warm Period is extensive and irrefutable. Scientists working with a variety of independent methodologies have found it in proxy records from Africa, Antarctica, the Arctic, Asia, Europe, North America, and South America.

* The IPCC cites as evidence of modern global warming data from surface-based recording stations yielding a 1905-2005 temperature increase of 0.74ºC +/- 0.18ºC. But this temperature record is known to be positively biased by insufficient corrections for the non-greenhouse-gas-induced urban heat island (UHI) effect. It may be impossible to make proper corrections for this deficiency, as the UHI of even small towns dwarfs any concomitant augmented greenhouse effect that may be present.

* Highly accurate satellite data, adjusted for orbit drift and other factors, show a much more modest warming trend in the last two decades of the twentieth century and a dramatic decline in the warming trend in the first decade of the twenty-first century.

* The "fingerprint" or pattern of warming observed in the twentieth century differs from the pattern predicted by global climate models designed to simulate CO2-induced global warming. Evidence reported by the U.S. Climate Change Science Program (CCSP) is unequivocal: All greenhouse models show an increasing warming trend with altitude in the tropics, peaking around 10 km at roughly twice the surface value. However, the temperature data from balloons give the opposite result: no increasing warming, but rather a slight cooling with altitude.

* Temperature records in Greenland and other Arctic areas reveal that temperatures reached a maximum around 1930 and have decreased in recent decades. Longer-term studies depict oscillatory cooling since the Climatic Optimum of the mid-Holocene (~9000-5000 years BP), when it was perhaps 2.5º C warmer than it is now.

* The average temperature history of Antarctica provides no evidence of twentieth century warming. While the Antarctic peninsula shows recent warming, several research teams have documented a cooling trend for the interior of the continent since the 1970s.

Paul 4 - IRS 0

2009-05-23T21:01:00.002-04:00

Well, the IRS struck out again in their quest to get more out of me through an audit. I've never been impressed by the knowledge of the auditors. They are friendly enough but I seem to always have to explain the tax laws to them.

Having your files organized and being able to document what you put on the tax form never ceases to impress an auditor. Must be that most people being audited don't have documentation.

To Hell with the Banks

2009-05-18T21:26:00.002-04:00

I've always paid every credit card payment, every HELOC payment, every mortgage payment on time - for over 30 years now. Last summer the banks sent me multiple notices on every property eliminating my lines of credit, claiming that my properties were worth less (they weren't - property values continue to rise here)

In the last six weeks my two credit card companies have (without reason) tripled the interest rate on my cards. I have cancelled both cards. My credit score was excellent (over 750) but these banks have decided that those that make payments are going to bail out the looters that default on their credit cards. To hell with them. I will not pay another bank for credit card interest again.

Theives all of them

Who is John Galt?

2009-05-09T19:31:00.003-04:00

The events of the past 4 months have left me deeply concerned about the country. The looters are in charge and making their best play to steal the wealth of many individuals who have worked to build a prosperous life for themselves. Obama's theft of Chrysler from the bondholders in payment to the autoworkers is the most outrageous public criminal act I have ever seen. Next he'll be seizing my rental property and giving it to the tenants.

If you don't know the references, read Atlas Shrugged. I think that the stock market is in the midst of a suckers rally and the next plunge will be deeper than the last. Based on what is happening inside my company I am not optimistic in the least. And the constant theft of property is not going to encourage any investment any time soon.

At least there are some free market capitalists left - unfortunately they are in China!

Another IRS audit

2009-03-20T11:14:00.002-04:00

I'm beginning to think that there is an IRS conspiracy against rental property owners. I've received another notification for an IRS audit of my rental properly documents. This will be the 4th time I have been audited.

I'm not really worried about this. Three previous audits ended in no change and one gave me additional refund. But it is a pain to have to spend 3 hours with an auditor.

I wonder if the IRS tax cheat in chief (Geithner) will be audited as much as I have been?

Time to panic? Yes!

2009-03-06T09:50:00.003-05:00

I've been watching my 401k for the past year trying to maintain my composure and not sell. All of the guru's tell you that the typical investor sells at the bottom and misses the rapid upturn. So I held and held and held my stocks waiting for the Messiah to turn the panic in the stock market around.

But now the Messiah thinks that the stock market is no more than a popularity poll and doesn't seem to care about it. The stock market losses since his election are the worst of any President in 90 years and there is no sign that he or his treasury sec. know what they are doing (except trying to nationalize health care, the utility industry through carbon taxes and the banks).

With no hope in sight, I finally decided to panic and sell all my stocks. I see no chance of the economy recovering for several years at this point. Looks like we are headed to European style government, growth and unemployment rates.

State of the Union Feb 2009

2009-02-24T14:06:00.003-05:00

Obama will deliver his first State of the Union address today. So far the stock market is screaming "no confidence" in his plan as evidenced by the huge drop in stock market value since his election and the worst market in 113 years. My 401k is 50% of what is was at it's peak and I'm not sure how much lower it will go. For a 20 year old this is probably a great time to invest in stocks but not so much for people near retirement (what ever that is?!?)

My only solace is my real estate investments. Real property values continue to rise in the greater Buffalo region. Demand for my properties is high (using my Rent to Own methods). My only concern is what will happen to interest rates.

Right now interest rates are at historic lows. However, the government has expanded money supply so much that it will come back to bite us. Are we heading to the stagflation of the Carter years? My guess would be yes. Unfortunately, I have a mortgage and several HELOC's that are linked to the prime rate. Once inflation hits the FED will be forced to raise interest rates. And I don't think Obama is going to rescue the investor class anytime soon.

TV shows caused the real estate bubble?

2009-02-09T12:54:00.003-05:00

Here's a new one - TV shows caused the real estate bubble:

The real villains here, the truly bad seeds at the heart of this crisis, have gone unpunished thus far and are still in operation. They are Jeff Lewis and Ryan Brown of Bravo's Flipping Out, Armando and Veronica Montelongo of TLC's Flip This House, Kristen Kemp of TLC's The Property Ladder, Kendra Todd of HGTV's My House Is Worth WHAT?, and the TLC, Bravo, HGTV, and Fine Living networks in general. All of them encouraged people to take out massive loans in order to buy and
renovate homes and sell them at a profit when, really, most people have terrible taste, and furthermore, are bad at laying tile. These shows are still on! WHY?

Want to have a web based business?

2009-01-23T13:50:00.004-05:00

I mentioned in an earlier post that I was looking into SiteBuildit as a potential source of income. Two years ago when I decided to invest in rental property I used a web business called InvesterPro to build a web site for me. It cost me nearly $600 for them to develop a site for me and about $50 per month to maintain it. During the two years that I had the site live I had very little traffic and only a few contacts. None resulted in a real estate transaction.

After purchasing SiteBuildit for $299 my eyes have been opened as to why the previous web site did not attract many visitors. The InvestorPro web site was just a cookie cutter site (every subscriber had the same site except for the name of their business. Search Engines like Google tend to ignore these type of sites.

The main concept behind SiteBuildit is what they call the C-T-P-M process. Intuitively this makes a lot of sense to me. The extensive instructions tell you how to find niche key words that can attract traffic without a lot of competition. Lots of advice on building content and monetizing your site. After working with the software for a couple of weeks I created a web site called Investing-in-rental-property.com. (It's not completed yet but I'm starting to put into writing some of what I know.) I've been really impressed by how easy it is to build web pages. Once I have the time, I'll be able to improve the look and feel. Lots of information in the forums as well.

Overall - a very impressive service for building a web based business.

Rent to Own homes concept reduces pressure on rents

2009-01-21T14:03:00.003-05:00

I read the other day that 50% of foreclosures are limited to 4 states - California, Florida, Nevada and Arizona. I have noticed any changes to the number of foreclosures in my area based on the foreclosure list subscription service I subscribe to. I expect that real estate prices in those 4 states were driven by speculators who bought properties before they were even built.

The Wall Street Journal carried a story today that the bursting of the real estate bubble has put downward pressure on rents. The Buffalo area is losing people and jobs and so I would expect that there would be some downward pressure to reduce rents here as well. So far, I continue to receive calls about when one of my properties may come available. This despite no advertising on my part. I would guess that this is due to the "rent to own" homes concept that I have been using. Not having to worry about whether I can find tenants is a great stress reliever for a landlord.

Increasing Income

2009-01-05T14:32:00.010-05:00

My company has announced no raises for 2009 and no bonus. I have to make an extra alimony payment to my ex-wife out of a non-existent bonus and I usually use it to pay down on debts. Like many people I either need to increase my income or cut expenses. My expenses are pretty barebone right now, so there is little to cut

What do I do now? Invest in more real estate? Take a part time job? Find another source of income?

Is the real estate market at a bottom yet? Probably not in the hot markets of the past few years if you look at this graph. The market neither increased rapidly nor dropped in the Buffalo area (it's up 4% in the past 12 months). Underwriting for investment loans has become very strict the past year. If I could get a real estate loan, I would re-finance one of the properties I own that has a variable rate loan. I just cannot see any purchases of real estate at the moment. Besides, cash flow from my properties is revenue neutral and I wouldn't expect that a heavily financed purchase would produce a positive cash flow.

I mentioned here and here about my experiences with multi-level marketing through Amway/Quixtar (I read this weekend that they are now dropping the Quixtar brand and reverting to Amway). I don't really consider Amway an option due to the high people skill requirements for success.

I "tried" the Internet with this blog. But my 25 months of blogging has earned me a cumulative $2.46! Of course, I do not have a good sense of how to make money on the net. One of the aspects that I really grasped with Amway was the "franchise" concept (see point #2 here). Distributors like Dexter Yager had created an excellent "system" for success.

As I mentioned a couple of posts ago, I have been looking into SiteBuildIt. It seems to me that the creator of the site has done a pretty good job of building a good system that can be followed by most people. The system looks pretty comprehensive. If you are (like me) uncertain what type of Internet business to create, there is a Brainstorm section which provides lots of data. You can use the data to determine supply Vs demand for any particular keyword (i.e. business idea). His C-T-P-M model makes a lot of sense (and points out why this blog doesn't make much money!).

I am applying for a Census job and have thought about taking a second job. The problem with second jobs is that they have little flexibility. Since my boys have not been willing to get their driving licenses, I still need to do a lot of chauffeuring.I thought about becoming a Real Estate Agent and took an on-line CCI - but, as I suspected, the competencies needed are much like Amway and I scored in the lowest 20%.

So, over the next few weeks I will explore a web site in more detail and may pursue that for the time being.

When is the best time to buy/ sell your house?

2009-01-03T10:23:00.002-05:00

Here's an interesting plot I made from data of the Buffalo/Niagara regions median home prices over the past 5 years. Typically there is a 60 day lapse between an offer being accepted and when a home is closed here.

So, if you want to buy at the best price, the ideal time to make an offer is in December. On the other hand if want to sell at the highest price, you should probably put your house on the market by the end of March.

