Posts Tagged ‘investment’

No One Truly Owns the Land

Land Everybody should have some. Not just to hold but to work on and improve and grow and build being Grateful to God for the work He or she has been given to do.

I am not for a minute suggesting we need to go back to an agrarian society however attractive that may seem it was a tough way to earn a living and life expectancy was often rich and full it was often shorter.

Endowed by our creator we claim these rights to life, liberty and the pursuit of happiness. The latter often is only achieved in the journey not the destination as Happiness as we define it today is so transitory. Like the Illusion of owning the land. No really owns it. All we can own is the right to work it and improve it and our lives in hope. Recently the Un offered an opinion that is so UN American Native Indian.

I was always taught that the Native’s who were here when our ancestors stepped out of their boats was no one can own the land. And to this they were correct, however they did fight tooth and nail for the hunting rights and grazing rights. Our Native american Indians were in a state of constant war and invading and conquering and torturing and slavery was a common way of doing business as they say. Life expectancy was very short if any lived past 50 they were revered as a wise elder. Because they achieved what so few did, Living past 50. either they were extremely wily, lucky, valiant, or all the above.

Which brings us back to the original premise  no one owns the land, God bestows it for us to be good stewards of it. It is not to be owned by some huge Governmental agencies that treats us all life children at best, serfs at worst. The Government was never meant to be the largest landowner in the USA. Until recent history the land acquired was redistributed to the citizens for their ownership and industry.

The land now held by our own Government needs to be given back to the people, period. Saving it our children’s children by not letting anyone use it travel on it develop is UN-AMERICAN. It speaks of a King and Lords and vassals, serfs. Which vanquishes all hope. WE escaped this from Europe and there are those who wish to return us to this system of life with its shorter life expectancy, corruptness, and strife.

Who controls all of the Student loans one Trillion dollars worth? The US Government. Who want to control one fifth of the economy through our medical. The US Government. Who wants to control who lives or dies through abortion and euthanasia to refusing medical care.  The US Government.  Who wants to controls the most Land through the EPA the Clean Water Act, the Environmental Wackos (The preservationists), the national parks system, ….etc. The US Government. Call it a Park and treasure and then put up a fence to keep everyone out! Who wants to control the education system from K through 12 and now through college? The US Government.

In a thinly veiled attempt to secure votes President Obama went to our colleges and basically state if you want to keep you low-interest rates and have your debts forgiven in 20 years. Vote Democrat. Insanity, the carrot and then cede freedom control and then the grave at their choosing not your own.


Economics 101 – How much should I get paid

Basic assumption all pay should be guided by the following principle.  Your pay should be in direct proportion to the net sales and revenue you provide to your employer.

This is a philosophy that all people employed are sales persons and responsible to reduce cost and improve efficiencies of what ever is being sold for revenue.  This includes the temporary hire to the president of the company and contribution and responsibilities result in a pay scale based on the percentages of responsibility.

You might say what about minimum wages and a fair distribution of profits.  By using a strict benefit for productivity methodology  minimum wages are now serving as a barrier to future raises as valuable revenues are being siphoned off to people who have no desire to aspire to anything than some easy money.  Unions rarely follow their stated intent to secure better wages and more job protection, instead they just become an extra layer of management and hinder productivity through rules that become inflexible in times of opportunity.  Instead of looking out for their clients best interest they by nature are self serving sycophants sucking the very monies to themselves in cash and benefits and merely achieve the status quo of what other unions can extract through intimidation and threats of bankrupting the company which they achieve directly or indirectly far too often.

In a government position where bankruptcy is removed from the table communities are held hostage and threatened with below average services as they are forced to fund jobs to 4 when one would be sufficient and the surliest of those who face no retribution are an anathema to public service eventually beating down the most altruistic  new hires into cloned submission.

The only hope for a raise remains in a risk reward situation where pay is directly tied to performance based on mutually agreed upon metrics.   It starts with a vision from top to bottom. with the presupposition of there are no employees but all are contracted sub companies where each serves their own self interest while agreeing to serve the whole in achieve mutually beneficial goals.   The company provide both pay and benefits and transferable job skills where their sub contractors can shop for the company that will best serve their needs.  People can choose to leave for more pay or agree to stay based on job satisfaction and the hopes of achieving  more pay in the future if the company is taking the risks that will result in a transformational product.  This is demonstrated by apple and face book and other start-ups that take risks and sometimes succeed and sometimes fail.  remember newton and the palm?  Steve Jobs had incredible failures say the Lisa before the Macintosh but people believed in His ability to bring out the best of his subcontractors to achieve amazing result.  Bill Gates was a genius in establishing standards through mass not price.  The  recent spate of copy write protection will be Windows demise as focus on retaining profits sucks the energy of creating new and better products.

