patrick.net

sfbubblebuyer,

Thank you, those numbers make sense and I think I can use them as a general conversation starter with my dad. He is thinking of rolling the mortgage from an interest only on the built property, onto a refi on his primary residence, using a fixed-rate. People on this board talk a lot about the pitfalls of the refi, so I'm just a bit concerned with this aspect of his plan.

EBGuy,

Thanks for the numbers. I'm aware of the low average income in Mendocinco County, having grown up there (though I suspect earnings from, ahem, medical marijuana, are under-reported). My dad envisions someone retiring from the bay area buying the place. I don't know how much of that is fantasy or not. I do wish he had stuck with the lower priced homes more suited to the area though.

What particularly recommends Mendocino as a retirement location?

I think the only reason prices got so out of whack outside immediate Bay area, was crazy pricing that forced people to look further out. Now that demand has collapsed. I mean seriously, look at all the communities in the Central Valley whose prices and development shot up in the last 5 years. Not that many people really want to live on my side of the mountains beyond Napa, they were forced into it.

When it comes to finance, go with the numbers not your gut. Beats some fantasy about a white knight or a lottery ticket.

Neighbor on my street where I rent in LA just gave up on selling also, and is rentin' her out.

Last 3 homes listed in 6 months on my street failed to sell. Two are flop lords, one was simply a fishing seller who still lives there.

I would expect rents to go down if this is a major trend.

Maybe I shouldn't have said "accountant". What I meant was someone competent to run the numbers for you. Could be you with a little study. Should not be anyone in any way connected with banks, mortgage brokers, RealtWhores, etc. Inevitable if they've got something to sell, they will consciously or not distort the numbers.

Heck even my tax accountant at H&R block keeps trying to work me for a home purchase while we're going over 1040 paperwork. They also do mortgage biz so even the best numbers guy will be corrupted by the sales-man pressures of their firm.

I don't know what the best source of impartial analysis would be, perhaps someone here has an idea?

Just when I thought I had already heard it all, seen it all, or read it all, yet another fresh outrage from the REIC fraudsters comes my way:

http://www.ushomeauction.com/terms.php

3. BIDDING AND BUYING AT THE AUCTION

Reserve Price. All Properties have a Reserve Price, meaning the Seller of each Property has established an unpublished, minimum selling price. The starting bid is not the Reserve Price. In order to become the Winning Bidder for a Property, a Bidder must meet or exceed the Reserve Price and have the highest bid. The Auctioneer may open bidding on any Property by placing a bid on behalf of the Seller. The Auctioneer may further bid on behalf of the Seller, up to the amount of the Reserve Price, by placing successive or consecutive bids for a Property, or by placing bids in response to other bidders. If no bidders meet the Reserve Price, the Seller is under no obligation to sell the Property. The Seller may withdraw a Property at any time prior to the announcement of the completion of the sale by the Auctioneer. Auctioneer is not acting as an agent for any Bidder in any capacity, and is acting exclusively as the Seller’s agent.

Unf--king-believeable. Having a secret (oops-- "unpublished") reserve price was already bad enough. Now the fine print informs us that shill bidding is not only commonplace (which the non-clueless already knew), it's apparently *also* perfectly legal??

If that's true, why even bother with the pretense of a so-called "auction"? How about just randomly picking "winners" from the phone book and mailing them a "congratulations, new homeowner!" notice (along with their six-figure bill)? I haven't checked my mailbox today ---who knows, maybe I already "won" a half-million dollar condo in Modesto!

God bless our beloved state "regulators" once again, for proving that government doesn't work (by example).

Sounds like somebody is having a case of the Mondays

@X,

:lol: We still on for that July 7th blog party?

President HARM

Now, I am become Debt.

Yes we are Sir.

President HARM

Now, I am become Debt, the destroyer of wallets.

Yes we are Sir.

Thanks, surfer-x. Always wondered what 'DOW' stood for...

