This post originally appeared on the Hermit Haus Redevelopment website on 2018-11-27.
Tuesday, December 04, 2018
Deciding If an Opportunity Is Right for You
Saturday, December 01, 2018
What’s the Difference Between Distress and Motivation?
This post originally appeared on the Hermit Haus Redevelopment website on 2018-11-19.
- Physical distress arising from deferred maintenance or the inability to pay for needed repairs
- Lack of interest in an inherited property or a second home the seller just doesn’t want to deal with
- Landlord fatigue that comes from not understanding how to manage rental properties and tenants or when the landlord moves away
- Financial distress arising form health problems, job loss, or financial mismanagement
- An entire village near Lake Waitaki in New Zealand is for sale with an asking price of $1.8-million.
- Once home to almost 3,000 people, it has been “mostly vacant” for almost 30 years.
- In 1995, the village was awarded historically protected state to prevent its demolition.
- The current owners bought the village in 2011 to use as a corporate retreat center.
- When those plans failed, they put the it back on the market in 2015, but it has not sold as of this writing.
- Recent changes to New Zealand laws prohibit foreign investors from buying homes, limiting the pool of potential buyers for this property.
Saturday, October 13, 2018
I’m Making Them Birds
This post originally appeared on the Hermit Haus Redevelopment website on 2018-10-06 .
- Cost basis
- Depreciation
- Capitalized expenses
Cost Basis
Under corporate accounting standards, when a company acquires an asset, it puts that asset on its balance sheet with a value equal to its "historical cost" – what the company paid for it. If it's a fixed asset with a limited lifespan, such as a building or a piece of equipment, the company gradually depreciates that asset over time, which reduces its balance sheet value. Even if the company has good reason to believe that an asset has risen in value, it still cannot increase that asset's "book value," the value reported on the balance sheet.
Depreciation
Capitalized Expenses
Saturday, June 30, 2018
Solving Problems
This post originally appeared on the Hermit Haus Redevelopment website on 2018-06-23.
- Believe they are fully in charge of their destiny
- Take responsibility for their actions and mistakes
- Actively take corrective actions
Monday, June 25, 2018
The Waiting Game
This post originally appeared on the Hermit Haus Redevelopment website on 2018-06-18.
So… here is the most successful investor in modern history who:...[I]t seems pretty clear from Buffett’s actions that it might be a good time to take some money off the table and wait patiently for the compelling opportunities yet to come.
- Didn’t buy anything in 2017;
- Is stockpiling a mountain of cash;
- Is now selling an asset that he would typically hold forever, because another company made an absurdly high offer for the business
Wednesday, February 14, 2018
Predicting the Real Estate Market
This post originally appeared on the Hermit Haus Redevelopment website on 2016-02-12.
When I wasn’t watching the rat race or helping prepare for the educational events at the Dallas conference this week, I was taking notes on what the speakers were saying. My biggest takeaway was to learn about economic base theory (EBT). Economist Robert Murray Haig first put forward the theory in 1928. It essentially says that jobs lead the economy both when it is getting stronger and when it is getting weaker. This is something that we all have intuited, but it was good to have this feeling stated overtly and have the underlying science behind it explained.
I won’t go into all that, but I do want to provide the sequence and define some of the terms used in the theory.
EBT holds that development happens in a specific order for specific reasons.
- 1. Basic industrial development
- A basic industry generates more of a “product” that is required by the local economy. The surplus is exported. Exporting creates more jobs than the local economy would otherwise support. Basic industries create jobs beyond what the local economy would generate without them.
- The important thing to remember is that manufacturing is only one type of exportable industry. In Orlando, tourism is a basic industry. In Omaha, it’s insurance. Real estate is not a basic industry because it can’t be exported, but real estate education can be. For most of our history, agriculture was a basic industry.
- 2. Support industries
- Support industries such as accounting and consulting move in once the basic industry grows to the point where it becomes able to outsource these functions more efficiently than it can perform them in-house. Support industries equate to even more job creation.