Ending 2008 Net Worth update

2009-01-01T14:16:00.006-05:00

Well, I've updated my net worth on NetWorthIQ. Like many (or most) others, my net worth suffered a sharp drop in the forth quarter of this year and is at its lowest level since 2006. The big killer was the sharp drop in my 401k which is largely invested in equities. And, fortunately, unlike a lot of others in many real estate markets, my property values are not declining.

That being said, I don't plan on buying any properties this year. I'm hoping that one or more tenants will exercise their options and purchase the house that they are leasing, but I'm not holding on to much hope. My big concern is the one property that I have which is on a variable interest loan (currently at 10.1% interest). I tried to refinance it several times last year and expect that it will be just as difficult to obtain a new loan this year. I have no hope that the current occupant will buy it and am concerned that all this money that the Fed is pumping into the economy will cause massive inflation. If that happens any variable rate loans will jump since the Fed will have to rapidly raise interest rates.

I'm in the process of applying for some temporary work with the Census. Beyond that I've also been exploring SiteBuildIt and the possibility of an Internet business. But for what, I'm not sure.

Bubbles and Demographics

2008-12-15T14:58:00.005-05:00

Like many during this current economic crisis, I have been trying to figure out what happened and when (if) we will get out of it. Will I have a job until I can retire? Will my 401k recover? Will Social Security be around when I'm retired? Will my company be able to cover it's pension costs?
I'm normally an optimist but this article has me wondering if any of the above will happen. The crux of this article boils down to one paragraph:

"There is nothing complicated about finance. It is based on old people lending to young people. Young people invest in homes and businesses; aging people save to acquire assets on which to retire. The new generation supports the old one, and retirement systems simply apportion rights to income between the generations. Never before in human history, though, has a new generation simply failed to appear. "

A look at the key graphic shows the problem:

The law of Supply and Demand is going to be hard pressed to overcome the demographic problem that the West has. The reduced population will have a low demand for the older generations money and homes. There will be a limited supply of money (i.e. taxes) to fund SS and pension funds.

My wife often argues that it is much better to have only one child so that you can have more for yourself. It is a view held by many, but in the end, this is a shortsighted and selfish view of the world. By failing to reproduce, we doom ourselves to a very bleak future.

Update: More from the same author with the Pope's views on free markets.

How much will housing prices fall?

2008-11-28T09:07:00.004-05:00

I found this graph here. It sure seems to indicate that some housing markets will be in decline for some time to come. Real estate prices tend to correct at a much slower rate than say stock or commodities. This doesn't mean that all real estate prices are falling (Buffalo's are rising).

The question is, will the politicians allow the market to correct and face a short, sharp recession or will they try to prop up prices and keep the country in a long period of stagnation? My guess is the later. We are a society that tries to avoid pain at all costs.

What's the forecast with Obama and experimentation?

2008-11-19T15:12:00.004-05:00

The economy looks as bleak as I have ever seen since the 1970's. Consumer spending seems to have fallen off precipitously. I looks like the government hasn't got a clue as to what to do. Treasury Secretary Paulson sold Congress on a $700 billion bill to purchase toxic assets (TARP). However, Paulson changed his mind and forced large banks to give some of their equity to the US government in the largest nationalization in our history. The markets have predictably reacted by dropping some more.

Last Sunday night on "Sixty Minutes" President-elect Obama indicated that we was going to follow FDR's model of experimenting with the economy. However, what Obama does not seem to understand is that the markets do not like experimentation. Uncertainty creates volatility. Here's a useful chart of stock market volatility during the last century.

Many Democrats idolize FDR as a saviour but the facts show that if anything, he made the economy worse. Now the electorate has put all their faith in a new Saviour who promises to repeat the mistakes of history.

Irrational Pessimism

2008-10-24T14:17:00.003-04:00

Many remember Alan Greenspans claim of irrational exuberance during the 1990's stock market run up. Now the market value has dropped about 40% from its peak and each day brings news of triple digit market losses. Foreclosures are up as well as joblessness and it's hard not to be afraid, especially for those in their mid-fifties who were hoping to retire in 5 to 10 years.

So is the world ending as we know it? Many people are thinking that way, claiming that this is the next Great Depression. The media claimed for over a year that we were in a recession despite the fact that the economy was still growing. Self fulfilling prophecies are part of the reality we deal with and as people are told that things are bad they change their behavior until things do become bad.

One contrarian is Warren Buffet who recently published an article recommending people buy now. I think that is exactly what smart investors need to do. Stocks have always come back. And some areas may have good real estate values where sellers have irrational pessimism (though I think that values will have to drop by 50% or more in some markets).

Stocks Vs Real Estate III

2008-10-10T13:46:00.003-04:00

I've written in the past about why I thought real estate was a better investment than stocks. The current 40% (and counting) drop in the stock market serves to underscore many of the points I made.

Now, many people who were trying to use the greater fool theory to flip houses in rapidly escalating real estate markets during the past few years may disagree. I used to watch "Flip this (or that) House" and wonder if I could ever make money in real estate in the Buffalo area. However, at the moment I seem to be at the right place to own real estate. My real estate basket has a positive cash flow and is appreciating.

Meanwhile my 401k has lost over 6 figures in value and if I look at that alone, I have no hope of retirement until I am in my 70's. I think that the country is in the verge of electing the most far left socialist in our history. His ideas of increasing capital gains taxes and taxes on small businesses as well as anti-NAFTA rhetoric is reminiscent of the 1930's. I wonder if it will make FDR look like a conservative a few years from now.

Fortunately, hockey season starts tonight and the Bills are winning. Otherwise, I might just jump off a skyscraper.

Third Quarter Net worth update

2008-10-06T17:39:00.003-04:00

Well, like most people my net worth fell in the third quarter of this year. You can see the chart along the sidebar or at NetworthIQ. The primary reason for the drop is the loss of $30k in my 401k. Retirement is getting further away with each passing drop. Wish I were 30 and could take advantage of this market. After a long decade (in the 70's) the stock market came roaring back for nearly 30 years and made many people rich.

Fortunately, I live in a area of the country where real estate is actually appreciating, so at least I have one investment that is not being hurt (My REIT fund has been going down, so my 5 houses here are what is helping).

In terms of debt, I'm treading water at the moment - neither going down much nor increasing too much (most of the increase is due to increased appraisal of a home I own with my ex and my "debt" to repay her share)

Congress Acts - Extends Crisis 10 years

2008-10-01T14:27:00.002-04:00

Every one is running around in a panic predicting that we are facing imminent doom if Congress doesn't pass out a bail out bill for Wall Street. Politicians are all about blaming greedy capitalists but greedy home sellers are as much to blame. But people, whether on Wall St or Main St were simply acting in direct response to the incentives that our benevolent politicians have provided for us. Easy money and the Community Reinvestment Act have combined to drive up housing prices to unsustainable levels. Having the government buy these "bad" loans at inflated prices will not solve the problem. Houses in most areas will still be over priced.

How do I know this? Just look at prices of homes in the greater Buffalo area. Housing prices in many areas of the country are still 400-500% greater. Now, I know people will pay a premium for a better location. But once the lending industry is reigned in, most people will not be able to afford a 500% premium. So, they will default or move.

So, I predict that we will (like Japan did) suffer from slow economic growth over the next decade or until we let the free market set housing prices unrestricted by government intervention.

Liberal Fascism and Free Markets

2008-09-30T12:47:00.006-04:00

I've been reading Jonathon Goldberg's book Liberal Fascism during the current economic crisis. The book is an eye-opening look at the "religion of the state" as Goldberg defines fascism. Fascists, progressives, and liberals are all one and the same and dedicated to the idea that the government alone can solve all problems, prevent all harm, absolve all sin.

There is no doubt that the real estate bubble was created by the religion of affirmative action. Government intervention (with a push by Obama) in the markets black-mailed banks into loaning money to people that couldn't pay for it. The solution proposed to solve the "crisis" is more government intervention into the markets.

President Sarkozy of France has declared that laissez-faire capitalism is dead. But, truth be told, the fascists have been in control of the markets for most of the past 100 years and the free markets of Joseph Schumpeter have not been allowed to work.

There is wide spread panic that if the Congress doesn't pass this bail-out package we are headed for the second Great Depression. I believe that we need the creative destruction of the free market to wring out all of the stupidity that has been fostered during the past 15 years by bad government policies.

I was happy that the bail-out package failed but I fear that ultimately, politicians cannot do the right thing. Here's a good description and solution to the problem.

P.S. You don't think we have a religion of the State???? Here's a creepy worship song to the Dear Leader.

Root Causes of the Market Turmoil

2008-09-19T12:34:00.004-04:00

Based on what I've been able to discern there are two causes to the current market crisis. The first began a decade ago when our meddling politicians decided that the lenders were being racists by not lending to poorly qualified minorities in slummy urban areas (CRA). So the government relaxed lending standards and created tremendous liquidity. This allowed people to refinance property and created two bubbles - first the stock market and second in real estate.

I was able to purchase property because of this liquidity with virtually nothing but my credit score. Some of the property I got was foreclosed when the homeowners couldn't pay after borrowing many times the value of their property. (One property I got for $5k had a $71k loan against it. In truth it was probably only worth $1k, but it was owned by a minority and no one wanted to discriminate by valuing the house at its real value)

The second part of the crisis is due to a FASB accounting practice called "mark-to-market". About 8 months ago I started getting letters from all my HELOC's stating that the value of my property had fallen and my credit line was no longer available. Although property values in our area have increased, suddenly the loans I owed money on were valued at over $100k more than I owed on them. So the big companies like AIG and Lehman had to revalue all of the loans to market value suddenly showing tremendous losses and cutting all market liquidity. It didn't matter if I (and most other homeowners) were still credit worthy and paying off the debt. These firms found themselves stuck.

So the politicians that created this mess are all decrying the "greed" of the Wall Street managers (and no doubt there is greed there). But the truth is that Washington created this mess by trying to interfere in the market.

Credit Crisis Hits Home

2008-09-16T13:29:00.003-04:00

I've been using a lease-purchase method to keep my 4 houses filled during the past 2 years. The first people to purchase an option on the first house I had bought 2 years ago decided to buy another property. So I was able to re-lease the property and collect another option payment.

The second couple has been quite religious about paying their rent on time and counting their rent credits in the hopes of buying the house. Their option expires this month and they have been unable to obtain a loan. It looks like stricter borrowing rules from the banks are the culprit. They asked if they could have another year to figure out how to buy the house since they really like it. They seemed really despondent about the possibility that I was going to evict them.

So, I am debating how to structure another option. Do I give them credit for any money they paid or any of the rent credits they earned (my position) or start from scratch (my wife's position)?

At the very least, I won't have to worry about having a vacant property. Despite the current climate of fear being generated by the media and politicians, my properties remain rented out and my cash flow situation seems stable.

Rent to Own Troubles

2008-08-26T18:30:00.003-04:00

After my tenants deserted my property in Cheektowaga, I spent about a week cleaning it up and put our a "Rent to Own" sign on the front lawn- no other advertising. I received about 50 calls in the past 2 weeks and 3 serious contenders for the house.

