Why to Sell in Today's Market

Last month, the Jansen Multifamily Team polled Puget Sound apartment investors about their impressions of the current market.  That poll data, coupled with our own observations form the basis for a three-part series on the “Why’s” of today’s Puget Sound apartment market.  This week’s post, number two of three, discusses why to sell in today’s market.

Generally speaking, nobody wants to sell in a market like today’s.  Values have come down 15-20% off their market peaks, significantly eroding many investors’ equity in their assets, and the prospective buyer pool has shrunk as many investors wait on the sidelines until the market clearly “hits bottom.”  For many Puget Sound apartment investors, now may seem like the wrong time to sell.  However, the situation is not completely dire, as there are still strong reasons to sell today, including the opportunity to re-leverage, the availability of cheap debt, and a historically low capital gains rate.

Re-Leverage Your Capital

In last month’s JMT poll, 44% of respondents indicated that an opportunity to re-leverage would motivate them to sell in today’s market, and it is a compelling argument.  Current market conditions enable investors to sell their apartment buildings today and reposition their net proceeds into superior assets that better fulfill their investment goals.

The fundamental rationale for re-leveraging is the notion that, if your value has gone down, your neighbor’s value has gone down as well.  Relative buying power has not changed for the worse.  Rather, buying power has gotten better for prospective purchasers.  Selling into a declining market gives investors the opportunity to strike a better deal on the replacement property as prices continue to decline.  If one were selling into a growing market (i.e. after we have “hit bottom”), relative buying power would decline, as prices would continue to appreciate while seeking a replacement property.

Secure Long-Term Debt While Rates Are Low

The opportunity to re-leverage is made even more attractive by the low interest rates currently available through Fannie Mae and Freddie Mac.  Mortgage rates have remained historically low throughout the national economic downturn, as illustrated in chart below (provided by Dupre + Scott Apartment Advisors, Inc.), which tracks mortgage rates over the last 30 years.  Investors that start a new holding period today will enjoy the stability provided by long-term debt at the most competitive rates we will see for years.  Looming inflation will likely drive interest rates up, which will decrease opportunities for positive financial leverage (explained in last week’s “Why to Buy” post).

Dupre + Scott Apartment Advisors, Inc.

Rising interest rates will take many buyers out of the market; those buyers still in the market will require higher capitalization rates to achieve adequate leverage and returns, thereby decreasing asset values.  Apartment owners can avoid this potential scenario by selling into today’s market, where financing is still keeping buyers “in the game.”

Capitalize on Historically Low Capital Gains Rate

Another exceptional way to maximize today’s value is to take advantage of one of the lowest capital gains rates in U.S. history.  The current tax rate on capital gains is 15%, per the Bush tax cuts of 2003, which is the lowest capital gains rate since the 1920s, when the rate was 12.5%.  The Bush tax cuts will expire at the end of 2010, and President Obama has vowed he will not renew them, thus returning the capital gains rate to 20% next year.  As far as where rates could head in the future, it is anyone’s guess (the rate was 28% in the early-to-mid-1990s).

Consider an example where an investor sells a 20-unit apartment building for $2 million.  The investor had $1.2 million in debt on the property and their taxable gain after closing costs and depreciation recapture is $500,000 (estimated for simplicity’s sake).  At the 15% capital gains rate, their tax obligation is $75,000, while at the 20% rate, their tax obligation is $100,000.  By selling today, rather than a year or two into the future, this investor saved $25,000, or possibly more, depending on where the capital gains rate goes in the future.

Selling in today’s market may not be ideal, but whether your motivation to sell is a “have to,” or a “want to,” there are concrete reasons why it makes sense to sell today.  If you unsatisfied with your property’s location, you can re-leverage into a stronger submarket.  If you do re-leverage, you will be locking in long-term debt at some of the lowest rates we will see for a while.  Finally, by selling today and “cashing out,” rather than exchanging, you will take advantage of the final year of capital gains rates at 15%, before they head to 20% and beyond.

There is a downturn in every investment’s holding period, and it makes sense to experience it at the beginning, rather than the end.  Regardless of your motivation, now seems as good of a time as any to start.

Check back in next week for the final installment of our three-part series, as we will be discussing why to refinance in today’s market.

[Via http://jansenmultifamilyteam.com]

An Unrestricted Interpol in the US

Obama has signed away American’s civil rights to Interpol.
In “Amending Executive Order 12425 Designating Interpol as a public international organization entitled to enjoy certain privileges, exemptions, and immunities,” our president has undermined all US civil liberties.

