[Escoguy]

Just started taking magnesium and to say the least am stunned how much it helps my sleep and muscle aches. Really a new lease on life. You may be on to more than you realize.

[Escoguy]

I run a small multinational manufacturing company kind of as a hobby.

Don’t really need the money but it is gratifying to keep 30+ people employed, manufacture in California and export to the rest of the world a high quality product.

I can walk away anytime as it’s not “mine” and my livelihood doesn’t “depend on it”.

Still will try to travel more in coming years. Focus on being a good dad etc.

[Escoguy]

In the past 15 years, some stay a long time, some buy regardless of rent level, some should be shown the door. Modest raises on a good tenant aren’t a problem: examples:

Property A, 2700 sf in 92027
Tenant 1, stayed 9 years from 2003 to 2013, raised rent from $1900 to about $2000. He was a single man staying in a 2700 sf home, his daughter was there some of the time. He was a low impact tenant and we were out of the country so I didn’t want to mess with turn over.

Tenant 2: same property from 2013 to 2016, rent went from $2000 to $2900. We were just too low. Tenant 2 bought a place but the rent increase didn’t drive the decision, he just needed to wait 3 years after the short sale.

Tenant 3: rented at $3250 and is very happy. Rent is flat 2 years running. Will likely raise by $50 this year but still below market.

Property B (down the street from A) slightly larger 2900 sf in 92027

Tenant 1: leased in 2013 for $2650, went up to $2800 over three years. Tenant eventually moved out to buy as 3 year post short sale period passed.

Tenant 2: from $2800 to $3150, stayed less than year 2016 to early 2017, he broke lease

Tenant 3: went from $3150 to $3500 and signed three year which will likely go to 5 years at $3620, $3740 year 3, then likely $3800 year 4 and $3900 year 5.

Keep in mind similar house down the street was $2000/month in 2012.

Property 3 (4S Ranch) 92127

Tenant 1: 2013 to 2015, went from $2100 to $2500, moved out as he didn’t want to pay for solar I installed

Tenant 2: 2014-2017, went from $2700 to $2950, I asked to leave as they didn’t communicate well

Tenant 3: 2017-2018 at $3150, will go to $3200, likely $50 more after that

Property 4 (Jack’s Pond/San Marcos) 3400 sf 92078

2014 to today: same tenant, have gone from $3150 to $3450 but did add solar, don’t expect tenant to move anytime soon

Property 5: foreign oil rich country, when oil was $150/barrel, got $4000/month, now get $2300, currency declined, same tenant for 10 years now

[Escoguy]

Gzz

The house I lived in while in High School (Central Texas) not Austin cost $60K in 1982.

By 2007 it was worth 85K or a whopping average 1.7%/year appreciation.

By 2017 it was worth 112K so over 35 years the appreciation was 1.33%/year.

According to Zillow, it would rent for $1100/month. The problem with smallish towns in Texas is the economy is not very diverse and if things go wrong, then what little activity can dry up.

Kind of crazy to think three years rent of my current home in Escondido could buy my childhood home mortgage free.

[Escoguy]

I shorted amazon back in 2000 successfully but thank God I closed the position after a profit.

Long story short, there are better forums to read about shorting Tesla but while it may look appealing, they have no problems raising funds.

Once they solve the short term production problems, it could well be off to the races.

Apple could also be a buyer for them and only use a small portion of their cash.

[Escoguy]

We ship containers of machines everyday from our factory in North County.

Pretty amazing actually, goes to Japan, Italy, Sweden, Germany, South Africa, Chile, etc on a daily basis.

Freight costs aren’t expensive when you consider what is happening for a moment.

[Escoguy]

It doesn’t have to be all or nothing, you can pay down 50% of the mortgage and get a modification to keep the same term. Might cost $500 but you then get a 50% lower payment.

With the remainder you can invest in a combination of Vanguard Muni and closed end muni bond funds to make 3-5% tax free.

The monthly savings can the be put into two index funds 50% muni bonds and 50% total stock market.

I personally like: VPGDX Vanguard Managed Payout Fund Investor Shares

Later if you decide you want to pay it all off, you can or you can continue with stocks or used some of the funds to buy more property.