The first was an older couple without children who I thought would be ideal tenants. They called my excitedly last Friday indicated that they had received a large legal settlement and wanted to sign the paper work. I drove 40 minutes up to the house and met them. They proceeded to tell me that they could not get out of their lease (wife in tears). I suggested they negotiate a pay off with their landlord.

A second couple contacted me through a Realtor several times and kept making verbal offers but all lowball offers. Sunday another couple came to the house and gave me a check for $1750. I told them I would decide Monday night and called the other two couples.

Monday I contacted the other two parties. The buyers came up slightly and the first couple could not be reached, so I deposited the check from the third party and told them they could have the house.

Today the second couple called and offered my asking price - too bad that their Realtor didn't give them good advice (She had sold a lesser property for $196k last fall)

The first couple called and said that they had paid their way out of their lease. When I told them I had leased the house, the wife broke in tears again because now their land lord would not let them continue in their apartment.
So now I've added to the ranks of the homeless - must be Bush's fault!
Now I've created a

Whiny Blacks

2008-08-15T10:46:00.003-04:00

While I was away on vacation I did not answer my voice mail to check for calls. About 30 people left messages, many several times. One woman called about 6 times. After I did not return two calls she started leaving more and more hostile calls accusing me of being a racist. Some were quite vulgar.

This type of behavior is so sad. It seems that many blacks believe that when something is lest than perfect, it must be about race. I'm not sure if these people have super low self esteem or just developed a sense of entitlement that they deserve special treatment. I find many of Obama's whines about race repulsive. I think he is using guilt as a political tool. Maybe this woman was as well.

The experiences that I've had dating a black woman in college and adopting a black child 15 years ago have led me to believe that most of the racism in this country today is in the minds of blacks - not in reality.

I don't think electing Obama is going to solve any racial problems in this country. In fact, I think it may just create more whiny blacks.

Bad Tenants vanish while I'm away

2008-08-15T10:36:00.003-04:00

While I was away on vacation my MIA tenants reappeared at my Cheektowaga house after being away for two months. They took about half of their stuff and left me a mess. They didn't leave any of the $3500 that they owed me behind. They wouldn't leave the mail man a forwarding address and the utility company didn't want to switch the power back on unless I put up a security deposit, so I guess they screwed everyone and don't want to be found.

Fortunately, with the security deposit and option money I had collected, I am not out anything. I put up a "rent to own" signs and have had 50 calls already. Hopefully I can do another lease-option before the end of the month, otherwise I'll be borrowing against credit cards to pay the mortgage.

The Best Energy Plan

2008-07-21T15:22:00.002-04:00

Well we've heard from the great guru Al Gore about his plan - a fool's idea if there ever is one. The great Al ignores the millions in invested infrastructure that would have to be mothballed, the trillions in investment for a new infrastructure. And, oh by the way, even if we did this it wouldn't be economically feasible.

Then there's is T. Boone Pickens who will harness all the wind power blowing up the center of the country and reap millions in profits. Talk about a self-serving interest.

So what is the best energy plan? How about letting the free market work? It's failed you say - look at what has happened to the price of gas!! No, it hasn't failed. The laws of supply and demand are working perfectly. Demand is way up due to the growing economies of China and India (I've witnessed China's first hand and know this to be a fact). The problem is on the supply side. The monopolists have been restricting supply for decades that has resulting in the rapid rise of prices. Oh those evil oil companies (you think), raping us to get obscene profits!

No, the monopolists in this case are the environmentalists - restricting building of nuclear plants, restricting drilling for oil offshore and in ANWR, restricting development of oil shale and now stopping the building of clean coal plants. (a third of my electricity bill goes towards paying for a nuclear plant that was built but never used due to environmental law suits)

The best energy plan is to start protecting our energy supply from lawsuits from these environmental monopolists. Once this happens:

oil companies can use new technology to recover an almost unlimited supply of oil from existing supplies as well as oil shale
nuclear plants can be built
gas will be cheap, electricity will be cheap and both will be abundant
we will stop the myth of carbon dioxide causing global warming

Net Worth Update for 2nd Quarter '08

2008-07-10T14:13:00.003-04:00

I've updated my net worth at NetworthIQ. My net worth dropped by $5k. Despite adding $3k to my 401k that account dropped by $6k. My debts dropped slightly, off-setting some of the loss in retirement savings.

One interesting thing has occurred which (I hope) underestimates the value of one of my properties. In 1998 I made an offer to purchase a home on 5 acres for $180k. Someone else outbid me and now has that property on the market for $369k. I purchased a slightly nicer property nearby for $195k which I have valued at only $235k. I still own that property (with my ex) and think that it is pretty comparable. If so, I may have more equity than I currently think in real estate.

Data from the local Realtors indicates that property values have continued to rise at their slow 3-6% rate as they have for the past 8 years. However, the banks have all sent me notices that the values of my properties has dropped dramatically (20%!!). I guess that they don't want to loan out any more money. At any rate, I've not changed the values of any of my properties.

Tenants are such liars

2008-06-24T13:03:00.003-04:00

Some properties just seem to have a dark cloud over them. We purchased and renovated a nice home in Cheektowaga last year. We were unable to flip it and so after dropping $16k in holding costs we rented it out. Meanwhile the loan interest rate ran up from 7.9% to 11.1% and makes the property a money loser every month.

We thought we found some great tenants for the property, but 3 months ago they started paying late. Last month I payed a visit to them on the 10th and the husband said that his wife had the check and they would drop it off as soon as she got home from work. Well, I didn't get the check until the 20th.

Now in June it's the 24th and still no check. I went over to the property last night since both their phone numbers are all out of service. The lawn hasn't been mowed for a month and the inside looks like a disaster. There was a notice on the door from a Rent to Own company. I called the number and the store manager told me that they wanted to pick up some appliances since the tenants told them they were moving to Illinois!

I talked to the lady next door and she told me she had seen the tenants within the past 2 days. I tracked down another phone number for the husband through his employer. As soon as he answered and I told him who I was he hung up. Minutes later his wife called to tell me she was in a hospital in Illinois due to a heart attack (she's in her thirties) and couldn't talk because she had a tube in her mouth! This is too rich. Her husband makes his sick wife who has tubes down her throat call me rather than telling me she is sick??? (and she wanted to know how the #?!% I had gotten her brothers phone number?)

Of course, the wife told me they will pay the rent - the check is in the mail

Bernanke signals end of peak oil pricies

2008-06-04T11:55:00.008-04:00

Yesterday Ben Bernanke signaled that the US was going to start supporting a strong dollar policy. This will no doubt start to stop the run up in commodity prices, especially that of oil. A look at gas prices in the chart above shows how irrational the market is at the moment. A smart, high risk trader would certainly short oil futures. If I had the cash I would also buy US dollar futures.

The gloom and doom crowd is predicting $6 a gallon gas prices. It's more likely that by year end we will be at half that price.

Update: from Senate hearings:

“Speculators now account for about 70% of all benchmark crude trading on the New York Mercantile Exchange, up from 37% in 2000, said Rep. Bart Stupak, D-Mich., chairman of the investigations subcommittee.”
Since then, oil has risen by more than 300 percent. Any questions?

Banks Panic - One size property drop for the country

2008-06-03T11:00:00.005-04:00

During the past 3 weeks I've received 3 letters from 3 different banks about HELOC's on 3 different properties in 3 different towns. Each letter essentially cut off all of the credit in the HELOC. Each bank claimed that the property values had dropped drastically in the past year in "my area" and so, by the terms of the HELOC agreement, they were, without providing any comps or data, going to revalue my houses 20-30% lower.

Now certainly in some areas of the country when housing prices were increasing 20-30% a year and with prices are crashing back to reality this makes sense. But in Western New York housing prices never increased more than 2-3% a year during the great real estate boom. And data from the local Realtors showed that last year was the first time prices increased a lot - a whopping 5%!! I've been watching real estate sales this year and they are pretty brisk and there is no sign of price drops - quite the contrary.

But in order to prove this, I have to hire an appraiser and shell out $400. This I'm not going to do. So the banks are doing their best to hurt the local economy by over-reacting to their poor choices in other areas of the country earlier in this decade.

The average time to foreclosure is 445 days in NY. I sometimes think about punishing these banks by just collecting the rent for a couple years without paying the mortgage. Unfortunately, the fools that run these institutions never pay the price for their stupidity.

the latest bubble bursting and what's next?

2008-05-30T13:13:00.005-04:00

Oil ran up to $135 a barrel increasing in price nearly daily. This despite drastic drops in US driving over the past year. Oil may be ready to crash as prices have dropped by $10 a barrel in the past week. Whether this week or next year, prices will crash eventually.

This is the third time in the last 15 years that we have seen this scenario. It seems to me that there is a tremendous supply of dollars chasing the next big thing. In the 90's the stock market marched to new highs due to "irrational exuberance", companies like Enron and WorldComm created new accounting to rack up "profits". When the curtain was pulled back and everyone realized the people pulling the strings didn't have the fundamentals, the bottom fell out.

In the early part of this decade the same scenario played out in real estate. The Wall Street gurus found new hedge founds to sell sub-prime loans and run up housing prices to irrational levels. The greater fool theory kept people buying until some started defaulting. Suddenly the curtain was pulled back again and look at the mess the real estate market is in.

I have no doubt that something similar is afoot in the commodities market. Oil prices are in the irrational range based on my years of working in oil research. Will we find new "funny" structures that traders have created? Possibly. Then Congress will hold some hearings and the money men will move on to some other way to find a way to invest all these excess dollars.

What that will be, I have no idea, but I'd bet money that it will happen. The world is awash with dollars.

Update: An interesting article I found several days later predicting $50-$70 per barrel oil in our near future. Also comparisons with housing bubble.

Rent Vs Buy

2008-05-29T15:21:00.002-04:00

Many have debated the rent Vs buy dilema with regards to a home. Now the NY Times has offered a calculator that you can tailor to your local conditions.

Here's the numbers for my current house. Since I plan to stay here for at least 10 years, its looks like a no-brainer.

A Global Warming Report with Perspective

2008-05-23T20:05:00.004-04:00

Fred Singer is a well regarded professor and expert on climate. This paper when read without the religious bias of the earth worshippers can provide perspective on how phony the climate change claims of Pope Gore are.

A key point:

Fortunately, there is a method that can be used to check on whether the observed warming is anthropogenic. It relies on comparing the observed pattern of warming with the one calculated from GH models. Essentially we try to see if the “fingerprints” match. The fingerprint is the pattern of warming, that is, the rate of warming at different latitudes and altitudes. Greenhouse warming should give increasing rates as one goes from the surface up into the atmosphere -- peaking at about 10 kilometers, where the rate of increase is about a factor of two greater than the surface rate, and quite pronounced in all the models.
The observed pattern, however, does not show any increase at all; in fact, the data from balloon-borne radiosondes show a slight decrease over the equator. Evidently, the observed and calculated fingerprints don’t match, indicating that the human contribution to current warming is insignificant, too small to be discerned. The cause of warming must therefore be natural, either an internal oscillation of the atmosphere-ocean system, or an external effect, perhaps stemming from the Sun.

