Thursday, January 31, 2008

late night thoughts about real estate

Yesterday's rate cute got me thinking about where the real estate market is headed. The cut, the second big cut in 2 weeks, leaves the rate at 3%, down significantly from the 5.25% it had long been at. This seems like such a small amount, 2.25%, but there's a reason business folks are always talking about it - it has a big effect.

We've already seen mortgage rates drop significantly. This of course lets people buy more house and changes the calculus on any investment properties. A mortgage payment on 5.3% is much lower than a mortgage payment on 6.3%. Now consider that that entire difference goes straight to the bottom line. A $50 per month profit on a rental might increase to $200, for instance.

Overall, the real estate market will still fall more. My summer 2005 prediction that prices would be flat 5 years later now looks like it was optimistic and still is. There is still a big unwinding that needs to happen from the bubble that took prices far out of line with fundamentals. Lower interest rates are unlikely to change that.

But don't generalize the overall trends in the market to mean every house. What these lower interest rates mean is that it is easier to turn a profit on a rental. You can lock these rates (and they might go lower still) in for up to 30 years. If you can find something that is a profitable rental (when I say profitable I mean you can rent it out for sufficiently more than your mortgage payment), you're looking at predictable, stable, and growing cashflow over a very long time period. If it meets the criteria by a wide enough margin (a margin of safety, if you will), you can make a confident bet even taking into account all of the risks in the market.

That said, it's still so hard to find something that makes sense because in general so few properties cash flow and the people who own them don't want to sell them! But if you look carefully, a fearful market is a good thing, and these lower interest rates will only help. Now will someone please do something about Texas property taxes so we can expand out of Arizona....?

Wednesday, January 30, 2008

Crazy

Just saw an ad on TV for a weight loss pill that ended with, "and we couldn't say it on TV if it weren't true." You have to be kidding me.

Tuesday, January 29, 2008

I expected this

Woke up today at 6a, stopped working at 11p. Getting up at 6 again tomorrow. None of this should surprise me.

Monday, January 28, 2008

First Day Observations

Got back from my first day. I'm working on a project here in Kansas City. Some observations:

I learned more today than I ever have before about one thing in a day

Mechanics and engineers can be really passionate about their jobs

2nd most awkward question of the day: "so what does it take to be a consultant, anyway?"

most awkward question of the day: "So what do you guys know about this industry, anyway?"

Sunday, January 27, 2008

First project!

News-  tomorrow I start my first client project. I'll be headed to Kansas City Monday through Thursday for at least the next 2 months. I'm pretty excited about the work and it relates to one of my interests. Also, it's going to be a pretty on-the-ground experience. I just got back from buying steel toed boots.

Notes from my first 3 weeks:

As homework for learning some background on where I'll be, they handed me a DVD from Modern Marvels on the History Channel.

They also gave me "decks", or Powerpoint printouts, on the industry. We communicate mostly in Powerpoint. Here's an example: they gave me some master's thesis that is relevant to our project....then they gave me a Powerpoint summary of the thesis. I am a huge fan of this.

On Mondays I'll have a flight that leaves at 6:50 AM. Not cool.

Before this, I did some mystery shopping for a big grocer, and then some work for a wind power project. It's much less cool not being on an actual project, but I still enjoyed it and learned a lot.

I'm just starting to realize the resources and expertise at our disposal. We can call experts on basically anything and have all kinds of documents and access to things.

Thursday, January 24, 2008

Technology

I'm in Atlanta for a presentation skills training and am staying at the Westin, which is about 1/2 mile from the Atlanta office. Yet last night I turned on my computer and successfully logged on to our wireless internet.

Tuesday, January 22, 2008

We're doomed

Ryan
+=========================================================+
This message may contain confidential and/or privileged
information. If you are not the addressee or authorized to
receive this for the addressee, you must not use, copy,
disclose or take any action based on this message or any
information herein. If you have received this message in
error, please advise the sender immediately by reply e-mail
and delete this message. Thank you for your cooperation.
+=========================================================+

Monday, January 21, 2008

Where are people going to move?

