Statistically speaking, rentals on paper are a goldmine but there is one problem. Abuse of the asset. It’s great if you have a two bed room unit for rent. The real trouble is the other 4 people you didn’t meet that want to call it home. Basic cleanup repaint and carpeting can run about $12,000. And the neat thing, is if you have someone managing the place, they are going to want another 15 percent for management expenses.
The basic thought premise, is that rentals are a godsend with the low interest rate returns. The reality is that you may wish you had ever thought of the idea. You may have to evict them and that could take about 8 months. And you might have to pay them $1,500 just to move out even though they haven’t paid rent in months.
Rental prices may be high in California, and if you are strapped for cash, you can rent a garage for about $900 -- split 6 ways, that’s about $150 a month. Of course that is illegal, and probably the people living in the garage are also illegals.
Housing prices are going up in California, and the number of cars parked in front of each house is also going up. Kind of makes you wonder what line of work your neighbor is in, to have 6 cars parked outside his house with a three car garage—three cars in the driveway and three at the curb. Of course, he could have three more cars in the garage. I walk by several, every day that have a sofa and TV in the garage or a garage that is packed full to the ceiling.
IMHO if the Federal government had let the real estate bubble crash in California, we would not have everyone moving home to survive. Prices would be realistic to where you could afford to buy a home without sharing it with another couple. 10 years ago, in my area, there were maybe one or two cars parked at the curb. Now days, on trash day, finding a space along the curb for three trash cans can be a real chore.
Just pause for one minute and think when has it been this bad before? If you have a job, life is great, if you don’t have one, life sucks. This is a bad time for a lot of people. This isn’t a depression, everything is just hunky-dory (the government told me so).
From the million dollar home, the owner can see the guy across the street with his car up on jacks trying to get it to run. While that guy can watch the soccer mom back out of their McMansion in their Mercedes SUV. You do have to admit that the guy with his car up on jacks has a better view out his front window than the guy in the McMansion. Two different lifestyles that are worlds apart and on the same block.
Let’s boil this mess down to its basics. If a house rents for $1,250 a month, 2 people need to live in it, $2,500 4 people. If a house is selling for under 250K two adult occupants, 500K 4 adults. What happened in California? The occupancy rate of homes depends on the amount money earned by the average worker. At 9 dollars an hour, you only make $1,440 a month, your max for rent is $800. You'll need a roommate.
The government effort to save housing prices, by supporting the price of housing with the Fannie and Freddie supports, has only increased the number of occupants per residence. The economics of it are a little like squeezing on a balloon. You get one desired effect with several unknown ones.
Of course to the untrained observer, looking at all of the cars parked outside all of the homes out here, auto sales must be booming. But it could be a bunch of kids unemployed, living at home and too poor to pay on their student loans. And we dare not mention car loans.
So let me think, who gets to cut my lawn this week? -- Jose living in the garage, or the neighbor's son Jesse with a BS degree and a student loan? The answer "me," my wife doesn't have to pay me.
Friday, May 22, 2015
Tuesday, May 12, 2015
Obama the Manipulator
Not sure where this fits into the meld of world events, but I though it worth giving it a link. Its about the death of Osama Bin Laden. The reporter that did this also did the My Lia incident in Viet Nam and has a Pulitzer prize for journalism. It kind of portrays our President as a real manipulator. It is a little long, but it seems to explain why his cabinet and appointees tend to be distancing themselves from Obama. Click on the link below.
The Killing of Osama Bin Laden
The Killing of Osama Bin Laden
Saturday, May 09, 2015
Democracy The Land Of Dreams
In a Democracy, there is always someone who falls between the cracks. The Democrats use these people as examples of the system failing as a whole. When in reality, no system will cover everyone. Most government programs are like training wheels with the option; you can keep them for a lifetime. The trouble is, most people will, if given the chance.
