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More detail here:

http://www.morningstar.com/cefs/xnys/bbn/quote.html

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Flu, I agree with HLS’s comment, you are not calculating interest right to come to that figure. You are charged based on your current balance, and in a year that balance will be lower. But you are assuming a stable balance over three years to get that 1% rate.

I’m guess your note rate is about 2.2% and is tax deductible. I’d invest that rather than do an early payoff.

I also am lazy and like the autodebit of my mortgage and having them pay taxes and insurance. Sounds like a payoff and setting up new ebills would take a solid hour of my time, better to do that in 3 years rather than now.

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I think the bigger costs/hassle of renting a SFH may be offset by the better appreciation. The number of SFHs on non-shared lots goes down every single year in central and coastal San Diego as multi-family slowly replaces them.

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UPDATE ON MY FIRST RENTAL PROPERTY

Over the summer I made nearly triple my interest+tax+ins in short term rentals.

Then in Oct and early Nov I got zero rentals despite dropping the price a lot.

I used this time to do a lot of renovations and improvements and have out of town family and friends stay, so it was not a total loss.

I had it listed at a somewhat high price for a long-term rental. I gave a lot of tours but had no takers over two months. Rather than cut the price, I just kept making the house better.

I rejected a few renters because they had multiple large dogs or otherwise gave me some bad vibes.

Finally last week I got a long-term tenant at my somewhat high asking price with one sweet and quiet medium sized dog. They’ve been very nice to deal with, I gave them their first week free in return for putting up with me finishing renovations that are in progress.

It is a relief to have it rented now, the short term rental was profitable but a giant hassle. More the constant “reservations desk” work with potential renters online and on the phone than dealing with the actual people in person. Customer service work dealing with semi-rich people (it was $320-400 a night plus tax) is no fun at all.

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Some RE market observations:

1. Late summer and early fall was disappointing for OB RE bulls, with inventory tracking up and prices holding flat. Just this past week though there were a big slew of active houses going pending and pending going sold, so inventory is once again extremely tight.

2. We are finally getting some new commercial space with the near completion of the large two-floor building on Sunset Cliffs and Cable. Only one announced tenant so far, a raw and vegan fast food place. Looks like parking will be ample and it will have nice landscaping. The building isn’t a landmark, but it is fairly pretty and much better than most “neighborhood commercial” buildings in San Diego.

3. Some drama involving a suicide attempt and waving around a gun at Ebb Tide Motel brought a bunch of emergency vehicles.

Nothing could be better for the immediate neighbors on the 5000 block of WPL than shutting it down or a complete renovation and tenant replacement.

The owner must pay a ton to insurance that place with the all issues it has.

Ebb Tide actually has improved somewhat over the years but is a still a nasty scar on a great neighborhood a block from the ocean.

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1. Oscar’s has a new name and owner but is basically the same

2. The 76 gas station reopened and is now very nice and modern, but still has very cheap gas

3. A fancy wine tasting place that seems to be operated by a vineyard opened on Newport near Cable

4. Another fancy bar opened next to Warehouse. They have no front door at all, just a roll up, so it has a nice open feel.

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I posted here a few months ago that a good way to hedge a housing decline was to short QCOM. Pretty good advice in retrospect!

http://piggington.com/qcom_proxy_sd_housing_market

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As for the economics:

Buy car for 40K with 20k miles
Drive 10 years end with 70K miles (he says he doesn’t drive much)

An IS 350 F Sport with with 70K miles and 12 years old will be worth about $18,000 in 10 years.

So 22K over 10 years is $2200 a year. Not too expensive. Also he is not depreciating his other car by the miles he puts on it, so that reduces the $2200 a year by some amount, maybe to $1800. Then add in the lost interest on the 40K cash and that brings this up to about a $2500 a year luxury.

I think an IS would be fine for one young kid too. Lots of safety features even though the back seat isn’t huge.

I have been on long rides in the back, it is fine.

I have also had three adults including tall males in the back seat. It is tight but not uncomfortable for a 15 minute ride to a restaurant, often I did this when five adults went out to eat rather than take a 2nd car. I also did not get any complaints on a long road trip with four adults, the two average sized women (120 and 150lbs) looked pretty comfortable.

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I had a first gen Lexus IS for 10 years and loved it. I also purchased a CPO and only had one issue the whole time: O2 sensors needed replacing which cost $350. Otherwise, nothing but $60 synthetic oil changes every 5K and $1000 for the 60,000 maintenance.

It was not expensive to insure. I think the last year was about $500 for $150K of coverage.

There are certain places I miss it since I now have a weaker car. One spot is the ramp onto the 15 by the Aero Drive Frye’s that you go from a stop to a steep hill to the highway. I used to floor it up the hill from a stop which was a lot of fun.

The great handling also let me go on curved ramps faster than I can do now. It took a couple sad months to adjust.

You can’t compare it to a Miata or non-lux sport sedan as it comes with a lots of lux features standard.

The driver and passenger seats both adjusted 30 ways electronically, there was a compass in the mirror, and the leather seats used good leather. The stock stereo system was also really good.

Random fact: the first gen IS (up to 05) and mid 2000’s Lexus SC were the last production cars to come with tape decks. I had an iPod in 2004, so tape decks were several generations out of date at that point. However, I find that the tape deck to audio adapter works better than FM adapters my friends were using to play their ipods. Now of course cars have Aux.

