EppsNet Archive: Real Estate

I Almost Got Into a Fistfight With a Realtor

13 Mar 2017 /

My wife and I stopped by an open house yesterday . . . after looking around, my wife said something to the listing agent, an oily-haired Chinese guy, about the fact that we’re working with a buyer’s agent and he said, “No agent! You get a better deal with no agent.”

“So we cut our agent out of the deal and save some money,” I said. “It sounds like that’s what you’re suggesting.”

“Agents charge 2 percent. You get a better deal with no agent.”

“OK, but I like to get paid for my work. I’m sure you like to get paid for your work. Why would you suggest not paying someone for their work?”

“It’s up to you,” he said. “You can save some money.”

“How about if we just talk to the seller directly and cut you out of the deal?”

“I have a contract,” he said.

“They don’t last forever. When does it expire?”

So I don’t think we’re going to get that house, but I didn’t like it anyway . . .


Could Donald Trump Have Made More Money in an Index Fund?

28 Oct 2015 /
Trump blurb

Click to enlarge

I’ve seen this theory advanced by multiple sources, including the attached clipping, which I saw on Facebook. I don’t know the original source, but the finger-painting reference is a clue that the author has an anti-Trump agenda, hasn’t done the math and is just repeating something that may or may not be true for the benefit of anyone predisposed to believe it.

The actual National Journal article, which is targeted at readers who don’t know much about history, math or the Trump family, says this:

By putting his inheritance into the stock market back in the 1970s, [Donald] Trump might have been “really rich” without all the drama. . . . Had the celebrity businessman and Republican presidential candidate invested his eventual share of his father’s real-estate company into a mutual fund of S&P 500 stocks in 1974, it would be worth nearly $3 billion today, thanks to the market’s performance over the past four decades.

One big problem with that analysis: Donald Trump didn’t have an inheritance in the 1970s. His father, Fred Trump, was alive until 1999. When the author talks about Donald Trump investing his “eventual share,” what is he talking about? You can’t in 1974 invest an inheritance that you’re not going to have until 1999.

Donald and Fred Trump

Donald and Fred Trump

How much money exactly did Trump inherit? I couldn’t tell you, but working backward from the National Journal analysis, in order to have $3 billion today, you would have had to invest about $35 million in the S&P 500 in 1974.

Fred Trump died in 1999 with a net worth of $250-300 million. He had five children, one of whom predeceased him, so after estate tax and perhaps some charitable bequests, $35 million per child should at least be in the ballpark.

Had Donald Trump invested that amount in the S&P 500 when he actually received it in 1999, it would be worth about $70 million today, which is not bad, it’s more than I’ve got, but it wouldn’t make him a billionaire.

If he’d invested the $200 million that Forbes magazine determined he was worth in 1982 into that index fund, it would have grown to more than $8 billion today.

The math is right . . . the S&P 500 has increased about 4,000% since 1982. But why 1982? The author selected 1982 for a reason, although he doesn’t say what the reason is.

He tosses off 1982 like one date is as good as another so let’s go with 1982, and relies on readers not knowing or caring what he’s up to.

In 1982, the stock market had been flat for almost 15 years, after which it took off on the greatest bull market in history. Today, in 2015, anyone can tell you that you should have invested your entire net worth in the stock market in 1982. Even a modest $25,000 investment in 1982 would have allowed you to take up finger-painting and still be a millionaire today.

Making great investment decisions retroactively is very easy, like taking a test when you already know the answers.

The author dishonestly uses the S&P 500 as a proxy for average economic performance but picks a starting point, 1982, from which stock market performance was not only not average, it was historically unprecedented. It was the optimal investment point in American history.

Same objection applies to his previous example of a hypothetical S&P 500 investment in 1974. Why 1974? Because in 1974, the stock market was lower than any point since the early 1960s, and in hindsight can be identified as an optimal investment point for maximum return.


Now It’s Tomorrow

29 Apr 2009 /

Phoenix has achieved the unwelcome distinction of becoming the first major American city where home prices have fallen in half since the market peaked in the middle of the decade, according to data released Tuesday.

Money quote from Greg Swann, a Phoenix real estate agent: “We were living during the boom like there was no tomorrow. And guess what? Now it’s tomorrow.”


A Mixed Blessing

9 Dec 2008 /

Reviewing the EppsNet balance sheet: investment accounts down, home equity down. My wife says at least we have our health.