The recent revelation that sea buoys have not detected any warming but cooling also boast the magnitude of the hoax the environmentalists are forcing on us to drive up gas prices and destroy our standard of living.

Of course, why let data get in the way of your religious beliefs.

The Environmental Conspiracy to raise gas prices

2008-05-22T12:46:00.003-04:00

I'm a big skeptic when it comes to believing in conspiracy theories. I think that 99.9% of these theories are believed by mentally imbalanced people. However, there is one "conspiracy" that I'm a firm believer in that no one is talking about. That is the conspiracy of environmentalists and politicians to foil the free market for energy in order to reduce our standard of living.

It was instructive to listen to oil company executives try to elucidate causes of high energy prices at Congressional hearings yesterday. Now, I believe, that politicians smart enough to graduate from Law School should have a fundamental understanding of the Economic Law of Supply and Demand. So why are these politicians spewing their ignorance?

Lets review some facts:

we have lots of oil in this country - more than 75% off-limits due to Environmentalists
we have even more shale-oil deposits off limits due to ???
We have enough coal to last for centuries. In the 1970's I worked for a coal company developing technology to convert coal to oil. Why aren't we working on that?

But wait you say - what about global warming?? We can't burn all those carbon based fuels, can we? Besides the lack of evidence to support AGW (man made global warming), let's assume that it's true. Well obviously we should be going full speed ahead to the only green-house friendly energy source that is economically viable. Windmills?? No. Solar energy?? No.

Nuclear power!! But wait- we can't build new nuclear plants. Why? Well the environmentalists feel that the truckload of waste fuel that that has been accumulated over that last few decades will threaten their god planet.

So politicians paid off by environmental interests have reduced supply of energy in all manner (except for really expensive sources like solar and wind). So it's no surprise that prices are high.

It's time to stop blaming oil companies when you go to the gas pump and put the blame squarely where it belongs - the wacko greens.

The Non-Recession Recession

2008-05-05T14:21:00.004-04:00

I wrote a few weeks ago that despite the news media proclamation and the consensus of economists that we were in a recession (or a depression) was wrong because we did not have any data to support that notion. Now that first quarter GDP shows a positive growth of 0.6% (note:revised up to 0.9%!!!). Unemployment is a historically low 5% and manufacturing data shows an upturn in orders. It turns out consensus science was once again wrong.

And we won't go into a recession!!

How do I know that? I work for a big international company and like all international companies we have been expanding into growing markets like gang-busters for the past 10 years. And there is no slow down over seas. With the weak dollar, exports are booming as American goods are cheaper in non-US markets.

This is brings jobs and dollars back into the US, counteracting a lot of the outsourcing that has been going on.

The economy has been growing since 2001 and we have not reached a peak. Maybe when the Democrats fail to extend the current tax cuts we will see that come to pass.

No on Refinancing

2008-05-02T15:30:00.002-04:00

I've given up trying to refinance my rehab. No one is willing to take on a loan to me since my debt to income ratio is too high per current underwriting standards and "No Doc" loans are definitely out of favor - even with a FICO score of 750.

So now I'm stuck losing $600 a month on this property. If I didn't have $50K of equity in it, I'd just walk away from it (the loan is not in my name). I was hoping the ARM would adjust since interest rates have dropped so much, but so far the loan is still at 11%.

Will Environmentalists be biggest killers of all time?

2008-04-16T13:21:00.007-04:00

Rachel Carson was responsible for the deaths of millions of African children due to her hysterical, non-factual rant about DDT. Al Gore's global warming hysteria has created a large spike in food prices (as we switch to ethanol which does nothing for global warming) and nations riot over food prices causing many to fore go food. Fear of genetically modified food has prevented Africans from using drought and pest resistance seeds. The world has the technology to provide energy, food and good health for the people of Africa, but are being forbidden by zealot environmentalists. That will continue to kill large numbers of people.

A large group of environmentalists subscribe to the theory that the cause of all the worlds problems is people and the only way to solve the problems is to eliminate people. Looks like they are well on their way to killing off most of Africa. People in the West are unwitting accomplices to this through our environmental policies, support of abortion and Europe's move to euthanasia.

Update: Looks like someone just wrote the book on what I'm talking about

Update 2: From the Corner:

So how does that add up? Check out this piece in Foreign Affairs, from last year's May-June issue:In a study of global food security we conducted in 2003, we projected that given the rates of economic and population growth, the number of hungry people throughout the world would decline by 23 percent, to about 625 million, by 2025, so long as
agricultural productivity improved enough to keep the relative price of food constant.
But if, all other things being equal, the prices of staple foods increased because of demand for biofuels, as the [International Food Policy Research Institute] projections suggest they will, the number of food insecure people in the world would rise by over 16 million for every percentage increase in the real prices of staple foods. That means that 1.2 billion people could be chronically hungry by 2025 — 600 million more than previously predicted.

The world's poorest people already spend 50 to 80 percent of their total household income on food. For the many among them who are landless laborers or rural subsistence farmers, large increases in the prices of staple foods will mean malnutrition and hunger. Some of them will tumble over the edge of subsistence into outright starvation, and many more will die from a multitude of hunger-related diseases.
More genocide here Guess the one Green focus is population reduction.

1970's Again?

2008-04-12T12:50:00.005-04:00

In some ways the economic environment today is eerily similar to the 1970's. We have rising gas, food and precious metal prices. There were incessant fears about the coming climate crisis (a new Ice Age). The government was screwing things up with price controls then, now they are mandating CFL's, and ethanol and preventing oil drilling (there's talk about price controls for mortgage rates). We have claims (again) of peak oil and predictions of depression (much less a recession that hasn't even started).

So should you be afraid? That's what the media wants. That way you'll buy more of what they are selling. But the facts don't support the non-sense.

The stock market has barely dropped 10% from its peak which is usually called a market correction. Take a look at some statistics from 1996 when Clinton ran on the greatest economy ever:

*Key Labor Market Statistics in 1996 and 2008*
	March 1996	March 2008
1. U.S. Unemployment Rate	5.5%	5.1%
2. Number of Long-Term Unemployed	1.33 million	1.28 million
3. Average Weeks Unemployed	17.3 weeks	16.2 weeks
4. Median Weeks Unemployed	8.3 weeks	8.1 weeks
5. Not in Labor Force because discouraged over job prospects	451,000	401,000

Of course, if the Democratic candidates that are preaching anti free trade get elected and create another Smoot-Hartley Act, all bets are off. My employer (a large international chemical company) is booming with earnings rising faster then they have since the 60's. Most of that is due to the drop in the dollar and expanding oversees markets.

I expect that we will have slow positive growth this year. However, since this is an election year and the press is trying to discredit the incumbent party, we are going to hear recession, depression and everything else that's negative about the economy.

By years end the press will be moving on to something else to create fear. In the words of Emily Litella "Never mind...."

Update: More perspective Economic Hysteria

Underwriting Hell

2008-04-10T14:03:00.004-04:00

I've been trying to refinance my Cheektowaga rehab since November. My latest loan application has been in underwriting for a month. The loan to value ratio of this house is really low and during past years would have been approved in days. Though the Fed is pumping money into the economy and interest rates are low the underwriters are being much more cautious about lending to investors. I expect this is due to all the investors that bought houses on speculation and then defaulted. I don't have any data, but I suspect that a lot of current foreclosure "crisis" is related to people that though they could make easy money by purchasing houses and flipping them quickly - assuming that the prices were going to go up forever.

So this year I have not even been looking at properties. This is unfortunate since I think that the current market is good for buyers. But flipping is too risky in this market and the only money available to me is hard money which is too expensive for a buy and lease strategy.

1st Quarter Net Worth Update

2008-04-10T13:37:00.004-04:00

I've updated my net worth at NetworthIQ through the first quarter of this year. Overall my cash on hand is up and debts are down compared to the end of December. This is largely due to two large tax refunds (from the IRS and NY State) I used to pay down debt. I paid no taxes due to huge losses in real estate last year but had my withholding higher than normal since I was expecting to make $40K in profits from sale of two flips. My 401K is up $2K as well which I think is OK considering the market was down 9% in the first quarter. Must be due to the interest I am paying myself from the loans I took from my 401K :)

Oil Bubble - ready to burst?

2008-03-28T15:29:00.003-04:00

During the past 10 years we've experienced bubbles in the stock and housing markets. Whenever a bubble bursts money tends to flow into other markets. With prices over $107 per barrel recently it looks to me like oil is a bubble market. There is not technical reason for oil prices to be this high. People point to increased usages by China and India but I believe oil prices are primarily fear driven. Technology exists to get oil for much cheaper prices and I think that the oil price will drop soon. Maybe this discovery will be the catalyst to a sharp price drop.

If I had the money I would short oil futures right now

Installing a tankless water heater

2008-03-22T15:17:00.002-04:00

When I purchased my current home in December I noted that the hot water heater was 13 years old and probably at the end of its useful life, though it was still working. I knew that the Federal tax credit of $300 for installing a tankless water heater was going to expire at the end of the year and the local gas company was offering a $350 credit as well.

When I looked into it further I found out that the local gas company would only pay if a "professional" company installed the water heater and the cost estimates for installation were ~$2000.00. With a little research I found out that the "professional" installer only had to have a Federal Tax ID to qualify as "professional". Well, I own an LLC with a Fed tax ID.....so I thought that I'd have my company (wink) install the heater. After all, I considered myself a jack of all trades!

I bought the 0.7 gpm model at Lowes for $999 with a 12 month no interest coupon. The instructions seemed easy enough. Removed the old tank and put up the new tank next to the same wall. Then I took my measurements for exhaust piping. My old tank had a powered vent with a side exhaust through a 4" PVC pipe. The tankless water heater requires inlet air from the outside (like a high efficiency furnace), so I figured I'd use the old exhaust PVC as the new inlet. When I went to buy the exhaust duct work I got a big surprise. Tankless water heaters put out a lot of moist air and require stainless steel exhaust ducting.

So I came home and relocated the heater to the exterior wall where I could still use the PVC piping from my old hot water tank. I then went out and bought lots of 3/4" copper piping and 1/2" black iron gas piping since I was about 20 feet from the old tank location. The instructions mentioned using 3/4" gas line but I figured that I must have enough gas pressure since the old heater used 1/2" and my huge furnace used only 1/2".

It took me about 6 hours to do all the soldering, installing the gas line, cutting a 5" hole through the wall for the new exhaust duct and then connecting it. I didn't have any leaks when I turned the water and gas on. I plugged the unit into the wall socket and turned the water on and it worked! Or so it seemed at first.

With our old 40 gallon hot water tank we hadn't been able to really use our jacuzzi tub yet, so we decided to try out the new tankless water heater that night. We turned the water on, got in the tub and about 10 minutes later the water turned cold!! So much for a hot bath that night. Over the next several days I tried to figure out what was wrong. Most of the time the heater worked OK but sometimes it would not light or go out. Also, when I turned the water on at high volume the whole tank would vibrate violently. The troubleshooting guide gave 4 possible solutions, none of which could be checked without specialized tools.