- 3. Residential development
- The basic and support industrial job growth create demand for additional housing once they have demonstrated that the jobs are there to stay (whatever that means). Workers like to live near where they work.
- 4. Retail development
- As families move into the area to take advantage of the job growth, they need to buy things. Again, most consumers prefer not to travel very far to buy groceries or clothing.
- In rural areas, the school district often is the largest employer. Education is like retail in that it depends on the strength of the local economy to survive. If the basic industry goes away, both retail and education will have to downsize and may eventually become completely unsupportable.
- Finally, the advent of internet commerce slows down the demand for retail development and speeds up the deterioration of the retail market if a basic industry moves out without replacement. In fact, you may now see demand for retail space decrease even in a stable economy.
This model can help predict the direction a real estate market will move. It is not 100% predictive because the real estate market is imperfect in that everyone is working with incomplete information, each individual property—single family, multifamily, commercial, or industrial—is unique, and a single seller controls the availability of each property. Nevertheless, we all need to understand the direction our local economies, and therefore our local real estate markets, are moving.
Tuesday, February 06, 2018
Pre Event Report
Ben, the two of us need look no moreWe both found what we’ve been looking for—Don Black
Weather or Not
Ratatouille
Because I was unable to write much this week, Suna adapted this post for republication on the Hermit Haus site on 2018-02-09.
Friday, February 02, 2018
Fortune Cookie Humor
If your friend wants to learn to drive, don’t stand in the way.
For the first time in a long, long time, I got a funny fortune cookie.
Sunday, January 28, 2018
Dream About Missing the Old Office
I am posting this much later than it is dated while going through some old journals. I list the souces as a dream about one of my least favorite parts of the corporate world. Apparently, it left lasting scars.
SELF
I’m going down to the crapateria to grab a bite.
OTHER
That won’t…
SELF
Kill me?
OTHER
No, but it will make you suffer.
SELF
That will have to do.
Happy Birthday, Ralph
Happy birthday to you. You live in a zoo.You look like a monkey and smell like one, too.—Childhood parody
Yesterday we celebrated Ralph’s 61st birthday, which actually occurs sometime around Tuesday. When it actually happens depends on how you look at it. Since he was born in Tasmania, he could celebrate more than 12 hours ahead of when he would here in the US, starting the day before. In fact, he says he has a 44 hour birthday.
As usual, he seems to of spent most of the day cooking in preparation for the party. He made what he calls a sweet and sour dish, but you can’t really tell. It didn’t taste like any sweet and sour I’ve ever had, but it was good. Also made curry dish which everyone that we would eat it said was good. While I find his crew dishes more edible than most, I avoid them when possible.
Sue Ann and Canova brought dessert, all of which got eaten.
Also in attendance were Duffy, one of his friends whose name I don’t remember, and Robert Palmer—not the singer; he’s dead, and we don’t really care for zombies showing up at our celebrations.
After dinner, Duffy regaled us with funny stories about the time he owned a rhesus monkey. We drink a lot of wine and went home.
Saturday, January 27, 2018
Brown Grass and No Water
It’s been spitting rain off-and-on for a couple of days now—never raining, never being dry. We’ve had fog almost all day today. We could actually use a little rain.
January has been really dry. We’ve only had about 1.3 inches, and that follows a fairly dry December. The average for January is just over three inches. I hope we’re not seeing the start of another drought.
As Dad would say, “We’ll see….”
Saturday, January 20, 2018
Truthiness and Laziness
It’s easier to overcome a lack of information than misinformation or disinformation.—CNN Pundit
Unfortunately, the claim of “Fake News” resonates on both the left and the right. Trump called CNN “The Clinton News Network” during in the election, falsely claiming that the network only carried negative stories about him. For decades, my more liberal friends have referred to Fox News as “Faux News.”