There are multiple reasons why this Obama decision is so deeply disturbing. First, the Obama order reverses a 1983 Reagan administration decision in order to grant Interpol, the International Criminal Police Organization, two key privileges. First, Obama has granted Interpol the ability to operate within the territorial limits of the United States without being subject to the same constitutional restraints that apply to all domestic law enforcement agencies such as the FBI. Second, Obama has exempted Interpol’s domestic facilities — including its office within the U.S. Department of Justice — from search and seizure by U.S. authorities and from disclosure of archived documents in response to Freedom of Information Act requests filed by U.S. citizens. Think very carefully about what you just read: Obama has given an international law enforcement organization that is accountable to no other national authority the ability to operate as it pleases within our own borders, and he has freed it from the most basic measure of official transparency and accountability, the FOIA.

I don’t know about anyone else, but I’m highly disturbed that any US president would give free reign to a foreign police force, above all US law, including the protections of the constitution that are afforded to us as citizens of the United States.
Now, I’m not one to see conspiracy everywhere, or the NWO as more than a tacit threat that might come to fruition at some point in the future, but even I can see this as another great blow, and another tactic to bring the USA into a world governmental force, instead of keeping us set apart as a singular nation. It’s just the beginning, but it’s there nonetheless, no matter how you try to spin this decision.
There may be people who don’t believe this is a big deal (probably all those left wingers who wail about civil rights for all, and the necessity for more and more protective laws to ensure it). Well, keep kidding yourself and next thing you know, it won’t be someone else affected.

[Via http://lmliberty.wordpress.com]

Dollars for change in Wonderland

Tim Burton has hit one out of the park again! Where is that motherfucker’s Oscar?! Alice In Wonderland kicked royal ass (Mia Wasikowska is positively lovely), and here’s the gist of it- don’t care if this spoils it- Alice escapes her huffy mother, oblivious sister, and slutty Edwardian Era Bobbsey Twins from getting hitched to Lord Piggish Ascot to follow the waistcoated White Rabbit (Michael Sheen) down the hole to Wonderland (or in the early version of Carroll’s tale “Underland” taken from the original title Alice’s Adventures Underground). She tries every door, drinks, eats, shrinks, grows, and ends up in sweet Stella McCartney outfits (I WANT THEM!). Nevertheless she’s convinced this is the dream she’s been having for the last 13 years.

The Dormouse (Barbara Windsor), Dee & Dum (Matt Lucas), the Dodo (Michael Gogh) are somewhat convinced that she’s “the right Alice” so they bring her to the Caterpillar, Absolem (Alan Rickman), and sitting atop his toadstool nearly invisible from his hookah’s fumes announces, “She’s hardly Alice”. He unfurls the Oraculum sketched by Tenniel himself where Alice is foretold slaying the Jabberwocky (Christopher Lee) on the Frabjous Day- callooh callay!- delivering Wonderland from the evil clutches of the Red Queen (Helena Bonham Carter) and her deceitful knave of hearts Stayne (Crispin Glover at his sexiest!) back to the dottily tender loving care of her younger sister, the White Queen (Anne Hathaway).

Finding herself at at tea party in the company of the schizophrenic Mad Hatter (Johnny Depp), the histrionic March Hare (Paul Whitehouse), and, of course the passive-aggressive Dormouse Alice is told of the Red Queen’s bloody coup, and then is delivered via air hat to the Red Queen’s castle. She loves the slimy Stayne, hates animals, children, and because of her gigantic head demands that her loyal subjects must show a display of ugliness to keep their own heads from rolling. Alice infiltrates the RQ’s castle and is determined to get the Hatter freed from prison and steal back WQ’s Vorpal Sword that is hidden in the house of dreadful Bandersnatch.

Well after returning the Bandersnatch’s eye (plucked out by the plucky Dormouse) he gives her the key to the Vorpal Sword’s chest and away they go to the WQ’s castle of cherry blossoms, demolished kitchens, and Persian pajama sets. The Cheshire Cat (Steven Fry) breaks out Hatter and Dormouse in time for the great battle of Frabjous Day on the chessboard square betwixt the two queens’ domains where Alice reluctantly accepts her fate as the WQ (really Wonderland’s champion) and clashes with the Jabberwocky in armor that could be suited for Joan of Arc herself. Six impossible things later, Alice dashes to the top of an aging tower, remembers her time in Wonderland and beheads the Jabberwocky.