I sent an email to the manufacturer and they thought my problem was inadequate gas pressure. I had noticed that the problem seemed to occur when the furnace was running, so I decided to replace the 1/2" gas line with 3/4" line. Another $100 later I have a tankless water heater that works flawlessly.

Overall, I spent ~$1400 on the installation. Unfortunately, I lost so much money on my real estate last year that I paid no Federal taxes, so I didn't qualify for the Federal tax credit. Today I did receive the $350 rebate from the local gas company, so my net was ~$1050.

Hopefully, this unit will pay for itself. With 3 baths and 4 teenagers who think nothing of 1 hour showers I hope for some savings, although they may be tempted to take even longer showers now since cold water was the only reason they used to stop.

The only complaint I have is that the heater will not turn on until it senses water flow for 4 seconds. If someone takes a shower and shuts the water off, then you get in you will have hot water at first (lots of water in the pipes) but then the water will turn ice cold (our inlet water is only 35 degrees). The hot water comes back eventually, but it seems like a long time when you are caught in a cold shower.

We're in a Recession!!! Not!

2008-03-11T14:46:00.006-05:00

Headlines across the country are screaming doom and gloom about the economy, claiming we are in a recession. This is impossible. A recession, by definition, is two consecutive quarters of negative growth. Since we have not even had one quarter of negative growth and probably won't, it's impossible for anyone to declare that we are in a recession.

Don't buy into the doom, and wait until the facts make the claims evident. Whether you are talking about economics or global warming the same logic applies

Update: It must be true - we have a consensus! Never mind gathering data.

Borrowing against your 401k part 2 - the question of double taxation

2008-03-08T14:08:00.004-05:00

One of the most popular posts I have written was Why not Borrow Against Your 401k? . The number 1 comment left as to why to not do this was that you would be double taxed. That is, you pay back the loan with after tax dollars and then pay taxes on the money when you withdraw it.

Let's do a little thought experiment here to see if this is a valid reason. Let's assume for convenience that I will be in the same tax bracket when I retire as I am now (this may not be the case - people are often in a lower bracket). For this example I will assume a 15% tax bracket. Assume my monthly payment is $170 so I need to make $200 to pay this back. But no matter who I make this payment to, it is with after tax dollars - so I don't see any difference here.

Now let's look at the money when I am old and start to withdraw it. I will indeed pay taxes on it. But as far as the IRS is concerned, it doesn't matter if the interest my account earned was from my loan repayments or from bond funds - I pay the same amount of taxes. So, I see this argument about double taxation as a false argument.

Now if you make the mistake of reducing your withholding (as I did when I was young) then borrowing against your 401k is a bad move.

I have never used my 401k for frivolous uses like vacations or new cars. Most all of the loans have been to purchase a primary residence. In this case the interest is tax deductible so I am not paying in after tax dollars. Using my 401k has allowed me to keep my LTV below 80% and avoided mortgage insurance. In addition, it doesn't affect my FICO score. For this purpose I believe that it has served me well.

Oh, Oh...Global Temps Dropping

2008-02-26T15:50:00.002-05:00

Al Gore will have to return his Nobel Prize. The last 12 months have seen the largest one year drop in temperatures ever recorded, wiping out a century of supposed global warming.

Oil Myths Debunked

2008-02-17T16:04:00.004-05:00

Here's an interesting report on why the price of oil is so high (OPEC) and when we will run out of oil (never). One interesting tidbit I didn't know was that the Saudis are using only 9 of their 80 know oil fields. So don't buy into Hillary's rants about ExxonMobile's obscene profits. She's just another Chavez statist puking up communist garbage.

Where to get rich?

2008-02-17T14:52:00.003-05:00

The laws of Supply and Demand really determine where you will get rich. The more people there are available to be your customers the more likely you can get rich. That is why a large proportion of rich people are located or do most of their business in the largest cities. The Internet has started to level the field in that it provides world wide access to large populations no matter where you live. However, for a person starting a business in a small town or buying real estate where the population is low this is no consolation. There are fewer customers in small towns or cities for your products or houses. Demand is low and potential for profit is low.

I watch a great deal of HGTV now and see lots of stories about how people make profits of $100k+ flipping houses (and selling them in days or weeks). Others just buy a house and in a few years reap over $100k in appreciation (and are often disgustingly disappointed because it wasn't $150k). This doesn't happen in Buffalo. There are few houses that sell for over $500k here and the demand for them is low. Most houses in this price range sit on the market for months or years. There is a house across the street that was for sale for $370k. It's a beautiful home of over 4000 sq ft in great shape. It was for sale for 2 years and now is off the market. I'm guessing the owner is going to let it go to the bank. So flipping a house here is a precarious venture. Long sales times and low profit margins can sink you. Plenty of supply and low demand.

One concept that is in demand here is a rent-to-own. Whenever I put up a RTO sign I get hundreds of calls. I can get higher than normal deposits and higher than normal rents and don't have to do maintenance on the properties.

One commenter on another post asked how I got into the same situation with real estate twice. The first time I had a dozen properties that were unrented and unrentable. I was literally paying people to occupy them so they would keep the heat on in the winter. Now I have all of my properties rented out (though I wanted to flip them) with a positive cash flow. Only one property has a negative cash flow and hopefully I will be able to rectify that soon. This is no where near my previous situation, just not what I had planned.

I don't think that I will get rich investing in real estate in Buffalo but it is possible since I have found a concept that has a high demand and few suppliers. This will be a slow process though since I have little cash to invest in more properties at the moment. I cannot use hard money lenders to buy properties since I cannot flip them quickly here and must wait on having conventional financing. Maybe an Internet business is the way to go from here but I haven't a clue what that would be.

A review of What's So Great About Christianity

2008-02-17T13:33:00.005-05:00

Dinesh D'Souza has written a book "What's So Great About Christianity" which I had the pleasure of reading during the past week. For me it was an appealing book because it comes at Christianity from a logic and reason standpoint (I'm an engineer that used logic and reason for many years to discredit Christianity). There were many points he made that I was aware of but D'Souza puts it all together in one piece that I find quite compelling. I was raised as a Catholic, became an avid atheist for many years but continued to study spirituality and was hooked into New Age beliefs for some time. I started reading M. Scott Peck's works (author of The Road Less Traveled) and by the 4th book I came to agree with Peck that Christianity was the only true religion.

Here are some highlights from D'Souza's book:

The conventional wisdom is that religion is declining. But the fact is that religious conversion is growing and Christianity is the fasting growing religion. Growth is mostly in the Southern hemisphere, but we see growth in mega-churches.
Darwinists and atheists(usually one and the same) predict the demise of religious beliefs, but as Darwin wrote “The vigorous, the healthy and the happy survive”. Atheism offers only a depressing world view (your life is meaningless, you are no different than any other animal species and death is the end – you came from nothing and are going nowhere), while Christianity offers hope and meaning to life (You are a special creation of a good and all powerful God. You are created in His image with capacity to think, feel and worship that sets you above all other life forms. You differ from animals in degree and in kind. Your Creator loves you so much and so intensely desires your companionship and affection that He has a perfect plan for your life. In addition, God gave the life of his only son that you might spend eternity with Him.) Secular people are not reproducing in adequate numbers to survive, while those with religious beliefs are.
The basis of Western Civilization is Christian ideals. The separation of Church and State is a religious idea that was first spoken by Christ (“Render unto Caesar that which is Caesars and to God that which is God's”) and further developed by Augustine in the “The City of God”. The basis of limited government, equal rights, religious tolerance found in the US Constitution were all Christian ideas.
The Christian concept of human fallibility led to the elevation of the nuclear family, limited government, the rule of law and our cultural emphasis on the relief of suffering. The priority of romantic love in marriage developed out of Christianity. Capitalism and the basic rules of economics rose out of Christianity. No where is compassion for those suffering so emphasized as in the Christian religion.
“All men are created equal” was a Christian idea. Though “democratic”, Greek and Roman cultures did not value the sanctity of life as Christianity does. Christianity elevated the place of women, was the first group to eliminate slavery, developed “just war” principles (you should not kill innocent civilians) and our concepts of individual freedom (derived from “free will”)
Science was able to arise in civilization only because of Christianity's focus on reason as a basis of understanding God's creation. The highest discipline in Judaism and Islam is jurisprudence, while in Christianity it is theology. Theology is employed to understand the ways of God. Augustine first posited that God created time along with the universe (something only recently confirmed by scientists). Augustine argued that every series (e.g. the universe) must have a cause and that cause must stand outside of the series. Thus the universe had a creator, God, that stands outside of time and space. Psalm 13:1”The fool has said in his heart that there is no God”. Anselm's argument that God is “that than which no greater can be thought” offers an inductive proof of the existence of God. Neither Augustine nor Anselm appeal to supernatural revelation to prove God's existence.
The greatest idea of modern science is faith that the universe is rational. All scientific discoveries have been developed from this faith. This is an idea Christians developed by envisioning the universe as following laws that embody the rationality of God the creator. The laws that govern the universe are written in the language of mathematics – a miraculous mystery. Institutions of higher learning developed out of Christianity (Oxford, Yale, Harvard & Dartmouth were all Christian universities). The first professional scientists can be traced to the Middle Ages and were Christians.
Modern science points to a Creator rather than a purely naturalistic explanation. The “Big Bang” theory is a stunning confirmation of the Genesis story of creation. “In the beginning was the word...”. Neither time nor space existed before the singularity of the universes' beginning. The universe was created in a burst of light. God separated night from day later, i.e. the sun and planets were created at a later point. The creation of the universe was truly a miracle. The universe had a beginning and that beginning had a cause which we call God. The Creator used no laws to create the universe since the laws of physics were created with the universe, so the creator must be supernatural. There was no matter before the universe, so the creator must be non-physical(i.e. Spiritual). Since space and time are inside the universe the creator must be outside of space and time (i.e. Eternal). Since the universe was created out of nothing the creator must be omnipotent.
Scientists claim that we are insignificant creatures in a vast universe and are nothing special. The Anthropic Principal proves that universe and all its laws are a conspiracy to produce human beings. Had any given law of physics differed by minutia amounts we would not exist (e.g. The gravitational constant or mass of the proton). It is not luck that we are here (the probability of all the laws of nature all lining up is astronomically small). The “multiple universe” theory explanation for the anthropic principal has no evidence. Using Occam's Razor you can deduce that we live in a Designer universe, that is a universe designed specifically for us.
Paley's argued that by looking at a watch you would conclude that there was a watchmaker and thus we can look at the Universe and conclude that there is a Creator. Darwin's theory of natural selection does not disprove the need for a watchmaker. Evolution by natural selection explains a significant portion of how creatures are they way they are, but does not explain the beginning of life. How did the simple living cell come into being? There is no explanation for the complex formation of DNA and RNA in such cells. In addition, evolution cannot explain consciousness, rationality nor morality. Evolution offers no explanation for the creation of the universe nor its laws.
Scientists believe that reason and evidence are the only way to understand the universe but Kant points out that our knowledge is limited by our 5 senses. Kant asks “how do we know that the reality that we see is reality itself?” Science provides only an illusion of reality – this is congruent with all the worlds religions. We don't know what we don't know.
Scientific laws are not verifiable. No finite number of observations can be used to determine that the laws are true everywhere in the universe. Science properly understood cannot verify theories, it can merely falsify them. This leaves open the possibility of miracles.
Life is full of gambles (who you marry, what field to study and job to take, where to invest...). So how should you gamble in regards to whether God exists or not? Pascal's Wager says that it is better to bet that there is a God than to wager that there is none. Reasonable people have faith because it is the smart bet. Doubt is the proper habit of mind for the religious believer. If we have faith in a God that does not exist what have we lost? If we reject God and are faced with an eternity without him (hell) than we have lost everything. If God were to reveal himself, He would force us to accept Him, defeating the free will He has given us to believe or not.
Atheists condemn religion claiming that religion is responsible for most of the deaths the world has seen. But the facts are otherwise. Atheism has been responsible for over 100 million deaths in one century (Hitler, Mao, Stalin, Pol Pot), Christianity was responsible for 200,000 deaths over 20 centuries. Why? Atheists have no moral constraints, an ideology that sees man not god as the creator of values. “If God is not, everything is permitted”.
Moral laws are both universal and objective. There are no known cultures that do not have some system of morality. Jews, Christian, Muslims, Hindus and Buddhists agree on a wide range of moral values. Morality is not relative since even relativists have a code of values that they espouse. Moral laws presume a moral lawgiver. Conscience is the voice of God within our souls.
Are we just made of matter or is part of us spiritual? If we do not have a soul then we live in a deterministic universe and free will is an illusion. A materialistic view of the world makes us slaves to our genes controlling all of our actions and decisions, yet we can demonstrate that this is not so. Our inclination to live within a moral code is one such evidence. The “I” that we experience is outside of our material bodies and transcends time. We are free to chose not to follow our genetic programming.
Marx said that “religion is the opium of the masses” but the opposite is true. Religion requires sacrifice, and promises damnation for failure to follow a moral code. How can this be an opiate? Atheism allows us to practice a hedonistic life without consequences and avoid accountability for our actions. Atheists use sensual pleasures to numb themselves to the nothingness of their purpose and existence and ultimate end. Atheism is the opiate of the morally corrupt.
If God is good why do people suffer? No one can explain the existence of suffering or evil. However, religion offers hope to the despairing. Atheism offers nothing.
All religions are not the same. Christianity holds that man, no matter how hard he tries cannot reach God, so God became man. Christians view that mans nature is the propensity to sin. We cannot redeem ourselves (Hinduism and Buddhism believe that we can through meditation, Islam and Judaism through following God's Law). Christians believe salvation is a gift from God that can be claimed by asking for it.
Christ is the most influential figure in history. His words are unmatched in eloquence and are easily identified. We know he existed. There is historical evidence of his resurrection. His claims were remarkable. He did not claim to be a prophet but God Himself (“I and the Father are One”). Using Gods words for himself, “I Am”, he claimed to exist before Abraham. He forgave sins and the divine authority to interpret Scriptures.
Christianity makes sense of who we are in the world. It integrates reason and faith. Christianity infuses us with a sense of purpose. Christianity offers a solution to the cosmic loneliness that we all suffer. It helps us cope with suffering and death. For Christians there is the life to come. Finally, Christianity helps us to become better persons that we want to be.

