All Forum Posts by: Calvin Lin

Yes I am aware of the demograhpics in Italy.  The 15% to 20% hospitalization rate is not just confined to Italy, it's for many countries who has seen this viral breakout.  Main point is that unless we want to ditch the elderly population entirely, the healthcare system still have to treat them when they become infected and the hosptials will be overrun.  Then all the non-elderly people who need care would not be able to get them, resulting in severe rationing and non-serious illness that's treatable is now life-threatening.  That's the knock-on effect of this outbreak.

I think you are missing the bigger pictur here.  Look at what is happening in N. Italy.  We know roughly that 15% to 20% of patients require hospitalizaion and around 5% of those require ICU.  If we have 60 milion Americans infected with this then 12 million would be hospitalized and 3 million would require ICU care.  It would overwhelm the healthcare system so much that a normally treatable and surivable pneumonia would become a death sentence because there would be no hospital and ICU beds left.  That's what's happening in N. Italy, where now they have to do war-time like triage in the hospitals and decide who gets a hosptial bed and an ICU bed.  Some of the Italian doctors are posting on their FB accounts on what's going on and it's like WW3 in terms of condition because they got overwhelmed with patients and had to ration ventilators and medicines as a result.   

I recently accepted a couple of lower credit scores than I would like, both in the low 600's.  One was a Sgt in the US Army deployed in Saudi Arabia and she is a wedding photographer.  Some unpaid car loans and credit cards from 2017 & 2018 dinged their FICO.  I accepted them due to:

1) In 2019 they started repairing their credit and I don't see any delinquencies for about a year.  They want to buy a house in the next couple of years so now they have to be very careful with this.  No evictions on their credit report.

2) They were willing to pay 2 months of security deposit.

3) They have kids who are in school which means an eviction will cause a lot of problem there, so to me that's an incentive for them to pay on time.

4) Spoke to their current landlord and he said they have never been late with rent the last 2 years.

So all in all I accepted them despite the lower than standard FICO score because the above mitigating factors.

While $10 a week may not sound much now, I am afraid this is just the beginning.  Like someone said, Zillow didn't buy up all these other RE related companies for charity and I am afraid they are on a march to charging much more than just rental listings.  The analogy I would use is how banks now charge for a lot of things that used to be free.  For example, checking account used to be free and now it is not unless you have some minimum amount.  Receiving an incoming bank wire used to be free but now it is not for a lot of banks.  The same thing happened with airlines.  Used to have a free meal, now just peanuts.  Use to be able to change tickets but now you pay $150 a piece.  Getting a good seat was first come first serve but now you pay for "preferred seating".

I bet it won't be long before Zillow start charging landlords to sort their listing to top of the search results or some other things that we have for free now, 1 charge at a time so you don't notice as much.

Happy New Year BP community.

I just got an email from Zillow rental manager saying that starting in Feb if I have > 1 rental listing I have to pay $9.99 per week for each listing.  This is for the Raleigh NC area.

Anyone else seeing this?  I wonder if I post in other sites it will cross post to Zillow for free?  Zillow is such a popular RE site I would hate to lose it but $10 per week is a bit steep in my opinion.

I use mysmartmove.com and ask the tenant to pay.  Haven't had an issue so far and I have had 7 tenants done it over the last 3 years.  It checks credit and eviction history, but it can not verify income (for that you need to verify w/ the employer directly).  It even flag a speeding ticket from years ago on one of them. 

So I had a insurance claim on one of my rentals for the first time since I started purchasing rental properties 5 years ago.  There was a water leak and it damaged some dry walls, carpets and closets.  My property manager found a contractor who gave me a quote of around $7,200 to repair everything.  I called my insurance company and put it in touch with the contractor and somehow the insurance company agreed to pay the contractor $8,700 by the time they concluded the discussion.  The $8,700 included a couple of items that involved demolition and restoration of concrete slab that had a pipe buried between the walls that was initially suspected as the cause of the leak, to the amount of $500.  Turns out however the leak came from one of the toilets which had a leaked flange and that was undetected for a few days until it did the damage so no concrete work was required in the end.  The contractor asked me to still pay him the full amount regardless, which is the amount the insurance company paid me.

Since this is my first insurance claim and working with such a contractor, a couple of questions:

1) Did I err by putting the insurance company in touch with the contractor directly?  Should I have negotiated w/ the insurance company directly instead?  I don't want to make any money from this mishap but I am not sure if leaving that to them to discuss the cost was the correct way to go?

2) Should the contractor be paid the full agreed amount with the insurance company even though at the end some of the work items were not actually required?  The contractor said that fixing the leaked toilet flange (he actually replaced the entire toilet which was $118 and installed it) = concrete repair cost, which I thought was a bit steep and he actually thought I should pay him $118 extra to cover the toilet.  Would you have agreed to this?  I said no to the $118 and said that the $500 of not-performed concrete work should cover it and then some.

BS in computer science and MS in financial mathematics - the study of math equations behind exotic instruments such as options, futures, CDO's, CDO^2 (yeah that thing that blew up the housing market back in 2008).  I can tell you none of those things helped with RE investing whatsoever, but it did give me a high paying W2 jobs for 20 years so that gave me the resources to build my RE portfolio without leverage.  Also it opened my eyes to how financial market works and macro economics trend in general and that's been very helpful overall.

A few things I have been seeing:

1.  Not just that yield curve inverted, look at the broad spectrum of bond maturities and see what message is saying to you.  Right now, 70% of yield curve is inverted.  That is a very strong signal something is not right.

2.  Outside of US, something like 50% of sovereign bonds have a negative yield, which means you pay the government to lend them money, ie I give you $100 now and you give me back $98 1 year from now.  Who makes this type of deal in a normal situation?  Answer: no one. 

3. Gold is screaming higher.  This is a risk off indicator.

4. YEN is screaming higher.  This is a risk off indicator.

5. Overnight swap lending rates (inter-bank lending rates to each other) is now negative for the first time in history.  This is not normal.

6. Check the price action of European banks.  It's in a death spiral.

7. Check the price action of commodity index.  It's screaming deflation.

Fed needs to cut 50 bps in the Sept meeting, they have no choice.  Right now I am not doing anymore RE deal but focus in preservation by keeping my capital in US short-term bonds which will benefit as the Fed cut rates down to 0 in the next 1-2 years.  It is not inconceivable that bonds in both Treasury and US corporate rated AAA have a negative yield in a couple of years just like the rest of the world is heading.  How would that impact RE prices in the US?  I am not sure because this has not been contemplated before as a possibility in the US.  I don't want to be overly negative as Japan saw waves of deflation but RE price in good locations like Tokyo actually have risen the last 5 years.  It's possible RE will become the inevitable choice of investment for those who want to avoid negative yielding securities as they have no other alternative.  Let's see how all these forces play out but buckle up as it is going to get rough.

Thank you.  Yeah I forgot that the depreciation recapture tax rate is different than that of the long term capital gains tax rate.

So let's say I bought it in 2015 for $110,000.  I am selling it this year for $160,000 after expense.  I took depreciation of $10,000.  So $110,000 - $10,000 = $100,000 is my cost basis and my gain is $60,000.  $50,000 of that will be at long term capital gain tax rate for the owners and the $10,000 will be at the 25% depreciation recapture tax rate.