World Democracy isn’t about politics, it is about money and lifestyle. You can be just as happy in a socialist country with a lot of money, just as well as in a Democracy. The great thing about Democracy in the United States is that it provides a level playing field to acquire wealth; in other countries that option most probably doesn’t exist. When our government promises the world Democracy, realize one thing. You can’t make these people rich in their own country. In most cases their dreams of an elevated lifestyle, from their misconceptions about Democracy, fail to ever materialize.
Immigrants come here with a dream of putting their child through college and getting them a better life. They will live through the success of their kids. Now you see why they succeed, their kids are their future. Whereas in the ghetto, kids are a byproduct of Saturday night sex; they are tolerated but not pushed to overachieve. Government welfare supports this way of life. No dream, just food and a housing allowance. You want more, then game the system.
The Democrats will produce the most losers in our new economy with all of the increased subsidies. You don’t have to be black, but it helps, failure always loves a ready-made excuse. I remember how hard it was to get a job when I was young and white. I couldn’t get the job, they’d hire a minority or a woman and it hurt. I got so mad that I bought a lawn mower on my credit card and started a lawn business. Good money for 4 years, but I couldn’t stand the boredom. From there, life improved. A little push is all it took.
Most of the world equates Democracy to being rich. If you are poor, it doesn’t matter where you live, Democracy is just beyond your grasp. All Democracy provides you is a chance at success or failure. Once you understand the reason why we lost the Viet Nam war, you can understand how fragile Democracy is. The Vietnamese farmer could point to his land, his wife and kids and his crops, but he could not point to Democracy. It is an abstraction.
The US needs to be very careful about giving the rest of the world Democracy--many foreigners view Democracy as being a backward way of governing. The problem is, our leaders don't understand that the world is an entirely different place when viewed through the eyes of someone from a different culture or religion. They think everyone sees the world as they do.
Getting rich is a dream in today's world. Everyone notices those that make the grade each year. Our government is always out to tax the rich. The rich are the "evil" people keeping the rest of Americans poor. It's OK to be poor in this country. And with a lot of hard work, by God, you too can become rich so we can all envy your wealth while the government taxes you to death.
Reality is living under the freeway in a cardboard box existing on food stamps. It's an "alternate lifestyle" for those "retiring" early in life. A little meth and some good whiskey and you too can dream about the good life.
The US is still a land of hope and dreams punctuated by reality. The paradox is the dream/nightmare about saving for a lifetime of retirement in luxury. Congress has destroyed the 8th wonder of the world, compound interest, and with it the middle class. The other day, I had to explain the rule of 72 to a bank executive handling my IRA. When I explained to her that when you took .5 percent, and divided it into 72, it took 144 years for your savings to double. The confused, incredulous look she gave back to me said it all. From here, we can deduce that the hand basket is real, the destination is still unknown only due to a lack of interest (pun intended).
World Democracy isn’t about politics, it is about money and lifestyle. You can be just as happy in a socialist country with a lot of money, just as well as in a Democracy. The great thing about Democracy in the United States is that it provides a level playing field to acquire wealth; in other countries that option most probably doesn’t exist. When our government promises the world Democracy, realize one thing. You can’t make these people rich in their own country. In most cases their dreams of an elevated lifestyle, from their misconceptions about Democracy, fail to ever materialize.
Immigrants come here with a dream of putting their child through college and getting them a better life. They will live through the success of their kids. Now you see why they succeed, their kids are their future. Whereas in the ghetto, kids are a byproduct of Saturday night sex; they are tolerated but not pushed to overachieve. Government welfare supports this way of life. No dream, just food and a housing allowance. You want more, then game the system.
The Democrats will produce the most losers in our new economy with all of the increased subsidies. You don’t have to be black, but it helps, failure always loves a ready-made excuse. I remember how hard it was to get a job when I was young and white. I couldn’t get the job, they’d hire a minority or a woman and it hurt. I got so mad that I bought a lawn mower on my credit card and started a lawn business. Good money for 4 years, but I couldn’t stand the boredom. From there, life improved. A little push is all it took.