Time for the Wall Street Shuffle via 10cc in the 70's!

In case you forgot the words-

http://tinyurl.com/286s4q

Seeing as this thread is the most dog slow conversation in months, I have a completely irrelevant question. Several of you appear to have lived abroad in what one would impolitely term "third world countries". DinOR and the Philipines comes to mind.

Right now I am seeing ads for golf course and beachfront property in Morocco and other areas for $30,000 and up. Picking up a golf course studio apartment near the beach for $30K seems like an excellent deal. All sorts of thoughts come to mind. Is it cheap enough that I could maintain $150K in investments and somehow live off the interest (or if not, what level of capital would I need)? How does one determine if a foreign country is safe for Westerners? How does one manage the different currencies, the tax situation, etc.? What secondary factors does one typically consider, such as access to hospitals, health insurance, local diseases, religious conflicts, expatriate colonies, etc.?

I am no expert, but you would first want to make sure that there will be no serious problem with your holding property in Morocco. This comes to mind because I know that Mexico and several Pacific nations do not allow foreigners to own real estate, or do not allow foreigners to hold certain real estate (for Mexico, I believe you cannot own along the coast unless you are Mexican, and becoming Mexican is apparently difficult). Morocco is pretty far from Mexico, but there might be some similar issues there. There are ways around those problems--you find a local agent or agency that you trust to hold the property for you. You know, a local agent that you would trust with a large chunk of what you own.

I have also heard that Morocco is an uncomfortable place to be Jewish. I don't know about other religious/cultural groupings, and it might be different in an expat colony.

The sites that I've been looking at seem to cater to British retirees who are trying to stretch their savings. One such example is www.compasspropertiesabroad.com.

Brand,

There is a site (Real Posts) which contains commentary from US State Dept personnel who have been posted to scores of locations around the globe. It's in the form of a questionnaire, and many have multiple entries up listed newest to oldest.

While it's hardly an exhaustive source, you might find it interesting to flesh out your ideas about Morocco.

http://www.talesmag.com/sitemap.shtml

My last visit to Africa was to Addis and Tangier, so not very useful to you.

I would certainly not buy a property in a place site unseen. It is a good excuse for a vacation to an interesting foreign locale, if nothing else.

I can't believe everyone isn't talking about the Bear Stern hedge fund blow-up. This might the real deal, the big shock to the financial system that so many here have been hoping for. Probably not, but I notice that *all* the financial stocks are taking a beating right now.

Jimbo: You need to meander over to Calculated Risk. They have scores of in-depth analysis of the Bear Stearn blowup, including links to some excellent resources. I think a lot of us have gotten our BS fix over there. ;)

Bruce: According to those maps, Tangier is within an hour of many new developments. Please add commentary. :)

Can you be more explicit about "financial stocks are taking a beating"?

Why would Bear Stearn be the straw that broke the camel's back particularly? Perhaps like some other recent implosions it's a symptom or a victim not a trigger event.

Perhaps now that it's down "there's never been a better time to buy" a CDO eh?

In keeping with the start of this, you would think a "hedge fund" would be something you would want as a safety net? It seems now that the meaning of hedge fund is something entirely different? I are an engineer not a financial analyst, sometimes the terms they toss around confuse me.

What can a saver do to protect his purchasing power, and maybe make some investment income?

emu farms. invest everything in emu farms and reap the rewards!

Different Sean Says:
emu farms. invest everything in emu farms and reap the rewards!

It is a good time to buy or sell an emu. Also don't forget to buy my book, "Rich emu, Poor emu".

SP

Brand,

I've never found any single, comprehensive source for the things a would-be expat usually wants to know. As I'm not looking to the North of Africa as a possible residence, I failed to note many of the things I expect you'd be most interested in.