Even that’s a mixed blessing as my retirement planning currently includes dying young before the money runs out . . .


Fun with Charts

20 Sep 2008 /
Ticket graph

I use charts like this one to track open project tickets, color-coded by priority.

At a meeting last week, I pointed out that the number of open tickets on this particular project had peaked out at 70 and was now dropping faster than the value of my house, at which one of the attendees laughed more enthusiastically than I thought was necessary.

“Why is that funny?” I asked. I mean, it was supposed to be a little funny, but not laugh-out-loud funny.

“I’ve been there,” she said.


What Am I Thankful For?

22 Nov 2007 /

I’m thankful that I have a job! A lot of people don’t!

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I lost my last job a few months ago, along with 9,499 other people in the Orange County real estate/finance industry over the past year. We all got to compete against each other to find another one.

The Orange County Register ran a story yesterday on how some of these folks are doing . . .

Delia DeYulia, a grandmother, was recently forced to take her first retail job.

For the holiday shopping season, DeYulia, 53, is working part-time at Kohl’s, placing clothes on racks and cleaning dressing rooms. She resorted to taking the temporary work after not finding other employment. After 15 years with Fremont Investment and Loan, she lost her mortgage job in Anaheim Hills in March.

“I’m used to sitting in an office,” said DeYulia, who audited loans at Fremont, a firm from which she expected to retire. “Now, I’m on my feet all day. I’m carrying a lot of stuff and my body has to get used to it. It’s hard work for a minimum-wage job.”

The extra money will help pay the mortgage and car payment. Her husband can’t work because he’s disabled.

“I had always felt comfortable financially,” said the grandmother of two. “Now, I’m worried about the future.”

 

[Robert] Harrington, 31, of Tustin, was let go in September from Bankers Mortgage in Santa Ana. As its loan originator, he made about $75,000 last year. More than half of that was from commissions.

That’s why he thinks his best bet is to find a commission-based job at a luxury retailer or a store that sells big-ticket items.

So he has zeroed in on several shops at South Coast Plaza. He recently applied to Movado, Bloomingdale’s, Sony Style, Porsche Design and Allen Edmonds.

“I hope one of them calls me back this week,” he said.

He needs to help supplement the income from his wife, who is a waitress. They have a three-year-old son.

 

Corinna Vickers, 35, was let go a year ago from Secured Funding in Costa Mesa. Then two months ago, her husband Shad Vickers, 35, lost his job at Lending Tree in Irvine.

Combined, they had been making $200,000 a year.

Now they’re both unemployed and have been hunting for work to pay their bills and help them save for retirement and college tuitions for their four daughters. They have not had any luck and now the Vickers are both willing to take on holiday retail work.

 
Man and woman looking at job postings

Rhonda Struman of Laguna Niguel is not waiting around to get hired full time. Last month, she began working as a part-time salesperson at Nordstrom at The Shops at Mission Viejo. It pays $8 an hour. Before she was laid off in August from her underwriting position at Paul Financial in Irvine, she was making more than four times that hourly rate, or about $70,000 a year.

Her husband also got laid off from the mortgage industry. He was pulling in about $130,000 a year. Now, he’s working for $11 an hour at a Costco in San Juan Capistrano.

Because of their huge pay cuts, they’re having a hard time paying their $3,400 monthly mortgage. They sold off their boat to get rid of the monthly payments. They will soon sell their furniture.

“I cry all the time and I’m stressed all the time,” Rhonda Struman said.

By February, she and her husband will leave Orange County for Colorado to look for mortgage jobs or work that pays better than their current employers. They’ll rent out their Laguna Niguel house to help pay the mortgage and then rent in Colorado.

“We have no choice,” said Struman, who’s in her 40s. “There’s too much competition in Orange County. “There are too many people out of jobs” who are looking for new work.

Whew, tell me about it! I was this close to taking a job parking cars for $12 an hour . . .

Related Links

Nor does the immediate future look bright for the local real estate market. Here are some of this week’s headlines from the OC Register real estate blog:


OC Real Estate Report

7 May 2005 /

I recently sold a house in Laguna for $3.5 million. It was on about 2,000 square feet of land, maybe a twentieth of an acre, and the house might cost about $500,000 if you wanted to replace it. So the land sold for something like $60 million an acre.