An airline that can deliver better service at a reasonable cost and rewards its customers with more service than they pay for will beat an airline that fly’s with the lowest cost and does not deliver the minimum expected service.  When airlines lose their way in their search for additional revenues and does not deliver superior service will go bankrupt regardless of their race to the bottom.  Each employee (subcontractor) has a huge impact on getting customers returning or calling them first. from the lowliest clerk and ship cleaner to the pilots and top executives, how they perform has a direct relationship to customer service even if they have no direct contact with customers.  I have often said the Clerks rule the world because they enable or prevent so many other from performing at their peak efficiencies.  Mutual respect and valuation of each other assures a consistent excellent performance.  Management serve only to document and train and encourage their reports to excel through developing the very matrix-es that can measure job performance to determine the reward, bonus, or minimum pay each position deserves.  When an employee fails to achieve minimum standards after rigorous training and opportunities it is the managements responsibility to explain why this may not be the job for them and allow the to seek employment elsewhere with the suggestions and help of management to send them on their way with hope for their  future.

This is what is called by those who seek an unachievable goal of equal pay for every one regardless of job performance a Darwinian approach but this is an unacceptable definition of mutually beneficial self service and bartering or trade defined by capitalism.

In a regressive tax environment which punishes those who succeed with ever increasing confiscation of wages, those who are more needed are encouraged to not work at all.

I went to an art show at the old Pabst Brewery in Los Angeles and felt remorse on what Los Angeles used to offer.  Jobs through manufacturing.  Because of regulations and ever increasing government rules manufacturing left because of the cost of the building all in the name of creating a safer work environment.  a company that has no way to pay their employees if their profit is siphoned off to pay off corrupt and misguided government bureaucrats whose only claim is “creating heaven on earth” and getting all of their friends and family on the government dole wagon with them at the reins as they drive the economy and successful companies into the ditch and/or out of the area.

The reason manufacturing is done anywhere than in the Us is the cost of operating the factory is so much less in time and money.  By dealing with more and more ever increasing governmental agencies is is almost impossible to do a manufacturing start up as revenues are siphoned off before a cornerstone can be laid.  In my home town of Redondo Beach apple could never have been started in a garage as they would be told you can’t operated a business out of your garage since you can get no permit you can have no business.  A business that had been operating for over twenty years with no neighborhood complaints was denied a permit after having one granted to those twenty years because they violated the zoning regulations.  the councilmen has indifference as the city cut off a revenue producer for no reasons except bureaucratic rules that do not serve or community well.

Without a vision to create a community in Redondo Beach balancing the needs of the community of residents and business it cannot achieve a place where people desire to live work and play.  Our children will not be able to get the jobs to live nearby and housing will at some point become unapproachable to them as well.  When Government does not have to operate with the same rules as a business to survive and dos not pay its employees based on performance the pay becomes skewed and is rife with cronyism and corruption and becomes a drag in what people can earn if they can even get a job.  when wages are dictated by fiat as they are in a minimum wage companies and employees lose their focus and people in the long term actually make less than they would because they must carry those who have no desire to progress because they are only making “A minimum wage” and feel un-healthy desire to any more than the minimum and feel if they can do less and get away with it they are making more?  ( I watched TV all Day and got away with it.  I slept through half my shift and got paid the same).  If they can even get a job.

The first step in changing this is the realization of we need to change direction.  A reduction and streamlining of governmental agencies even in a city must be examined and costs to start a business.  an acceptance of variances granted to companies operating in a flexible zoning plan will result in more home businesses and start ups and desirability as people will want to live in a town that will allow them to achieve financial success and hire their neighbors who moved there because they can get a job they can walk to.

If zoning allows overbuilding we lose the heart and balance of the very city we live in and defeats the economic machine that will allow to work close to where they live.  If Redondo is allowed to become a retirement village where businesses are prevented from being started you will have a city of haves and have-nots where they only jobs pay so little there will be no hope for children much less our children’s children.

If Business are allowed to start up regardless of their impact on the quality of life of there surrounding areas people will be driven out and the back lash will be to sever them without regards to consequences.  One possible solution would be the signatures of the neighbors on the variance and a 90 % minimum of those who live within a four block radius or reasonable distance from the business.  If after the business is started complaints are served to specific measurable standards changes must be made and if achieved the variance granted on a 5 year renewal.  there will be some circumstances where one or a small group of people will relentlessly attack and if rewarded in driving out those who are trying to succeed based on perception and or fear or just a contrary spirit.