What does strike me as relevant is the velocity of change there. Tangier was (May 2006) experiencing a construction boom which I understand is driven partly on the monarchy's commitment to welcoming tourism, partly in preparation for Expo 2012. I would not be surprised to find living expenses rising in the future.

We are very welcome there. I think some of that may be the mindset of the Souk, but much of it seemed to me perfectly genuine. [surfer-x: Tangier coastal surf 6/glassy in May. Locals swear it's like that fall-winter-spring.]

On matters of finance, I have found Adam Starchild's The Offshore Entrepreneur generally helpful. Online table of contents and some abstracts are at:

http://www.cyberhaven.com/offshore/sample

Brand said:
Right now I am seeing ads for golf course and beachfront property in Morocco... [is this a good idea?]

Morocco is not a bad place to live - the cities (tangier, rabat, marrakech) are relatively cosmopolitan and have enclaves of western expats, mostly european. In general, urban facilities (roads, power, water) are in decent shape.

Although the theocracy is not very vocal, their influence has been rising slowly. It isn't a problem yet, since the natives are not prone to going nuts over silly stuff. It is a predominantly islamic country, the law is based on islamic law (with french/spanish influence). It is hard to say which way this will go over the next twenty or thirty years.

Personally, I wouldn't buy property and move there to retire - although it is a tremendously fun place to live in - as long as you can get out if needed. :-)

SP

I haven't had time lately to read my favorite blog. But I wanted to share this today. Is Lennar smoking crack? Unexpected loss? Come on guys...

http://tinyurl.com/35w4p5

Brand,

Could we just forget I ever posted that cyberhaven link? I read Starchild a long time ago and remembered being interested. Now it looks like cr#p.

"Rich emu, Poor emu" LOL!

Where do I get MY copy!?

I thought this article was emblematic of America.

http://biz.yahoo.com/cbsm/070620/8d95be7caf994c909605fad32361c515.html?.v=1&.pf=retirement

Investment companies trying to profit off of the sheeple’s apathy. They want to profit by default from people who don’t care and are unwilling to take any active role in their retirement portfolio.

Why would Bear Stearn be the straw that broke the camel’s back particularly? Perhaps like some other recent implosions it’s a symptom or a victim not a trigger event.

Vincente,
The prevalent theory behind this is that the BS funds collapse unearthed a dirty little secret - these very, very illiquid financial instruments such as CDOs and MBSs have a financial value that is not very clear because they are so illiquid and infrequently traded. As a result, when hedge fund investors and the banks that loan money to the hedgies so they can "double down" their bets get the least bit antsy and ask for a valuation or ask for a margin call, there can be sudden downward valuations on these funds. All of a sudden, the investor realizes their stake in the fund is worth 30% less than they thought previously (this is more or less the case w/ the BS funds).

People are concerned that the BS problem could be the start of a chain reaction because now, all of a sudden, everyone else who has a stake in all these other funds with heavy investments and leverage in MBSs is exposed to the risk of significant devaluation. Add to this picture the recent push by Moody's to revalue many of the funds in this category, and in the worst case scenario, you could potentially be looking at a massive panic and fleeing for the exits by investors to these funds.

Whether or not the panic occurs is obviously not certain. Clearly BS "decided" to bail out at least one of their funds to stave off this scenario. I believe a similar thing happened during the LTCM meltdown.

I'm by no means even close to having the most expertise on this matter among the posters here, but that's my lay-person's understanding.

KT,

I agree, it IS a mess. The Act, as originally written was not necessarily a bad piece of legislation. I've advocated "negative enrollment" for years. It's sad to see this become a political football. Enter greed.

Getting a new job and/or transferring can be stressful. Perhaps what's needed is proper follow up from HR within a reasonable time to get participants into investments they have actively selected, making the "default funds" a temp. parking vehicle?

Nice find.

skibum,

No, that's about the size of it. This "re-pricing of risk" is what it's all about (and what BS and the street is fearing). You may have missed your calling.