Hunkering Down

2008-02-13T10:39:00.004-05:00

The past few months have not been too active for me in the real estate business. I spent November and December fighting pneumonia and this past week had surgery related to complications I am suffering from ulcerative colitis that I've had for the past year. Unable to sell any of my "flips", I now have everything rented. I was hoping to have a positive cash flow but due to the mortgage crisis have not been able to refinance the big rehab I did. I still am paying over $2200 per month on it and taking in only $1750 (which is a damn good rent in this area). Interest rates are low but banks are wary about doing investment property loans at the moment and looking for full documented loans. Unfortunately, I can't show a profit on my rentals. I have been working on my 2007 taxes the past few weeks and am in shock as to the extent of my loses last year. Despite my high salary I won't be paying any income taxes. In fact, I expect to get back all of the withheld taxes plus $3000 in child tax credits when I file. Certainly this was the worse year of my financial life.

So I am hunkered down trying to ride out this financial disaster. Not spending anything on real estate that is absolutely necessary. I've taken down my web site and stopped doing direct mail. Everything is at a standstill. Hopefully, the tenants will pay their rents on time and my cash flow will allow me to sustain my lifestyle until one of the lease-purchases excercises their option.

The Best Mix of Investments from two top performers

2008-01-24T13:07:00.000-05:00

I wrote a post talking about having a balance of investments in both stocks and real estate. It turns out that the "big boys" use this exact strategy and get some of the best returns. Look at how Harvard and Yale invest their endowments. It turns out that they invest approximately 30% of this money in real assets like real estate. And what is their return? Over 10 years it is 15% and 17% annualized returns for the two schools.

Even though I was upset that I could not sell my real estate last year, property values here have not declined at all and in fact have risen over the past year. So while my 401k has taken a beating this year, my real estate equity has been stable.

A Landlord Once Again

2008-01-24T09:10:00.000-05:00

At the start of last year I had set some goals to buy and flip some houses. I ended up buying 3 houses last year Vs a goal of 4. I had set a goal to sell 3 houses but was unable to even get any offers on the houses I own. I tried FSBO, professional Realtors, and auctions but got no where. So to save myself from bankruptcy, I have rented all of my properties. Right now I have 4 rental properties in my real estate portfolio.

I wrote about my previous experience as a landlord in WV here. It was a miserable experience. Tenants didn't pay their rent, the apartments were usually vacant and difficult to rent, I was awakened in the middle of the night to fight bats or crawl under houses to thaw out frozen water lines and I lost lots of money.

I bought a house 2 years ago and used a lease-purchase method to rent it out. It worked out pretty well. The tenants spent money to upgrade the property, never called me and I didn't have to spend a penny on repairs. They decided not to buy the property after the year and so I got to keep their option money and have re-lease-optioned the property quickly. I should have learned from that lesson, but I had the flipping thing in my head and so spent the greater part of last year losing money trying to sell 2 properties.

In the end I ended up renting out all of my properties using the rent-to-own signs I put on the front lawns. The signs got the tenants, not any other advertising. I got lots of calls and rented each property quickly and higher than market rates with a non-refundable option payment. So far it is working out well. One trash property that I bought is being rehabbed by the tenant. He's put $3K into it so far - re-plumbed the whole house, re-wired it and put in a new bath. I couldn't give this house away when I was trying to sell it and now it's in much better shape and worth a lot more, so if the tenant defaults I'll have house worth much more.

The cash flow on all but one of the properties is positive. I had tried to refinance that property but so far have not had much luck. However, it has an adjustable ARM and maybe with the interest rate cut the ARM will drop from it's current 9.7% interest rate. The only real negative to my current situation is that I have no cash on hand for emergencies or to buy more properties. If the economy tanks and one of my tenants loses a job, it could put a hurt on my finances. Hopefully, someone will exercise their option in the coming year. But for now I remain a landlord not by choice.

CountryWide mess hits home

2008-01-21T19:07:00.000-05:00

I had decided in November to take my flip off the market and try a lease-purchase. Part of the strategy was to re-finance the loan on the property. (I had been paying the previous owners loan payments on an ARM loan and the interest rate had jumped up to 9.7%). When I applied for the mortgage in November the broker thought it was a slam dunk. But CountryWide dragged their feet on the loan for 2 months, constantly asking for this and that document. It was a death of a thousand cuts as they decided Friday that they didn't want to lend the money.

So now I am in a funk. This is a $500 a month penalty over what I thought I would be paying on the re-fi. I had the cash flow on all my properties worked out to squeak by and now it doesn't look promising. There's no place else to look for income at the moment and the only light I see in this tunnel is a train coming at me.

I'm a Millionaire!

2008-01-09T21:41:00.000-05:00

Hah! Not really. If you click on my NetworthIQ you'll see that I have assets of over $1.2M now. On the downside, I have liabilities of nearly a million dollars. My net worth has moved slightly downward over the last 2 quarters as my stock portfolio has taken a hit over the second half of the year. My real estate ventures did not pan out as I had hoped either. On the plus side, real estate values in this area are not taking the big hit that they are in other parts of the country, so this is counterbalancing my stock market losses.

I've been trying to re-finance the property that I rehabbed last year (it has an ARM that's at 9.7% right now). However, the bank (CountryWide has been really dragging their feet on this loan. I'm hoping to get that done soon so I can pay off some of the increased debts I've accumulated in the last 6 months.

I'd say my big mistake this year was not trying to lease-purchase out my rehab. I thought that I could flip it and make a profit, but flipping is for people in markets that are growing. Buffalo is not such a market and that exit strategy doesn't work here.

I still haven't come up with a plan for 2008. I'm recovering from pneumonia which I have had for the past 2 months and have not had the energy to do much. Moving in December took the last ounce of energy I had and put me over the edge.

We're all Capitalists when we are making a profit

2007-12-26T15:32:00.000-05:00

During the 90's when the stock market was booming and people were making a killing on tech stocks no one was calling for government regulations to tame the market or for higher taxes on their profits. Same thing happened in the early part of this decade. Where was the outcry for investigations when people were buying houses and flipping them overnight for huge profits?

Now we want to put all the bankers in jail and regulate the heck out of the mortgage industry and Hillary wants to nationalize the oil industry.

When we make a profit it's our great skill that at play, but when we lose money it's someone else's fault and when a company makes a profit its through stealing. Someones not thinking right here - wonder who?

The great mortgage bailout

2007-12-09T21:17:00.000-05:00

Our politicians seem hellbent on making the country one great nanny state. The Presidents proposal to bail people out is just the latest example. Here in NY they want to keep us from smoking, eating trans-fats and taking any responsibility for our lives. Fools and speculators have driven up the prices of homes in major markets and now someone has to pay the piper. It's always the politicians solution to make all of the prudent people pay for the crooks, fools and speculators irrational behaviour. People have been speculating since the great tulip bubble in Holland hundreds of years ago and someone gets burnt. Hell, I bought into the stock market in late 1999 and lost a lot of money. I didn't sue anyone or call my Congressman to get my money back. Instead, I kicked myself for my stupidity and learned a lesson. If people lose their houses because they took out liar loans, why should I pay (and I will, as will you)?

I wish politicians would let the free market take care of itself.

