[heavyd]

Thanks for these comments! I agree that if I were to buy, the most cost-effective way would be to get the home unfinished, then do the final finishes myself with my own contractor. I believe the homebuilders make SICK margins on these upgrades…but it seems the party is coming to an end!

[heavyd]

This is great advice — I wish you could come to our office to deliver it in person to our jr analyst, a year out of college and spending down to his last dollar each month on a Porsche, trips to Vegas, the works! A couple of bits of advice that I would add are:

1) Establish a rainy day fund early on, equal to at least six months worth of your expenses — and keep it in cash or cash-like investments (CDs, money market, etc).

2) Regarding your comment on ‘flash’, keep in mind that the greatest luxury in the world is having the financial security to tell your boss to take a hike!

[heavyd]

A few questions & comments:

1) Have these results been audited by an independent auditor? The site you mention has a clear conflict of interest…

2) Is the pool that generated 45% return the only pool entered in the Robbins contest?

3) How do you adjust returns for risk? I ask because the dude who runs (ran?) $9bn at Amaranth Advisers was up close to 40% as of 3-4 weeks ago…and now he’s down more than 50% on the year after a big, risky trade went against him. You can make big bets that will often produce outsized returns — happens all the time — but you need to disclose the risks involved in taking those bets.

4) Chris, if you can replicate these kinds of results over time, you should stop fiddling around with a newsletter and put your energy into gathering funds…on normal hedge fund terms, you’d be entitled to a $3m payout YTD on your results with just $25m under management, which is tiny by hedge fund standards. And you could take the rest of the year off to work on your golf game…

[heavyd]

By the way, could someone elaborate on how purchasing optional features from the big developers works? Like another poster here at Piggington, I work in the same building as the Pardee “Design Center” on El Camino Real in Carmel Valley; this is where home purchasers go to order upgrades in carpet, tile, etc. On a lark I once stepped into the office and asked for a price sheet for options at one of the new developments in Carmel Valley; I was told these were only available to people who had signed a purchase contract. Can this be correct? The “standard” flooring and tile at these developments (even the monstrous $1m+ 4,000 sq ft homes!) is pretty awful, and I am certain most buyers would opt for upgrades, either direct from Pardee or via Home Depot or an independent contractor. But not knowing the price of these options before you sign on the dotted line? Isn’t that like going to the Toyota dealer and being told, “base price is $18K, and we’ll show you the cost of the options after you’ve committed to buying”. Crazy! DH

[heavyd]

Here are my 2 cents as a San Diego native and someone who has recently returned to the area and now rents in Carmel Valley: My simple advice would be to wait to buy ANYwhere. Carmel Valley has low crime, highly-ranked schools and is relatively close to freeways and centers of employment, but apart from that there is little to recommend it. With about a half-dozen exceptions, CV is 100% tract housing (and last holdouts are being bought out), and most homes (especially newer developments) carry hefty Mello-Roos and homeowners’ association fees. Yes, the schools usually achieve high scores, but unless you and your kids are highly competitive, there is a good chance s/he may be left off the team as space in extracurricular activities is always limited. Every house looks the same…every family is competing for the same limited opportunities (at school, on local teams, etc), and frankly most homes are jammed onto undersized lots. Del Sur will also end up a cookie cutter community; it will be relatively cheap for early buyers, but lots there are also small and the commute will be a lot tougher — Camino del Sur was not designed to handle a lot of traffic. If someone put a gun to my head and told me I had to buy today, I would probably look for a shabby 3BR/2BA somewhere in the older parts of Encinitas — lots of 1/2 acre+ lots up there. Poway would be another option; relatively spacious lots and great schools. But again, my primary advice is to WAIT until you get a feel for the neighborhoods before buying…DH

[heavyd]

It is ironic that most of the gated communities I see are in communities with extremely low crime rates. There should be no premium for the gated community; you pay for the perceived added security in the form of high monthly HOA fees. Seems I am preaching to the choir here, but the marginal benefit gained (less traffic, enhanced security) are more than offset by the silly restrictions, ie, “you can paint your home any one of these shades of beige”. I am renting in a gated community in Carmel Valley and the neighborhood teenagers are just as rowdy (if not more so) that I was growing up in an older community in the East County. I personally don’t see the benefit…fact is in places like Santa Luz, between Mello-Roos and HOA fees, you are $800-1000 out of pocket every month before you’ve even started to pay towards the mortgage and property taxes…just makes no sense to me.

[heavyd]

As someone who works at a hedge fund, I take some offense to the comments about hedge funds and George Soros. I can think of no other private individual who has done more to promote democracy and clean government in places like Russia, Czechoslovakia, Georgia, Hungary, and South Africa. Likewise, prior to Gates’ and Buffet’s recent announcements, I can’t think of any living philanthropist who has given away a greater percentage of his fortune (ca $5bn at last count). As an industry hedge funds are publicity shy, which is too bad considering what a positive force they are in US philanthropy. Bottom line is, if you don’t like risk, stay away from risky assets like stocks, currencies, commodities, and real estate.

[heavyd]

Thrivent is a non-profit fraternal organization with about US$70bn in assets under management — not BofA, but not small potatoes, either. As a non-profit it can legally extend benefits to the groups it was founded to help. This is no different from a parochial school offering parishioners a break on tuition, or unions offering members’ kids scholarships. Nothing illegal about it…as long as it retains its non-profit status. They are BIG in the midwest…not much of a presence out here. DH

[heavyd]

This issue with mean and median home prices, and small-ish sample sizes (especially in the case of Del Mar and Solana Beach in August) is why I was asking about price change on a per square foot basis. That figure would still be subject to skewing (ie, a 3,000 sq ft waterfront place would sell for a lot more than a similar place 6 blocks from the beach), but probably gets us closer to actual price action. DHH

[heavyd]

I suspect this guy in Leucadia is operating on the ‘greater fool’ theory. Alternatively, I believe he may have bought the place expecting to be able to expand (it’s on a very large lot) but cannot do so due to septic system limitations. In any case there are 2 houses on the market just down the street from him asking 20% less for a LOT more square footage…and they’ve both been on the market for 100 days so far. Biding my time as a renter…DHH

[heavyd]

Some improvements to electrical and plumbing, and minor cosmetic stuff, but no additional sq footage. My ballpark estimate is about $75K in improvements and he’s asking $300K more than he paid…! DHH

[heavyd]

Is there any way to see what prices in N. County Coastal areas have done YoY on a per SQF basis? Some of these neighborhoods saw only a handful of sales in August, so could be skewed by a couple of very expensive / cheap home sales. Visited an older home in Leucadia on Sunday where owner / agent wants 35% more than he paid Q4 last year…DHH

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