On the Bear Stearns and other funds woes, here's a shot across the bow from Bill Gross:

http://www.bloomberg.com/apps/news?pid=20601087&sid=abbFUHu6bkY4&refer=home

Gotta love the guy! A frank assessment, and he manages to squeeze in at least 3 separate colorful metaphors:

RE: CDOs:

``AAA? You were wooed Mr. Moody's and Mr. Poor's by the makeup, those six-inch hooker heels and a `tramp stamp,''' Gross said in his monthly commentary posted on Pimco's Web site today. ``Many of these good looking girls are not high-class assets worth 100 cents on the dollar.''

OR,

Defaults on subprime loans will ``grow and grow like a weed in your backyard tomato patch'' and if total losses reach 10 percent, CDO slices rated A may also ``face the grim reaper,'' Gross said.

OR,

``The willingness to extend credit in other areas -- high yield, bank loans and even certain segments of the AAA asset- backed commercial paper market -- should feel the cooling Arctic winds of a liquidity constriction,'' Gross said.

skibum said:
I’m by no means even close to having the most expertise on this matter among the posters here, but that’s my lay-person’s understanding.

Good summary. Another 'plain english' explanation is:
1. Investors gave money to B-S.
2. B-S went out and bought Collateralized Debt Obligations.
3. CDO's were backed by the value of the collateral assets.
4. The valuation of the collateral is now questionable.
5. Investors want to know whether they are adequately covered.
6. If B-S is forced to verify the valuation, it is likely to come up short.
7. If valuations are lower than thought, the value of the CDO falls.
8. Investors rush to the exits, causing the CDO to plummets further.
9. This can trigger a worldwide re-valuation of all collateralized debt.
10. Pretty much all models are screwed because you don't know if your counterparty is solvent anymore.
11. When you don't 'know' and your models can't 'tell' you anything for sure, your risk shoots up.
12. High risk needs to get priced into everything you invest in, assuming you actually choose to invest instead of curling up into a ball and sobbing.

In other words, the tide is going out. Nobody knows who is swimming naked - it could be you.

SP

O.K Bill, we get the idea without the "tramp stamp" thing! For once BG and I are in agreement (mostly). Bank loans are an entirely different asset class and probably shouldn't be lumped in with this mess.

I think there may have been (1) add'l step? Merrill provided BS w/ "warehouse lines of credit" to run out and buy this cr@p and THEN back filled it w/ investor $'s. I guess that's how Merrill got involved. As in "we have warehouses full of money".

DinOR Says:
I think there may have been (1) add’l step? Merrill provided BS w/ “warehouse lines of credit”

True - in my summary this was simplified into 'investors' who gave money to B-S. I glossed over the fact that the money was actually OPM - that is pretty much a given on Wall Street. :-)

SP

DinOR says:
“Rich emu, Poor emu” LOL!

Where do I get MY copy!?

Maybe at "www.I_Am_Facing_Extradition.com"

:-)

SP,

True, true. It's a given. I will say that I like the brand of candor Bill Gross is bringing across. You have to wonder why he didn't have more pointed comments earlier?

As for living abroad, there's a number of good websites that offer that information. My favorite is internationalliving.com - though it's approach to real estate is awfully bubbly.

That's one thing I've always wondered about so many of those "escape-artist.com" type web-sites? I'll take obviously the pricing model in much of Central/South America is built on someone that has leave the U.S post haste?

"Buy this lovely villa in Colombia for ONLY 2/3rds of what a similar property in Miami would cost you!"

Yeah uh.. if I'm going to live in a country where more people are held for ransom than hit by champagne corks I'd be looking for a little bit more of a discount? Hint? At least where the Philippines is concerned virtually everything that's for sale (is also for rent!) In fact with but a few exceptions the lists are almost identical. Difference is, just as it is here, rents are ridiculously cheap! Think ocean view w/pool for about $600 a month. That's their ADVERTISED price!