Moving week

2007-12-09T19:20:00.000-05:00

Well, this week we will be moving to a new house and am putting up our existing house as a "Rent to own" purchase. I'm not sure if the Christmas season will slow shoppers, but I've had three calls since I put out the sign Saturday. With this rent to own concept it seems that all I need is a sign. The $1000+ that I have spent advertising in papers has not yielded a single buyer and amounts to about 1% of the inquiries about the properties I have used this concept on (4 in total now).

The tenant at my trash property has been tearing the place up and seems to be pretty competent at fixing up properties. But he has uncovered some defects that neither of us saw. It seems that the roof has had a leak on one side for some time. When he tore the bath room wall off the interior of the outside wall was soaking wet. He tracked it down to a roof leak, found huge ant nests in the walls and lots of rotten wood. The property is probably worth even less now in its current state and now that we know the condition of the roof (it was very hard to access since the adjoining house is only 5 feet away).

I've fallen off blogging over the last few months for a couple of reasons. My work load at my job has been incredible the last few months due to being assigned to 2 high value Six Sigma projects. I've also been in a funk due to the inability to sell my rehab. But fortunately, thanks to the prodding of one of my readers, I have that house rented out now and feel considerably better. After moving and putting my current home in shape to lease-purchase I expect to get back on track.

Goals - review and look forward

2007-12-02T19:46:00.000-05:00

I've been thinking about how well I did Vs my goals for 2007 in my real estate venture. I've been told that if you write down your goals and review them daily you have a high chance of making them. But that doesn't seem to be the case in our situation.

I did buy 3 houses this year, but since I didn't sell any properties this year, I look at my entire plan as flawed. Flipping houses in this area takes much more expertise than I have at the moment. Watching all the flip shows on TV where clueless people do everything wrong and still make $100K just discouraged me most of the second half of the year.

But I did meet some of my sub-goals:

I did find over $720K of funding although I did not seal the deal on the major source ($500K), so I ended up having about $220K of funding available but did not use any of it. The major source was going to cost me $6500 to finalize the deal (I did get approved) and I borrowed that money from Prosper but by the time it came around to paying out the money and signing the papers, I started to realize I was not going to sell my rehab and was stuck with a $2300k per month payment to make, so I bailed.

We did do direct mail all year to pre-foreclosures but again, do to the failure to sell any properties we scaled back our advertising to just those properties in growing towns. This amounted to less then 20 letters per week which isn't enough to really do any good.

The third goal we just didn't do after our first 2 purchases in February. When we couldn't sell the wholesale property quickly and realized I would need much more cash for the rehab I only worked with pre-foreclosures and only made a limited number of offers to banks for short sales.

I did get an operations manual in place which has been a really good way for my wife and I to communicate about what to do.

I see that most of the sub-goals were geared towards buying property and not towards selling. There were several strategies we tried for selling properties: FSBO, flat-fee listing, full service Realtors, E-bay auctions, The "Sell Your House in 5 Days" strategy and Rent-to-own. The last was the the only success that I had, which doesn't get me any of the equity out of my houses.

So now I am in the position of many real estate investors - lots of equity but little cash.

I had hoped to double the number of houses bought and sold next year when I first devised my 2007 goals, but now think that I will scale back. My experiences buying in areas where population is declining echoes my 1980's real estate experiences in WV.

In the next month I hope to come up with a plan for 2008, but for the next couple of weeks will focus on moving and fixing my current residence so I can market it as a Rent to own house.

A Solution to Real Estate Situation

2007-11-28T21:55:00.000-05:00

One of my readers left comments suggesting that I rent out my properties to stop my financial bleeding, so for the past 3 weeks I have been feverishly trying to do that. I have received large deposits on both vacant properties that I have been trying to sell most of the year. In addition, I am refinancing my rehab from 9.7% to a 6.5% interest rate loan.

The "rent to own" strategy that I have used before is what got me a solution that works. Typically rents for homes in this area average about $1000 per month and many of the callers to my sign could or would only pay that. But I found 3 people who competed for the property and am getting $1750 per month. The couple that is renting the property with an option to buy are paying one months security deposit as well as a $1500 option payment to purchase the property in the next 12 months for a price of $199,000. At that price I will break even on this property (mostly due to the extensive carrying costs that I have incurred). So, I feel fortunate that for the next 12 months I should be cash flow neutral on this property and I shouldn't get burned when I sell. If they don't buy I will probably do the same thing again and should have a positive cash flow.

The "fixer-upper" that I have been trying to sell since February and couldn't give away at an auction has also been "sold". I've given the buyer a 3 year lease for $450 per month with a $375 per month rent credit (He paid a $1500 option price). So after 3 years he will have accumulated credits of $15,000 at which time I will Deed the house over to him. Although I'd rather have the cash this is equivalent to loaning out the $13,500 loan balance at 11% interest rate, so it is a pretty good investment.

My big education this year has been that "flipping" is for the people in growing metro areas - not any places where I have lived. But in areas with poor economic climates rent to own is a high demand product for houses.

WOW! House rented already!

2007-10-29T13:48:00.000-05:00

Just hours after posting my house on Craigslist I got a tenant - from England no less! She's coming to the US to study for her Masters and will be sending me a check for more than the first months rent and deposit. I just need to send her some personal information and once I deposit the check wire her back the balance.

Too bad the education system is so bad in England. Poor Kelly can't write proper grammatical sentences or spell very well for someone with a college education. Maybe she's majoring in Scam 101. I'm sure she'll make a great tenant though!

How to Sell Your Home in 5 Days?? No Sale Again!

2007-10-29T11:47:00.000-05:00

I've decided that the author of "How to Sell Your Home in 5 Days" is either a fraud or just sold his properties during the booming real estate market days. I've now tried to sell 2 homes using his methods and had either no bidders or bidders trying to steal the house. I've spent $1000 in advertising in papers and direct marketing to prospects who are most suited to purchase the property, so I don't think that I have missed anything the author suggested.

A commenter (LRK) has offered the suggestion that I try to rent out the properties and that is what I am going to try to do at this point. With winter approaching (very slow sales season) and heating bills threatening to take more of my money, that seems the only reasonable recourse. My big concern is how low a rent will I be forced to take on my Cheektowaga property. My monthly net is -$2300 and no properties here rent for that amount. I've got the properties listed on Craigslist and with various relocation/ temporary housing websites. Advertising in the Buffalo News is like throwing cash down the toilet, so signs are the only other means I can think of doing at the moment.

Location and Price in Real Estate

2007-10-23T22:08:00.000-04:00

I have been watching real estate flip shows over the last few months while sitting in limbo waiting for my properties to sell. "Flip this House", "Flip That House" and "Property Ladder" have been standard fare on Saturday night. "Property Ladder" is the most amusing as it usually highlights clueless people who, given the advice of a professional, learn some hard lessons. Despite their mistakes and ignoring the expert advice many make lots of money. Which highlights the most important lesson in real estate - location can overcome ineptness, ignorance and stupidity much of the time. None of the shows I watch feature homes in Buffalo. The houses are always located in a thriving metropolises of CA, TX, SC or CT.

Which brings me face to face with why my rehab is not selling. This is a beautiful home that has everyone who enters it exclaiming how wonderful it is. It's located in a great neighborhood of well kept homes. I've not heard a negative comment yet about the house itself. But there are two comments people make - "too expensive!" or "taxes are too high!" We started out at at a price of $219k and are now down to $199k but one comment we still get is "taxes are too high" (taxes are $7800). Now this is a house that has 2800 sq ft of living space and at $199k is selling at only $71 per sq ft. It's assessed value is only $165k , so I guess people are thinking it will be reassessed once it is sold and taxes will go higher. Houses of similar size located in the neighborhood are all assessed the same so the possibility of getting the assessment lowered is slim to none.

Five hundred yards to the north houses are selling for over $100 per sq ft. The difference is that you cross from Cheektowaga to Amherst. Both cities border Buffalo but Amherst is known for its good schools, while Cheektowaga has schools which are not so good and rife with racial problems. Cheektowaga is where inner city blacks are moving and Amherst remains largely white.

When I had researched the house for comparables, the only house that had sold in the last 2 years of similar size and style in Cheektowaga was the one I bought (for $182k). There had been multiple sales in Amherst within 0.5 miles in the $250k-$350k range of similar homes. To the eye, the neighborhoods looked identical, but crossing the townline makes all the difference in the world.

I recently found a top notch Realtor and he told me that only 5 homes have sold for a price of over $200K in Cheektowaga last year. He blamed the taxes, but Amherst has similar taxes. So is it schools, racial composition or some other factor making Cheektowaga a bad location? One thing I have noticed is that 98% of the people viewing this home are black. It's a desirable location for blacks who want to leave Buffalo. Whites who wander into my open houses will just turn around and walk out when I tell them the house is in Cheektowaga.

But the kicker is that I have learned that there are only 785 black households in all of metropolitan Buffalo who would qualify for the loan and pay the taxes on this property. That is a very small pool of buyers. In a sense, the Realtor is right that taxes are limiting the prices of houses in Cheektowaga. But the ultimate reality is that this is a town where whites are moving out and blacks seeking to flee Buffalo are moving in. Buffalo is a poor city and the good paying union jobs are disappearing.

So what were my mistakes in buying and selling this property?

I did not recognize how much influence a town line made in price. Even though no one would recognize the difference between Amherst and Cheetowaga driving the neighborhood, there is a substantial difference in a buyers mind.
I did not realize that there was a strong racial component to this neighborhood. Over 98% of the 200 people that have visited the open houses have been black. It is possible that a white family will buy this but not likely at all. This also reduces the possibility that a relocating black family will buy this house.
I did not realize how limited the pool of successful blacks are in the entire Buffalo metro area. If my assessment is correct that only a black family will buy this house, that means less than 0.079% of the people in this area can afford it. To sell I will have to reduce price drastically to increase the pool of buyers or wait longer.
I did miss on improvements that were needed and spent ~$15k more than I had estimated. Had I used a contractor like the people in all those flip shows used I would have spent about $20k more than I did spend and would really be in the hole, so I feel only partially bad about this.

In the end though, I think it is all about location. Location influences the pool of buyers. There aren't many buyers in Buffalo able to spent the outrageous prices for home as seen on the flip shows near big cities. In my case, the demographics are working against me.

How to Sell Your Home in 5 Days?? No Sale!

2007-10-22T09:43:00.000-04:00

I mentioned that I was going to try the technique advocated by the book "How to Sell Your Home in 5 Days" last weekend. I spent several hundred dollars advertising the property, bargain priced it below my acquisition costs at $9,900 and handed out flyers at the local REI club meeting.

The results? Four people showed up, no one was willing to put in any type of bid. So much for a "sure fire" way of selling a house.

I've advertised my expensive rehab for next weekend using the same technique. I've direct mailed postcards to every person in Buffalo that could qualify for loan for this house as well. I hope I get some offers on that house since I'm bleeding $2300 per month on it. My biggest fear now is that no real estate is going to sell until the spring.

Will there be bidders?