I’m not citing the two claims as equivalent. In a sample of one, I once got a Republican friend of mine to reluctantly agree when I called the Republican Party “the political arm of Fox News” because it certainly seemed that the network established the Republican talking points on a daily basis. At the same time a study found that people who scored worst on a questionnaire about current events listed Fox News as their primary news source while those who scored best said their primary news source was … Comedy Central.
On the other hand, CNN at least tries to rely on factual reporting. They don’t always succeed. And I don’t believe the Democratic Party is organized enough to be the political arm of anything.
Finally, this whole problem with confidence in the media derives from laziness.
When I was a child, Walter Cronkite was the voice of reason and truth. We believed him because he did his homework.
Today, the media seems much more focused on conflict than truth. Reporting is considered unbiased when they bring two talking heads together to argue without fact checking either side of the argument. Arguments are drama, the verbal equivalent of a bloody lead. Facts are boring.
Politicians are eager to exploit this laziness, which enables them to spout whatever truthiness their base wants to believe. This laziness, along with the ever increasing political siloization, brought us to the current government shutdown, at least partially because Senate leaders Mitch McConnell and Chuck Schumer “are not in the habit of talking to each other,” according to one Senate aide.
Call to Action
We need to hold our leaders accountable for the mess in Washington. That means notfollowing the party line of either major party. It means looking beyond the distraction of the 24-hour news cycle and the endless parade of forgettable pundits. It means doing the work of fact checking with reliable sources.
Here’s a hint: If you agree with most of what you hear on your primary news source, it’s probably not factually reliable. If it relies on attacking the character of its opponents, it’s definitely unreliable.
Truthiness is the enemy of democracy and the tool of authoritarianism.
Monday, January 15, 2018
Good Rhetoric
Why would I lie when there are so many ways to tell the truth?
—Unknown
When I studied communication in college, I had to take a course called Rhetoric and Communication. There I learned a simple trick to understand the truth of what people say in political discourse. It is a simple adage, “Good rhetoric denies itself.” It means we are more likely to believe a persuasive argument if the speaker says he is not trying to persuade us or, as is more common in today’s propagandized sound bytes, states a blatant untruth that feels right. To use a term Stephen Colbert coined, this last bit is called “truthiness.”
Here are a few examples of good rhetoric denying itself. Forgive me if I use Shakes twice from the same speech. It’s just that the Forum Speech uses almost every rhetorical device known to man.
- “I am no orator, as Brutus is, But, as you know me all, a plain blunt man....”
Mark Antony disparages his own speaking ability to put the crowd at the forum at ease before delivering one of the most persuasive, eloquent orations in the English language. - “I have come here to bury Caesar, not to praise him.”
Of course, Mark Antony goes on to paint Caesar in a light that would make Oprah seem vile by comparison. - “Reason, not rhetoric will win this campaign.”
As Max Atkinson says, “So here he was using an alliterative contrast, one of the most important of all rhetorical techniques, to tell us that there wouldn’t be any rhetoric from the SDP.” - “I’m the least racist person you will ever interview.”
Need I say more.
Tuesday, January 09, 2018
Feeling My Mortality, LOL
Last year, I fell ill just after Thanksgiving. I was sicker than I remember being in years. Then I fell ill again on a return from a Christmas vacation in Ruidoso. All of this illness has me feeling my mortality, but since I am a big fan of Dad Jokes—and being a dad who is approaching his sixtieth birthday—a couple of them came to my mind during recovery. I can’t help it. I come from a long line of folks who tell jokes on their death beds.
The first of these jokes has to do with my eventual reaction to cold medicines. Over the years I have noticed a fairly standard progression as the disease works its way through my body and eventually out of it.
Q: What is the scariest thing about being sick?A: Realizing you have to sneeze and the drugs you’re on give you the runs.
The second Dad Joke comes from a much more humiliating realization.
Q: What is the saddest thing about getting older?A: Realizing that you now consider coffee a recreational drug.
That last one would make Charley Davidson, who once referred to coffee as “the nectar of the gods,” very sad.