New Word = Corporatocracy

Corporatocracy = Corporate + Democracy

 

The government and economy is influenced by large companies such as Big Pharma/Big Oil. 

 

Why is solar and other renewable energy not a priority...Oil companies and refineries lobby for pro-oil policies.

 

Why is the ineffective flu vaccine purchased by the government and push upon the citizens?

Seattle Real Estate Market Annual UPDATE 8/2014

We last visited the Seattle Real Estate for a single family home in 6/2013.  See below is as of 4/2014.  Not much has changed as we are continuing on track.  2015 will bring the transition from the Sellers Market Stage I to Stage II.

The paradigm of working to providing money for the family or time

In work you get paid more and given more responsibility based on your experience level/years of service.  With the average length of duty at any one company being much less than 10-15 years it certainly logical to agree with the saying "learn in your twenties and earn in your thirties".  There is a disparity and disconnect in this traditional career path.  In your twenties you are paid the least and in essence you put in the most effort.  (Related reading: The Crossover Point)  In your thirties you tend to get married/have kids and your level of effort dips at work.  I ask the question why is there a dis-correlation between pay and effort?

There is a paradigm shift where they must ask the question now that I have hit my stride in my career... do I pull pack and re-configure my efforts to providing more money for my family or provide more time with my family (less time at work). 

Perhaps because many people take the "path of more time with my family" that those who chose to take the career orientated route are rewarded with higher career paths due to less competition.

Money Flow Theory

Money is not distributed into the economy evenly, instead it is distributed in concentrated areas and distribues out from there.  A good pictoral of is is cones where money flow is injected at a point and them trails out from that point.  The key takeaway is to position yourself as close to these epicenters as possible.

It seems simple but it requires awareness and mobility if not luck.

For further reading check out:
http://www.chaostan.com/feddisaster.html

The Mom and Pop Investor Boom

Follow the money and you follow the trend...

1) Back in 2011-2013 hedge funds (google "Blackstone") took their money away from the stock market and started to invest in rentals (low hanging fruit).  A lot of the up tick in home prices in 2013-2014 have been caused by these hedge funds and international investors buying a buttload of homes with cash as evidence by non mortgaged properties statistics. 

2) 2008 recession happens and people lose 40% of their portfolio.  Baby boomers on the verge of retirement are forced to stick around at their jobs an extra 5 years to make up for their loss or let the market correct.  Investor vigor is damaged and an attitude of "anxious money" syndrome takes over where people are investing in less volatile investments or bonds.  Currently there are a lot of wealthy California's purchasing rentals in out of state locations.  Turn key rental companies work for these Cali investors to find properties, do the rehab, find tenants, and the do the property management.  Pretty slick operation and however there is a heavy cut that the turnkey company takes.

3) Fast forward to 2014 and we are seeing the first signs of the hedge funds moving out of buying properties (since they are over-valued) and into the lending world.  See article: http://theinvestorinsights.com/blackstone-landlord-lender/

The future prediction
- New wave of stock market refugees taking money from their 401k/ira/savings and buying rentals with  easier investor lending.
-higher property prices, lower rents, leading to the next bubble *2018-2020

Myths in Real Estate and Investing

I don't link to articles but this one is facinating.

http://www.biggerpockets.com/renewsblog/2014/03/27/strategies-for-managing-equity/

Opportunity Fund

I don't like the term Emergency Fund.  It comes from a scarcity mentality.  Going for lets call it an Opportunity Fund to take advantage of deals to come in the future.

Luck = Preparation + Opportunity

SFH Real Estate Market in the Northwest 2014Q1: Sellers Market - Phase 2

This is you public service announcement that here in the Northwest USA SFHs have officially entered Sellers Market - Phase 2.  (See graph below, yes I'm calling the top 2018)  The 8-12 year Real Estate cycle is separated into 4 cycles based on a variety of factors which include a variety of factors in the economy.  Sellers Market Phase 2 is a period where the price to rent ratio has gone over the steady state or in other words things have become over valued.  From an investor stand point properties it is almost impossible to make money and cashflow positively after typical expenses.  Yes there still tricks such as finding pocket deals, financing tricks (owner occupied financing), and finding that magic property that can increase your margins but for the most part the ship has sailed.

Strategies to employ in this market:
1) Stop buying until Buyer Market Stage 1 & 2 for Buy and Hold
     a) Pay off mortgages and dept
     b) Save your Opportunity Fund
2) Fix and Flips will work however need to be executed quickly to avoid the impending bubble burst
3) For those investors find other emerging markets outside SFH real estate or some hobbies because your going to have to just wait it out, like a bear hibernating in the winter.