Sometimes I wonder which way population will go, in toward cities or away. On the one hand, you might think people can stay more connection with phones and internet, and so don't need to be as close to people as they once did. At my work you can work from wherever you want on Fridays for example. This might suggest people would go to cheaper areas so they can have more space for instance. Why rent in Manhattan when you can call from Montana?

But on the other hand, increasing technology and decreasing free time means proximity gains value, especially in terms of non-work interactions. I love living on a busy street full or restaurants and things to do.

This article says the number of people migrating to rural areas is increasing.
Affluent retirees and other high-income types have descended on these remote areas, creating new demand for amenities like interior-design stores, spas and organic markets. For many communities, it's the biggest change since the interstate highway system came barreling through in the 1960s and 1970s.

Thursday, January 17, 2008

3 random notes about Texas

I met someone 22 years old at TCU that named his dog Reagan. This is seen as normal.

They have never heard of dirty Mexican food, and think a Taco Bell clone called Taco Bueno counts. It's promoted at Mavs games, so it totally doesn't count. Would Filibertos (Fili Bs!) or Viva be promoted at anything? No.

Cowboys tailgating is like college tailgating, but with more ridiculous vehicles.









Wednesday, January 16, 2008

One thing I learned today

Sherbert is actually spelled sherbet. I've had it wrong for years.

Sunday, January 13, 2008

Cowboys game

Ryan
+=========================================================+
This message may contain confidential and/or privileged
information. If you are not the addressee or authorized to
receive this for the addressee, you must not use, copy,
disclose or take any action based on this message or any
information herein. If you have received this message in
error, please advise the sender immediately by reply e-mail
and delete this message. Thank you for your cooperation.
+=========================================================+

Saturday, January 12, 2008

Paintball

Today our work went paintballing. Insight of the day: ex-military guys are
good at paintball. The things I'm learning...
Ryan
+=========================================================+
This message may contain confidential and/or privileged
information. If you are not the addressee or authorized to
receive this for the addressee, you must not use, copy,
disclose or take any action based on this message or any
information herein. If you have received this message in
error, please advise the sender immediately by reply e-mail
and delete this message. Thank you for your cooperation.
+=========================================================+

Wednesday, January 09, 2008

Why I love my job, part of a series

At a company event (we had dinner, then went to a concert at the House of Blues) last Saturday, my sister looked over at two of my coworkers. They were smiling and giggling. She told my roommate, "you'd think they were talking about girls or something, but they're just talking about work." 

"Yeah, you see, we just really love what we do and think it's interesting," he said.

Tuesday, January 08, 2008

Hillary and Obama flip positions in a day

In just one day Hillary now has a 62% chance of winning the democratic nomination to 37% for Obama. This is roughly the reverse as it was last time I checked. The volatility!

(for the techno geeks out there, my roommate and I just installed a remote controlled light switch to use with our universal remote. If only we were going to be in our apartment more than 3 days a week.....)

Update: An hour later, and it's 57 to 40. What is this, a tech stock?

Monday, January 07, 2008

First day of work

Today I started work. I've been waiting a really long time for this job and it was so exciting to finally walk in and be a real employee. I met with the head of staffing and it looks like I'll be doing a railroad project starting this week. Perfect!

Sunday, January 06, 2008

What the betting markets say

You hear all kinds of political talk from all angles, but when I really want to know what's going on, I just go to intrade.com and see what people are putting their money on. And right now, Obama has a 60% chance of getting the democratic nomination to only 38% for Hillary, and McCain has a 33% chance of getting the Republican nomination compared to 32% for Giuliani and 16% for Huckabee. I was amazed that McCain's numbers are so good. We'll see if they're right.....

For the general election, there's currently 38% Obama, 24% Hillary, 14% McCain, and 12% Giuliani. Go to the website for other predictions. I love betting markets.

Friday, January 04, 2008

Signs your mayor has a big head

Sent via BlackBerry from T-Mobile

San Fran

Was there for a few days, including New Year's. What a great city.
Sent via BlackBerry from T-Mobile