2007-10-19T12:27:00.000-04:00

I've scheduled 2 open auctions this weekend and next to sell our 2 properties based on the book "How to Sell Your House in 5 Days". Per the book, I should have received 40 phone calls about the property for auction this weekend. So far I have one call. I've not yet gotten any response from news paper advertising in this city. I have the properties advertised in both the major paper and weekly community paper and the price for the fixer is set at only $9,900.

I attended the local real estate club meeting on Wednesday and passed out about 30 flyers. Typically there are over 100 members at these meetings but this week the topics did not have any draw, so attendance was lower than my expectations.

So, I'm not sure if I am going to get any bidders this weekend. On the other hand, signs seem to be the best draw, so I will put out lots of signs tomorrow.

New House

2007-10-18T11:09:00.000-04:00

It's looks like I will be buying a new house in the next 60 days. I had a seller accept an offer of $269,000 on a 3200 sq ft contemporary home in my town. The seller had paid $290k for the house and had upgraded the kitchen and put on a new roof. The house is assessed for $339k.

After 9 months on the market and moving to Arizona they became one of the desperate sellers that you read about. The seller had dropped the price from $350k to $290k and had 3 interested parties. We all put in offers, surprisingly, the offers were all around $265k. We had included $5k in seller concessions and our offer was rejected initially. But we upped our offer to $270k without concessions and no one else was willing to raise their offer, so we got the house.

The plan is to rent out our existing house. Maybe a "rent-to-own" offer might work. There are few properties for rent in our town as it is quite desirable to live in. I think that we can still extract more value from our existing home by doing some upgrades. The new house also has potential for upgrades to add value.

At any rate, my wife (who has been unhappy with our current home since we married) is overjoyed with the new house.

Another last desperate attempt to sell property

2007-10-08T10:39:00.000-04:00

While I was putting out signs for an open house at my Cheektowaga property the neighbor walked over and handed me a book titled How to Sell Your Home in 5 Days. After reading through it I decided to give it a try on the Buffalo property that I bought in February. I haven't had so much as a looker for months now, I tried to auction it off on eBay with no bidders, so what the heck.

The steps given by the book:

place an add a week before the sale date in local papers (I put ads in Craigslist as well as weekly and daily papers)
price it lower than you might want to sell it for
hold open houses so potential buyers can inspect the property on Saturday and Sunday
Have a bid sheet at the open houses so that the buyers can place a bid on the property and everyone can see the bids
call bidders on Sunday evening and do a "round-robbin" bidding, calling each successive bidder and see if they want to raise their bid
sell house to highest bidder

So, I am going to try to sell this house on the 21st of October.

I had an open house for the Cheektowaga home this weekend. I had 15 people look at it (that's 13 more than the Realtors showed in 2 months while they had it listed!). Every one loves the house- no one wants to pay @$%# Cheektowaga's taxes.

Third Quarter Net Worth update

2007-10-03T20:42:00.000-04:00

I've updated my third quarter net worth at NetworthIQ with the graphic located on the side of my blog. My networth is down slightly from the second quarter mostly due to increased debt and decreased cash. I had never really included the profit from the potential sale of my property so that I have not shown a decrease in real estate equity. But monthly mortgage payments from the property I am trying to flip is draining all of my cash and forcing me into debt.

The first quarter of this year was a heady time as I bought 2 houses through what I thought were great short sale deals. However, the real estate market has not been kind and I have been unable to sell either house or purchase new properties. One property that I own that I have "sold" twice through lease-purchase options continues to cash flow very nicely, but this has not been a good time to flip.

Back to flat fee listing

2007-09-28T15:26:00.000-04:00

Well, I've gone back to flat fee listing services on both my houses for sale after wasting 2 months with a full service Realtor. The first Realtor was totally unprofessional while the second just wasn't interested in selling the property. At least that is the impression he gave me.

For my wholesale house I am using a new service called IggysHouse which has no charge at all (most flat fee listing services charge $300-$700 for their service). The flat fee listing service that I had for my more expensive rehab is going to give me the balance of my listing time at no charge, but I expect there will be a renewal fee.

I'm also considering a rent to own option for the rehab house. The main problem is that it will give me a big negative cash flow and leave me with a house still unsold next fall if they renters don't buy. I feel I am in lose-lose situation with this house at this point. There are no good options.

refinance and rent - drops payment $300 per month but lose another $4k upfront and still lose money if I rent it
drop price under $200k per Realtor recommendation- lose money (already spent over $201k and rising $2300 per month). Unknown how long it will take to sell at this price.
rent to own - lose probably $800 per month for next year and hope buyer gets financing. Only 30-50% chance of that, so I most likely will have the house vacant again next fall

I had convinced my wife to invest in real estate this year so that she did not have to get a job. I was sure we could make $20k. Looks like I will lose at least $20k this year with no end in sight.

Realtors aren't so great

2007-09-25T14:21:00.000-04:00

I've kicked myself for not putting my houses with a professional Realtor, but now realize a Realtor is not a panacea.

I've had my rehab house with a Realtor for 50 days now and here are the results:

2 showings
no flyer box despite repeated requests
one open house last Sunday without my agent - no advertisements were made at all for the open house, no signs were put up in advance, no mention in the MLS and it was only open 1 hour. Not surprisingly only 4 people showed up
no magazine advertisements.

I chose the top agency in this area and asked for a top agent. I got garbage. Last night I fired the agent and demanded the #1 seller or else I was going to change agencies.

I was getting 10-15 showings a week when I was doing FSBO using just street signs. I read all this great hype about what agents can do but don't see it.

Maybe I should kick myself instead for using an agent

Rent to Own (Lease-Purchase) Real Estate

2007-09-19T07:59:00.000-04:00

I've been struggling lately to sell 2 of the properties that I purchased this year. One a fixer-upper wholesale flip hasn't had a bite for 6 months, the other is a nice rehab that I am trying to sell at the upper end of it's neighborhood price range. The first property is in Buffalo, the second within a mile of Buffalo.

The first house that I purchased for investment in this area was a 1.5 story brick cape in the town of Lancaster. Lancaster is the fastest growing suburb of Buffalo. We purchased the house for $80k. The basement was full of water and it had sat on the market for nearly a year. We spent about $19k rehabbing it with about $8k going to drain tile. Since our cash flow was very tight I couldn't let it sit on the market for long, I decided to try to sell it as a lease-purchase.

I had learned about lease purchase primarily from a course I purchased through Ken Preuss. For this property I put up one sign in front that said "Rent to Own". This sign generated over 500 calls last year and we quickly leased the property to a family. Rental rates are quite low here and a typical home rents for ~$900 per month. We were able to get $1050 and a $2500 non-refundable option payment. The lease agreement specified that the tenants pay the first $200 of repairs, so my maintenance for last year was $0 and the property generated a positive cash flow of $300 per month.

The tenants took care of the property and actually made improvements (installed a new bath room floor and a nice ceiling fan in the kitchen) at their own cost. In the end they decided to buy another house and have moved out leaving me with their option money. We put our "Rent to Own" sign out again 2 weeks ago and were again flooded with calls. This year we have a $3000 option payment and raised the rent to $1075. The option amount is for a sales price of $139k and we give the tenants $500 rent credit towards a down payment if they pay by the first. We quickly found another tenant.

For a rental property this method really seems to work well. The advantages:

the rent we get is about 20% above current market rates
the rent credits really motivate the tenants to pay on time (I used to have to chase tenants down in my previous days as a land lord)
the upfront money we get seems to motivate the tenants to take care of the property
we don't have to worry about the nitpicking small maintenance items that used to get me out of bed at 2 am
the selling price is higher than what I think I would get by putting the property on the market

The one disadvantage has been that I cannot get my equity out of the property, although I was able to recover all of my down payment and rehab costs by getting a HELOC type loan on the property.

The concept does have it's limitations. For starters,we are at the upper end of the rental market here and I don't think I could do this for my Cheektowaga home. I would need to rent that one for $2000 per month just to break even and I have never seen any houses advertised for that rate here (although there must be some available through re-lo offices of local Realtors). Preuss also talks about getting $5k to $10k as option money, but that is too high for our area. $3000 seems about right. The rent and option money really drops the number of qualified people significantly (95% self-eliminate when they find out the terms) at the price range I am charging.

The courses I have taken talk about focusing on "bread and butter" homes. It seems that this house is such a house for our area. The other 2 are either too highly priced for their location or the location is so bad no one wants them. Modifying my house buying criteria might help me turn a very negative year around next year.

Selling My Fixer Upper - Real estate turns sour

2007-09-13T15:42:00.000-04:00

I purchased a fixer upper using a short sale in February thinking I could make several thousand dollars. I initially priced the house at $25k FSBO and was probably too greedy. I had an interested buyer the first month but would not reduce my price sufficiently for him to bite.

After a couple of months I put the property on the MLS using a flat fee listing service. I got one bite from a NYC investor and thought we had an agreement to sell at $17k. But she backed out.

Last week I tried listing the house on EBay with a starting bid of $12,700. But I had no bids. Tomorrow I will list with a full service Realtor. The main problem is that local Realtors charge a minimum of $3000 commission. I bought the house for $5k but with closing cost, attorney fees, back taxes and ongoing tax and clean out I have $11k into this property. My dream of making several thousand dollars profit has been eliminated and I am just hoping to break even now.

Unfortunately, this past weekend a drive-by shooting occurred one block away with 2 people dying and several more injured, so I am not too optimistic about selling.

I got into real estate last year so that my wife could stay home, but with neither of the houses selling after 7 months, she has been forced to find work. Our other 2 properties are vacant which drains $3500 per month from us. A few more months of this situation and we will start facing the fate of the people that we have been buying from.

9/11 - Not a Tragedy

2007-09-11T08:54:00.000-04:00

Much is being written today about the "tragedy" that occurred 6 years ago on 9/11. I can remember clearly the morning of that day while visiting my parents in Massachusetts. A friend had just rang the door bell and told us an airplane had accidentally hit the World Trade Center. We turned on the TV in time to see the second plane dive into the other tower. At that moment I knew this was no accident and hence not a tragedy, but an act of War.

Today some 40% of the population is in total denial about the threat of Islamo-fascism. And an equal number thinks that the attacks were an inside job. These people are so demented that they overlook basic science (how is steel made?, what is modulus?) and cling to hatred of President Bush over all reason.

But, like Hitler, the threats from Bin Laden and Ahmadinejad are real and to be taken seriously at our own peril. Some point to the fact that we have not been attacked since 9/11 as "proof" that this is not real. The facts are that Al Qaeda has not attacked us because they can't. Our offensive and defensive campaigns have neutralized much of their capability. However, if they see an opening, they will attack again.

And there-in lies the problem. The left is so intent on bringing down opposing views that they are willing to do whatever it takes to bring another attack on the US. The ad in the NY Times (General Betray US) is one of the most despicable, treasonous things I have seen in my lifetime.

During the McCarthy hearings, the Senator was asked "Do you no sense of decency?". This ended McCarthys credibility. Moveon.org and DailyKos have gone way beyond decency and literally make me ill.

The one fact that those who oppose this fight fail to realize is that we are dealing with evil. Evil cannot be ignored, only defeated.