RQ’s playing card army lays down their arms, WQ gets her crown back, and banishes big sis and Stayne to the Outlands. Then Alice takes a sip of the Jabberwocky’s blood after bidding farewell to her dear Hatter goes back to the garden party, tells Piggish to fuck off, tears down the Bobbsey Twins, asks her spinster Aunt Imogene to get some help (from Dr. Freud most likely considering the timeline), and she’ll be watching her adulterous brother-in-law, then convinces her late father’s old business partner to set out for Hong Kong where Alice starts her apprenticeship never forgetting her dear friends in Wonderland.

And some dumbass ghetto whore says it wasn’t nearly as good as Avatar… People have some serious problems with creativity.

Afterward my best friend Kaye and I along with Joel and Mack set out to Chipotle, some Tex-Mex fast food place that gave me a major headache (although food sensitivity seems to be a recent problem with me but the bright-ass florescent lights and blasting pop music just added to the problem). I got the vegetarian burrito bowl and that dumbfuck Mack called it “puny”. I had no idea at how much weight Kaye gained! Though most of the bloating comes from the drink. And those two assholes couldn’t stop drooling over the sight of her ever enlarging tits! She’s picking up some extra scratch doing everybody’s taxes, but the fifty we gave her just won’t go for the online filing. She’ll be stocking up on vodka and rum. I want to help, but I know I can’t, I’m sickened by her being drunk, and just want to dump her because of it.

I know it’s bad and an economic turnaround is far fucking off, but I really need away from these ghetto motherfuckers! I love my best friend and always will, but change is hard to come by for poor folks- and at least she has a degree, I have nothing. But I need to get myself moving if I want to get away from these idiots. I’m dodging Joel and Mack because I want to avoid going to their houses, Joel has a sprog and as you know being CF, babies sicken me. Mack can’t stop looking at my boobs despite the fact that I wear huge black sweaters and a man’s bubble jacket. I have made myself clear: I don’t date friends! So he’s backed off and looked for other women to knock up and marry. He’s balding, doesn’t have a real job, and lives in the fucking ghetto. Yeah, that’s a desirable spouse.

So until Kaye’s mother crashes and burns allowing Kaye to exterminate the bedbugs, disinfect the apartment, and get shit fixed, I will only be hanging out with her online, outdoors, and she can come over here… so she can help me with the FA shit and I can get myself back into school to finish it and get busy with my library sciences master’s degree coursework that will keep me busy and away from them so a slow alienation can build up. I hope to get some real writing done and that makes me hopeful for a little artistic and financial success which will further my goals of moving away to never come back.

[Via http://silvererieann.wordpress.com]

Watch as America Self-Destruct

I often wonder how great we would be today if America truly lived up to our potential. If we truly followed democratic principle. The founders set us on the road to a great destiny but the money grubbers changed all that and with our country in the grip of bigoted, right-wing religious extremist, (zealots), we are going down the toilet fast. If we were a nation that advanced truth instead of race, the world would know us as the proud and powerful nation that we pretend to be. I’ve had this discussion before and have always been told the same thing, as if from a secret right-wing playbook, “America is a republic not a democracy”. As you can guess that statement always comes from someone who loudly and proudly proclaim to be ‘conservative’ and who hate any association with the word democrat in any form. They’re half right, though. America is a republic… that follows democratic principles. Let’s take a moment to see where the founders were heading with this. What does republic mean?  When the founders declared America a republic they clearly had one thought in mind. To them the definition of republic meant:

“A state in which the head of government is not a monarch or other hereditary head of state”.

So, in fact America IS a republic. Now, let define democracy. Democracy means:

“Government by the people; a form of government in which the supreme power is vested in the people and exercised directly by them or by their elected agents under a free electoral system”.

This is true also. We have in America, what is called “Representative Democracy”. Can you imagine how our economy would be effected if each and every one of us had to vote on every appointment, ratifications, bill, law, amendment that passed through congress on the state and federal level? Then we must also include in state, county, township and local level. That’s a lot of time voting. We’d be screaming for the return of monarchy. I assume that we are now all in agreement that America is both a republic and democracy, or at least understand, if you refuse to agree. I will move on.

