Best Real Estate Advice

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....

• 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

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

"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!

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

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

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?

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

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!

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

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?

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?

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

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

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?

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

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

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?

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?

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.