Economic freedom precedes all other freedoms for without revenue or the hope of revenue people cannot have freedom of speech and religion.  By a governmental restriction of economic freedoms through bureaucratic rules and fees it succeeds in putting itself out of business and plunges its citizenship into darkness.  this occurs not just on the Federal level but the state and city level.  It also occurs on the street where you live and in the households where entrepreneurship is not encouraged.

Anyone who has tried to refinance but been denied due to an appraisal?

I woke up this morning with questions about current loan requirements for a refinance.  No I wasn’t having a nightmare. I am just sort of living one faced by many Americans who have been denied the money being printed by Ben Bernanke and the private money pressed the Federal Reserve.   On several occasion over the last interest rate cycles we have thought about refinancing both our house and our one piece of income property.  While not purporting to be a real estate expert (I’m not) we have through careful budgeting have been able to start the purchase our home and invest in one single family residence (a 3 bedroom house) in the suburbs of the Los Angeles area.

We raised our family in the one now used as an investment property for 15 or 16 years and when the opportunity of doing elder care was needed we decided to look for a larger house and secured a second loan credit line because we wanted to purchase at house on our time table and not sell our principle residence first and then start looking.  We were confident we could sell our house and cover all of the costs associated with the move.   We researched and looked at over a hundred houses walking many many streets in all of the beach cities and Torrance (we wanted a great high school). While we loved Manhattan Beach and Hermosa, we decidedly landed in quiet central Redondo Beach location 10 years ago in an amazing house with wonderful neighbors well before the last surge in housing values.  Our astute mortgage broker looked at our numbers during the financing and stated “you know you could rent out your house and cover both the first and second loan payments and have enough to handle the expenses of investment property!

” Wow we thought here is our chance at the brass ring. We could start an investment for our eventual retirement.” Taking on this second job has been both a blessing and a lot of hard work and added expense but overall it has been rewarding yet terrifying. Properly capitalizing the property for the evolving rent increases and decreases is a learning experience. We have been able to steadily make improvements to the property with a new roof a remodeled bathroom, forced air heating system, painting the exterior and adding some new windows.  We have weathered new tenants and rent fluctuations each time wondering, “Do we have it priced right?”

Interest rates have declined considerably and we have taken advantage by refinancing and lowering our debt on our primary residence several times.  We were able to secure a credit line on our income property to be able to do capital improvements on both our principle residence and the income property.  Interest rates are now at a historic low we are still unable to take advantage of it with our investment property.

When the housing bubble burst our lender quickly froze the credit line was converted into an interest only second loan based on a computer matrix model.  I was given an opportunity to appeal if I paid for an appraisal.  I thought that stinks why do I have to pay for an appraisal and the bank doesn’t but I conceded those who have the gold do make the rules which I did read and sign and have a copy of.   Since then I have tried to refinance when rates declined but was unable to do to how the banks look at my loan.  While the credit line which no longer is a credit line it is still looked on as a cash out loan? So the lenders are restricting my ratio to under 60 to 70% of what they will refinance.   Now to this plain spoken American it doesn’t make allot of sense but hey once again them’s the rules.

So Interest rate are now at a historic low and being unable to refinance both loans due to restrictions, I thought “well if I can’t refinance the entire amount how about just the first and get the holder of the second bank to subordinate to a new loan at a better rate and for only a $250.00 nonrefundable mind you they will.  Now I get the property refinanced for the third time and guess what? Once again the appraisal comes in even lower due to the short sales and foreclosures in the neighborhood.  We have spent over a thousand dollars and hours and hours of compiling papers and copying only to be stalled out again and again.