America, like the many great societies that have come before, is at a cross-road. Do we stand behind the principles which we’ve expounded for over 200 years; having shed the blood of untold hundreds of thousands of our young men and women in defense of those principles; executed and assassinated tens of thousands here in this country and abroad; spent billions around the world to prop up seriously flawed democratic governments; fought a 40 year cold war with the then U.S.S.R., and now Islāmic extremists, or do we cast all that aside, because the someone who played by the rules, exercised those American principles and achieved the highest office in the land happens to be black? If those principles are cast aside so easily, then they really aren’t good principles to live by are they?

All across the nation I see crowds of people calling President Obama a socialist; a Nazi; a Kenyan, and those are the nice terms. Pictures of him in clown face are splashed around the world, for his children to see. There are people coming to rallies and town hall meeting where the president is, carrying guns. We have current and former elected and non-elected officials constantly on the airway denouncing a sitting president, spreading lies, misinformation and dissention.  When does it end?

Is this the democracy that we’ve been spreading around the world? Do we support discrimination of citizens in other democratic countries, or does discrimination of blacks not really count as discrimination? Where is the outrage at this?

Let me say this. We are all victims of propaganda. When other nations and cultures shout anti-American slogans, they are actually referring to “White Male America”. They study us better than we study them and they know that minorities, (blacks, Hispanics, Asians and women have no power in this country. White male leaders in politics and corporations do. In this country the rest of us aren’t seen as Americans until there is a war. Our job is to consume and be fodder.

Can we get back on track or is it our time to self destruct like the great ancient cultures before us? Because of racism, having a black man win the presidency did more damage to this country than 911. The events of 911 galvanized a country into one people. Racism is going to destroy it.

[Via http://mrkellybrownjr.wordpress.com]

High Crimes and Misdemeanors - The president's path to health care

Tonight the president is meeting with 10 of the Democratic Congressmen and women who have opposed his health care bill in an effort to either buy them off or twist their arms in order to gain crucial support. The brother of Congressman Scott Matheson was nominated to a Federal judgeship this afternoon. It is an amazing act of political graft.The real crime is that he is using a technique, reconciliation, that even he has been quoted as saying is illegal, in order to pass his legislation. The man who wrote the legislation, Robert Byrd, has said exactly the same thing. It could not be any clearer.

The president has been using every trick in the book, including ones we don’t know about, to try to achieve his aim of taking over the country’s health care system. He bought off the pharmaceutical companies. Many insurance companies are now selling the rope by which he will hang them to him in the interest of short term profits. He bought off the leaderships of AMA  and AARP with shiny objects despite a $300 Billion/year hit to Medicaid which directly and negatively affects their memberships. And his accounting numbers, according to the Congressional Budget Office, are lies despite his calling Lamar Alexander, the man who disputed these numbers the other day, a liar on national television.

But it just doesn’t matter. For this is the Super Bowl and World Cup and World Series and Olympics rolled into one for the left wing of the Democratic Party. Once the camel’s nose is under the tent they can the use incrementalism and executive orders and the bureaucracy to shape their policy. This is a long range plan for establishing the party as a permanent ruling party as they dole out jobs and benefits.

Our country is now run under crony capitalism. If you’re in, you win. On Wall Street, in corporate America, in State and Federal politics, and in the unions it’s an insiders game. If you’re close to the action, the benefits are real and substantial. But if you’re a working stiff, you’re out of luck. Ask a Chrysler retiree who first took it on the chin when the government took away their pensions and who is now facing a loss of medicare benefits for their opinion.

The last time the level of corruption was even mentionable in the same sentence was when Benjamin Harrison was president, and back then, the government had not elbowed its way into a controlling position on Wall Street and in our largest industries. The hell of it is that this is being done in the name of the little guy. The leadership class has become a ruling class drunk on its own power.

To the Democratic left in this country, the Constitution is an obstacle to be overcome. Woodrow Wilson started this trend and it continues to this day. And yet the founders of our country and our Constitution were explicit. The arguments in the Federalist Papers and correspondence between them and the Constitution itself are explicit. They argued about the ways and means to enact major legislation. The Equal Rights Amendment is in limbo today for exactly that reason. It did not meet the test of passage by a majority of the 50 state legislatures. Health care affects all of us and is even more important, and yet the president wants to use parlor tricks and bribery to ram it through.

For if he achieves this, he will have gutted our civil rights. We will no longer have the right to choose except as the government dictates. And therein lies the rub.