We paid off our first home about 5 years ago. It allowed us to rent it out and buy a bigger house (short sale) in 2013. The intersting thing was, the rent from the first home covered the mortgage on the new one. So we kept doing this three more times to get to 6 properties, of which 2 are free and clear. We owe about 1.5M on properties worth 4.2M now and the cash flow is good enough so work is optional.

I continue to work but to buy the things I wouldn’t be comfortable selling assets to buy like vacations, new cars, water treatments, major landscape projects, additional solar panels etc.

So paying off a mortgage can be a great step to financial freedom, but don’t sweat it too much as there are many options.

[Escoguy]

I’m getting a new Heloc on an investment property from BoA.

No specific plan for use, more to have in case of an opportunity.

-30 yr fully amortizing payment calculated monthly
-initial rate 3.24% 12 months, then 4.24% variable
-no fees

Notable that the bank won’t use the income from the property in question to determine income, but fortunately I don’t need that income to qualify.

Mostly to use as backup if I need cash for next 10 years before I can tap IRAs without penalty.

[Escoguy]

I’ve been waiting to reallocate for a decade.

During the depths of the financial crisis, I sold most of my treasuries and bought stocks and high yield debt. When high yield recovered, I sold and bought more real estate.

Effectively, real estate (with modest leverage) replaced my bond portion of the portfolio. I know they behave very differently but do produce income. Really the only thing they have in common.

I’m more and more convinced that the 10 year will top out at most 3%.
For many purposes, that would be enough to put 30% back in intermediate treasuries with a 5-7 year duration which would likely yield about 2.5%. That would cover about 75% of my fixed rates which average 3.3%.

[Escoguy]

Margin was 107,330 in the three states that mattered.

http://www.abc.net.au/news/2016-11-10/donald-trump-us-election-rural-vote/8012874

My guess is that demographics will take out that margin over a 4 year period.

While generally Republican myself, when I hear what some older voters really think it is quite appalling. Kind of like liberals blaming Bush for everything, some just want to complain about Obama excessively. Both perspectives are distasteful as our leaders are often just reflecting what others want.

The key is we all need to make our voices heard and participate so the outlier ideas don’t take over.

[Escoguy]

yes, agree

All my loans have been 25% to get the better pricing.

Was just surprised by the 35% quote. It may just be that bank right now.

I hadn’t read that 20-25% was no longer applicable but I haven’t bought a new property since 2014 and last refi was 2016.

Any other comments appreciated.

Thanks

[Escoguy]

1. Best interest rate on Variable mortgage investment property: First Republic 1.75% tied to 11th district cost of funds

2. best Cash back on credit card: USAA 2.5% but need address in Texas to receive

3. Best heloc rate: Bank of America 3.75% (prime minus 75 basis points)

4. best auto loan: PMCU Pacific Marine 1.99% for 60 months

For me the debit/card, checking account is a commodity, I don’t care where the money is. USAA and First Republic do show same day direct deposit credit though. USAA also allows for instant credit on transfers from other banks.

Haven’t used Barclay’s or Alley. Unless something is better than what I showed above, no reason to IMHO.

[Escoguy]

One step further, allow for DAF (donor advised funds) to make the contribution.

[Escoguy]

I did the numbers a dozen times on the residential power wall.

As I have solar and am on EVTOU2 rate, it made no sense.

For a 11-12K investment, I might save $300-$400 best case per year.

Believe me, I really wanted the numbers to work but ended up cancelling my SGiP application. Just decided to add more solar instead.

There may be an additional investment tax credit of $3-4K on top of the SGIP incentive but even then the payback was about 17-18 years vs a 10 year battery life/guarantee.

For commercial users, the math is very different if you can get away from demand charges. I’m looking into a system for the factory I run and the payback may be 5-6 years but need to do more homework.

[Escoguy]

Sometimes a person has a set of beliefs that they operate with.

For a while, the person can be right but if they are unable to adapt to a new reality, and the developments go against their beliefs, it can be quite painful psychologically to acknowledge it.

The housing recovery has been strong, prices continue to increase.
It is almost boring now. The demographics and lack of construction will continue.

The conversation becomes more subtle. Less room for grandstanding and loud opinions without supporting data.

[Author]

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