Now appears the conundrum that leads us into a partial cause of this mess.  People purchased property on an adjustable rate that included a very low rate which lenders used to make loans to people priced out normally from home ownership.  Buying your first house is a pretty heady achievement as you step forward in entrepreneurship and are no longer paying rent but paying yourself a part of the payment in the hopes of one day owning your own house. Then the reality sets in.  That water heater blows up there is no landlord to call.  The lawn needs to be mowed the maintenance fees can add up and unless you become familiar with home depot and are willing to work and learn you must pay someone else to work for you.  Then the loan adjustments start coming down the road.  After putting in a new roof and replacing the sewer line your cushion is pretty much eaten up.  The wife or husband gets laid off or has to take a wage concession.  Children magically appear.  After receiving several months of unemployment benefits a job is secured at half of what you once made.  That house payment that once was 33 % in now a budget stretching 50 % or 75 % of your expendable income.  You eat rice and beans.  You see all of the advertising for the lowest interest rate in years and they are on a fixed loan. Here is your chance to get some relief

You apply for a loan with the lender that holds your current loan.   You get an appraisal and they say well sorry your house will not qualify.  They look at you income and even though you have never missed a payment and your credit is over 700 they decline to refinance.  Now it gets worse you put your house up for sale and are offered a short sale 50,000 less than you need to pay off the loans.  The bank hems and haws and approves the new loan giving your house over to a new owner who has more income.  Then you find out the new owners are just filing for bankruptcy and are in foreclosure themselves.  They were smart enough (but unethical) they are using the money they should have been paying their loan off as most of their down payment for the new loan and left have their old house and the loss with the bank.  Was it fraud? Yep! Was it legal in some cases yes!

What could be an answer?  After months of quantitative easing there is billions of capital sitting in the banking system that they cannot and will not lend to you and me because out house Has declined in value due to the actions of those who were unable or unwilling to make the sacrifices to meet their obligations.  Also the rules that banks are issued for the criteria to sell the loans on the secondary market must be followed or they would have their ability to lend restricted to only the assets they currently have on the books and people would be denied the investment in bonds created through the bundling of mortgages.

I know this is a very simplistic rendition of how loans work.  Then this morning I thought what if a bank or lending institution who currently hold loans were not allowed to use the appraisal to deny a refinance to those who were current on their payments had a stellar credit history 700+ and had the ability to pay the new loan.  My thinking if you haven’t missed a payment yet for 2 years would suffice.  The bank would get to make their points so they could care less.  The loans could be packaged and sold to those who wanted to invest in funding loans to people who pay their bills no matter what.  Thousands of people who are underwater but are still making their payment would save hundreds if not thousands annually in the housing costs.  This capital could be spent on say medical bills or education or even a newer car or a future investment.  When a person commits to making a payment for thirty or more years shouldn’t the banks make a similar commitment? If the cost of money drops should not the money be freed to spread around to those willing to take the risks of home ownership and handling income property?

A second thought is if the bank is willing to take a lower new mortgage through a short sale.  What happens to the homeowners who keep plugging away making their payments next door.  They then get denied a refinance because of the questionable but legal lending practices established by the federal government.

Could there be a private answer to Fannie Mae and Freddy mac?  It is difficult to compete with a company with unlimited resources who make up the rules and change them as they go along. 

If I loaned you a dollar plus a nickel for points   I then secured a note against the skateboard I sold you to be paid back the dollar plus a quarter a year in interest.  If you didn’t pay me I would get my skateboard back.  If you took the wheels off I could make a further claim against you for depriving me of what is rightfully mine.   You could use the skateboard to lend to others for a quarter and over time pay me back by collecting over time enough capital to pay me back.  I don’t care I am owed a dollar plus interest for the life of the loan secured by a note.  If the skateboard is now only worth 50 cents you could offer to renegotiate our terms and I would say you owe me a dollar plus a nickel.  If you borrowed from another friend who is willing to lend me a dollar and a penny I would give you your dollar back and own the board.  If I was selling another board to another person and were willing to sell it for a 50 cents and a penny a month,  you would not be allowed to refuse to renegotiate my interest payments down to a penny a year since I am paying back the dollar which I owed you on the original value of the board.  While I would like the higher interest if I am willing to make less with someone else I would have to give you the same rate.  Banks change the interest they pay out all the time.  You still get your dollar back plus interest.  But what if you can sell the board for 2 dollars now and get 50 cents in interest.  You need to make acquire another board and do that.  I save money you can still make money and the economy grows. 

This one concept could reduce the housing inventory rapidly and stabilize prices almost immediately at their current levels.  Banks would be able to lend and make money further stimulating the economy.  Capital would be freed to be invested in rental housing and new housing starts.

Yes there are many scenarios to contradict my theorem I look forward to resolving the freeing up of the capital for new business and the reduction of everyone’s debt!

The way to wealth and prosperity is to fear God.  It is the beginning of wisdom.  Live beneath your means and invest the savings in the kingdom by using you gifts and abilities through hard work so that you can bless others.  Steal no more but work hard to give God the glory

The Great Salt Lake in Utah
The Great Salt Lake in Utah


%d bloggers like this: