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?

Quote

"All coins have three sides"

Robert Kiyosaki

Best Practices: Gamifying your Life

People on their death bed often say that they regret spending so much time working and did not have enough fun.  I propose to gamify your life by counting the number of enjoyable/pleasurable/fun/memorable things that you do each day.  This idea is supported by the idea that "If you can't measure/track it you can't improve it".  This also requires to both reflect and have appreciation which are two things that is commonly referred to as important.  I don't know what the secret to happiness is but this sure does seem like a start.  

Here is an example:
+1 Tried new coffee and it was really good
+1 no work emails until 10am
+1 school was off today therefore there was minimal traffic
+1 free lunch at work since there was a meeting
+1 it was sunny
+1 made it to the gym
+1 watched a good movie
+1 got to sleep on time
+1 got a non-work project done
= daily score 9

*Statistical analysis and graphs to follow

Best Practices: Mobile Check Depositing

All the wonders of apps on your cell phone and how wonderful it is to save yourself the trip to the ATM to deposit that archaic check.  Sounds good until that check does not go through for some reason and there is no paper trail. 

Time it takes to run down to the ATM to deposit the check < Mental currency wondering if the check deposit or will be taken out in the next 90-180 days plus the task of verifying that the funds were deposited 90 days later.

Just something to think about.

2015 the Beginning of Best Practices

I don't know who said it but "Learn in your 20′s, earn in your 30′s" is a true statement to explain how your are someone's bitch in the workplace post college/entering the workforce and how you should tear shit up in your 30s.  However you apply this quote as I near the the end of the 20's and enter the 30's I realize that I have learned a few cool things.  I also realize that I will not be on this earth forever and I would like to capture these experiences and achieve Maslow's highest level of need which is to leave a lasting impression on the world you leave behind.  Thus starting in 2015 I will begin a new category called "Best Practices" not so people can use my tips but build upon them.

Do You Reddit? Well Sorry

Sometimes I measure my growth in not new habits I take on but the bad ones I stop.  One of these is using Reddit.  A very popular site that aggregates news and allows for commenting.  Here is a good example below which showcases a conversation about a potential theory about the NFL canceling Freaknight so it would be ready for the Seahawks game the next day.  Really... I just wanted to know when I would be getting a refund but there went 10-20 minutes of productivity to meaningless reading.  Thats why I am going to stop reading this stuff on Reddit.

http://www.reddit.com/r/Seattle/comments/2l0yna/anyone_know_why_freak_night_was_cancelled/

Good Idea: Quotes with Friends Boardgame

Link up quotes in "Words with Friends" or "Scrabble" fashion. 

For example Einstines quote "Everything should be made as simple as possible, but not simpler"

Can be linked on to...

 “Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.”
― Steve Jobs

 Can be linked on to...

"Opportunity is missed by most people because it is dressed in overalls and looks like work." - Thomas A. Edison

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.

30-Day Challenges

30 day challenges for diet/health or business activates have been all the rage to evoke action to a goal.  The structure supports action however if those actions are not aligned with the goal then there is just wasted energy.
In a Results Only Workplace (ROW) known as the modern day workplace model you don't get rewarded for micro goals such as turning your computer on, getting you inbox to zero, etc.  Your value is measured by the end product.  Going back to the 30-day challenge goes hand in hand with the millennium mindset where everyone is given praise for the simplest of tasks.  Didn't lose any inches off your waist (you gained some)??? But hey your still a winner because you exercised everyday!"

Using All Cash Vs. Conventional Financing with Buy and Hold RE

A lot of experienced investors and non-experienced investors use large sums of cash to obtain properties at great discounts (70-80 cents on the dollar) via direct sales of pocket listings or auctions.  Paying cash commands respect and is seen as a more reliable deal which is the reason for the discount on the property.  The following will analyze the numbers behind this strategy and compare it to a typical 20% down payment conventional deal. 

Scenario A: All Cash
Market Value: $100,000
Purchase Price = Money in the Deal: $75,000
Annual Cash Flow: $12,000 (assuming 1% rule)
Cash on Cash Return: 12/75 = 16%

Scenario B: Typical 20% conventional deal
Market Value = Purchase Price: $100,000
Money in the Deal (20%): $20,000
Annual Cash Flow: 12 x $1,000-540 = $5,520 (assuming 1% rule)
Cash on Cash Return: 5520/20,000 =27.6%

Conclusion: Using all cash strategy would yield 11.6% less return on principal investment.

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/

Quote of the Day

"Start thinking outside the Wall Street Box"

Let Me Reserve The Right to Change My Mind: Car Financing

It's a shame that we can backtrack on what we say but here is my attempt to...

Once upon a time I thought financing a car was out of question. I thought it was best (if you had the cash on hand) to pay cash especially for a depreciating asset such as a car.  However you need to look at the bigger picture and arbitrage interest rate... In other words what could you have done with that money and turned it at a higher rate than the car loan was.

1.99% car loan < 4-6% stocks < 10%+ alternative investments

A car loan is cheap free money... The take away is there is no clear cut answer.  It all depends on comparing the intrest rate and playing the arbitrage game.  WMD: This is not a free pass to buy an expensive car that you would have bought otherwise.

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.