Most of the world equates Democracy to being rich. If you are poor, it doesn’t matter where you live, Democracy is just beyond your grasp. All Democracy provides you is a chance at success or failure. Once you understand the reason why we lost the Viet Nam war, you can understand how fragile Democracy is. The Vietnamese farmer could point to his land, his wife and kids and his crops, but he could not point to Democracy. It is an abstraction.
The US needs to be very careful about giving the rest of the world Democracy--many foreigners view Democracy as being a backward way of governing. The problem is, our leaders don't understand that the world is an entirely different place when viewed through the eyes of someone from a different culture or religion. They think everyone sees the world as they do.
Getting rich is a dream in today's world. Everyone notices those that make the grade each year. Our government is always out to tax the rich. The rich are the "evil" people keeping the rest of Americans poor. It's OK to be poor in this country. And with a lot of hard work, by God, you too can become rich so we can all envy your wealth while the government taxes you to death.
Reality is living under the freeway in a cardboard box existing on food stamps. It's an "alternate lifestyle" for those "retiring" early in life. A little meth and some good whiskey and you too can dream about the good life.
The US is still a land of hope and dreams punctuated by reality. The paradox is the dream/nightmare about saving for a lifetime of retirement in luxury. Congress has destroyed the 8th wonder of the world, compound interest, and with it the middle class. The other day, I had to explain the rule of 72 to a bank executive handling my IRA. When I explained to her that when you took .5 percent, and divided it into 72, it took 144 years for your savings to double. The confused, incredulous look she gave back to me said it all. From here, we can deduce that the hand basket is real, the destination is still unknown only due to a lack of interest (pun intended).
Saturday, May 02, 2015
Taxing The Rich
I really don’t understand the thought process involved in the government’s proposal to tax the rich. Everyone has about 70 years on this planet, and you either save for retirement or you don’t. Why should those that saved, be tax because others didn’t put money away for retirement? You want to drive a corvette and impress me with you wealth, don’t whine when you reach retirement age and have no savings.
My only question in life is, “Why do Democrats exist?” They want to give money those that never saved for retirement by taking it from those that did save. Notice you cannot take money from people who have none. And in this country, if you can prove you’re broke, you can qualify for government subsidies. How hard is that to do? They government wants to give to those that don’t have anything, and if you give everything to your kids, you too can qualify for benefits. In some families that might not be a very good idea. It could take only a couple of weeks to snort all of Dad’ IRA up your nose.
The neat thing about taxing the rich, is that the old rich have no idea what you are doing in a lot of cases. Senility has set in. Try raising the taxes on the middle aged. The only real way to do it is through inflation, the young people today don’t understand that concept, raising taxes they fully comprehend. Solar panels are selling like hotcakes because energy prices have “doubled” in the last 20 years. How do you connect the dots if you are 21 and someone tells you that cigarettes were 23 cents a pack 40 years ago?
Inflation is an "Old People's Disease." Congress's prescription; "Take two aspirin and call me in the morning if you're not dead. And in case you are dead, don't feel obligated to call."
My only question in life is, “Why do Democrats exist?” They want to give money those that never saved for retirement by taking it from those that did save. Notice you cannot take money from people who have none. And in this country, if you can prove you’re broke, you can qualify for government subsidies. How hard is that to do? They government wants to give to those that don’t have anything, and if you give everything to your kids, you too can qualify for benefits. In some families that might not be a very good idea. It could take only a couple of weeks to snort all of Dad’ IRA up your nose.
The neat thing about taxing the rich, is that the old rich have no idea what you are doing in a lot of cases. Senility has set in. Try raising the taxes on the middle aged. The only real way to do it is through inflation, the young people today don’t understand that concept, raising taxes they fully comprehend. Solar panels are selling like hotcakes because energy prices have “doubled” in the last 20 years. How do you connect the dots if you are 21 and someone tells you that cigarettes were 23 cents a pack 40 years ago?
Inflation is an "Old People's Disease." Congress's prescription; "Take two aspirin and call me in the morning if you're not dead. And in case you are dead, don't feel obligated to call."
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