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[quote=njtosd]

Everyone claims that the dogs are service animals – but according to the ADA, store owners are not allowed to require proof that the animal is a service animal http://www.ada.gov/archive/qasrvc.htm

You can apparently get a certificate online in some states saying that your animal is a service animal, without any proof.

Overall, I am in favor of genuine service animals being permitted to assist people who need their help. But there has to be some consideration of the potential for abuse and also the issue of allergies and fears among the general population.
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I noticed when I put a rental ad up that said “pets considered, please describe” about 50% of people with dogs, maybe even more than this, described them as “service animals.”

It is pretty said so many people selfishly take advantage of rules designed to protect the disabled. The owners of the fake “service animals” might as well park in handicapped spots and stick their hand into and grab out money from donation jars in stores.

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The black/dark brown and white look in the LV apartment gallary looks very sterile. Great for a vacation rental or hotel but not for a primary residence.

The other bad thing about ultra-modern is that it does not show well with any clutter. If my house looked like that I’d have to spend at least two hours cleaning before any company could see it.

Pendant lighting in the kitchen I feel looks too trendy and “trying to hard,” especially in this one:

http://capi.myleasestar.com/v2/dimg-crop/8941480/1085×724/8941480.jpg

My first apartment in SD did have three small multi-colored colored glass pendants over the kitchen bar. It looked good because they were tiny and not right in the middle of the kitchen.

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I like the squared countertops too.

I just put in round ones and I would have gone square if I had the option. But the extra cost would have been $600+ as I was using prefabricated granite and they did not offer a choice of edges.

LEDs have become so much nicer than five years ago and I am 80% of the way to all LED. I look forward to my remaining CFLs burning out so I can go replace them.

I am set on doors, my houses had the old floor plan where the kitchen, dining, and living rooms all had doors between them. The prior owner removed the doors and most of the walls, but kept the old doors in the attic where they remain.

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Check my post above. These all involve situations where you don’t sign arbitration agreements. Or in the case of labor law, there is, for now at least, a very limited California-only exception for labor cases.

With cars, when you buy you sign an arbitration agreement that stops you from suing the dealer, but not the auto maker.

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The only class actions you see right now are about products you buy in stores so don’t sign arbitration agreements, plus securities fraud since you don’t sign an agreement with a company when you buy its stock. (You can’t sue your stock broker or financial adviser for fraud however, no matter how bad, since you do sign a contrast with them, which of course includes arbitration.)

There used to be a lot of class actions against banks and cell phone companies. Now there isn’t, and they can violate the law and common morality all they want.

The overdraft fee scam was the absolute worst.

Say you start with $100 in your account, and in the morning buy 5 things with your debit card for $5 each, and in the evening buy one thing for $97.

You had sufficient funds in your account for the first five purchases, and only went over your limit with the last purchase. But all the major banks would charge your day’s transactions from high to low, not the order they occurred. So your account would look like this

$100 -97
$3 – 5 $35 overdraft fee
-2 -5 $35 overdraft fee
-7 -5 $35 overdraft fee
-12 -5 $35 overdraft fee
-17 -5 $35 overdraft fee

So instead of getting a single $35 fee, you’d have a total of $175 in fees for your single mistake of going $17 over your limit at the end of the day. Also, perversely, this would not happen if you made the final purchase the next day.

This is not the way banks did things at first, but a software company came up with this idea, and then did some studies to market software to reorder transactions to banks.

The class action settlements over this practice resulted in most banks both changing their practices and giving most or even all the excessive fees back. The amounts in total exceeded $5 billion, showing just how much of a windfall this practice of screwing people too poor to keep much money in their account was to banks.

Labor law class actions are starting to disappear too. The California Supreme Court recently said one type of a labor class action, called PAGA cases, are not technically private class actions but more like private law enforcement, so cannot be sent to arbitration. There is a decent chance the US Supreme Court will reverse it, and that will mark the end of employers having to care about following labor laws since it is so easy to make arbitration a condition of employment.

A class example of a phone company scam is that AT&T, which decades ago rented phones to people when it was illegal to use your own phone, continued to charge people $2 a month to rent a phone. And these are just basic slimline phones that cost $8, but AT&T was charging $24 a year to rent. Eventually this became too sleazy even for AT&T, so it sold its phone rental business to a dedicated group of sleazeballs who continued the practice.

All the people victimized by the practice are necessarily elderly since they would have had to have a contract with the phone company starting in the early 70’s or earlier. One victim was my grandmother, who had been paying $4 a month for two phones for something like 30 years. So she paid about $1500 for two $8 telephones. She never noticed this on her bill with her bad eyesight and all the other little random charges. Also, she had no idea what phones they were for, as she had the same two cordless phones forever.

My aunt just discovered this about 3 years ago when she happened to randomly look at my grandmother’s phone bill.

Another scam practiced by “respectable” giant companies, like Allianz for example, is to go to retirement communities and have a talk with an “financial adviser” with lots of free food. The adviser then scopes out the audience, and looks for a mark, the ideal one people an old person with assets who is a lonely and trusting. They will then get them to mortgage their paid off house to buy annuities that feature a 10% commission and a huge surrender charge, often another 10%, plus features that make it more likely the holder will get hit with the surrender charge. Sometimes the same is done with life insurance.

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—but I am looking at the remaining interest left, which is about $4000 total. That comes out to be at 1.31% apr…So where can I find a 1.5% or higher return that is guaranteed over the next 3 years?—

You made a math mistake in there somewhere. If your loan interest rate is 2.75%, there is no scenario where you’d be better off investing at 1.5% versus paying the loan down further.

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