The term “high crimes and misdemeanors” was first used in England in 1386 to impeach the Chancellor for lying to Parliament when he failed to pay a ransom for the city of Ghent as he had promised. It was next used in the conviction of one of his descendants for obstructing justice, cronyism, and corruption. It has been repeatedly used to prosecute negligence, abuse of power, and violations of the public trust at the highest levels. The most controversial use of the term was in the impeachment of Bill Clinton not because of his adultery, but rather for his perjury before a grand jury. If one reads the history of the term, William Jefferson Clinton has nothing on the current occupant of the White House.

This isn’t simply about health care. It is about the basic conduct of our government. 52% of the public adamantly oppose the president’s proposal. His policies on many issues are highly unpopular not only on the right but the left as well. He is taking away much of what it means to be an American; those inalienable rights bestowed upon not by a ruler, but by God. For what he is doing is ripping up the Constitution with his actions. He knows it. We know it. And he doesn’t care. Legally, the grounds will exist for impeachment. And it doesn’t look as if his supporters are going to do very well in the next election. Something he may want to consider.

There is an anger and a fear for our future abroad in the land that has not existed since December 7, 1941. This is existential fear. And this fear is rational. Our government’s spending and irresponsibility and poor policy have put us into a very difficult position which will take years to resolve. During such times it would behoove all of us to act with courage and conviction. But what we are seeing instead is a craven act of political self interest and lust for power. One that we and our children will be paying for as long as the Republic remains. If ever there were high crimes and misdemeanors, these actions fit the bill.

[Via http://oceanaris.wordpress.com]

Education The Panacea

I found this fascinating quote today from my old the blog of my old Critical Inquiry Professor Michael LaBossiere

:

Obama noted that people who do not finish highschool make less money than graduates, are more likely to be unemployed and are more likely to engage in undesirable behavior, such as committing crimes. His proposed solution is to take steps to make it more likely that children will finish school.aphilosopher.wordpress.com, A Philosopher’s Blog, Mar 2010

You should read the whole article

Are you done reading the article? OK good. One of the things that is often neglected when discussing drop out rates is that sometimes dropping out is not the result of disinterest in, or unwillingness to learn. It is not the result of poor teaching, or standardized test. The choice does not have it’s roots in lack of funding for texts books, field trips, or computers, but it is the result of something that is a little more basic. The need to eat.

In the neighborhood where I grew up there was nearly a decade break in between my sister’s graduation, and that of the previous graduates from when the neighborhood was a Black middle class enclave. That decade break coincided the Crack pandemic, and the rise in street gangs as the surrogate families for a lot of young people. Those street gangs fed a lot of my friends who were orphaned by crack, and I am not using orphaned in a figurative sense. In many neighborhoods around the country you could count the amount of fathers on one hand, in my neighborhood you could do the same with mothers. This parenting vacuum left a lot of hungry children, and the older children were tasked with feeding their younger siblings. Doing this while going to school full time was nigh impossible when you factor in the other bills that needed to be paid. So a lot of young men and women deferred or forgot their dreams, dropped out of school, hit the block full time, and in the process lost a generation. Nicer books would not have made a difference to them. Neither would a sparkling new gymnasium. Money had to be put in the mailbox, by any means necessary, and the only means left to them was to work on their wrist game.
Rhetoric about drop out rates that does not recognize and confront poverty, and the immediate needs of those caught up in it does nothing for those it intends to help.  Just my last two dollars.

[Via http://thecochranfirm.wordpress.com]

Yummy for my tummy!

Hi all, back again. Sorry been away for so long. Hope you’s didn’t miss me too much lol ^_^

Anyway found this really cool site on more food art, looks so pretty you should definitely check it out. (Over here) It’s super kawaii. I really like the bok choi fishy (i think it’s suppose to be pak but anyways) It very playful and stays with the vegetable structure making it even more realistic. The pumpkin carvings are spectacular aswell especially the predator (from alien vs. predator….duh), not really a big fan of the movie but i can still admire the art and work that’s been put in (alot of detail as you can see).  The toasts i thought was super awesome and reminded me my friend’s Miss Dorothy Hunter’s Foundation piece (only she burnt little piece of toast). Check out some of her work here. Well here are some preview samples of what’s on the site to give you a little taster. ^_^ Hope you enjoy it!!

[Via http://winnieshek.wordpress.com]