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Peter P
2007 Feb 9, 2:24am
HARM, you need a big, BIG disclaimer for the thread itself. Talking about something illegal may be seen as a crime in itself.
* I am not a lawyer.
StuckinBA/Suds,
Uh.... YEAH! :)
Like I say Doug Kass' comments yesterday shared SP's sentiment that this stuff doesn't happen in some sort of "sterile" environment. This WILL bleed over into the A paper! Not to tout my own projections but I've been preaching this from a soapbox for awhile. The sense of vindication is, well....... intoxicating! (Hick') :)
Claire,
I have excised the 'rat poison' comment, but I really wouldn't worry too much. Talking about someone else doing something illegal or about a crime conceptually is a far cry from advocating it. And last time I checked, the First Amendment was still in force over here (though the current Administration has done its best to subvert it).
Oh, there's just a ton of pranks I could tell you about that I learnt from others as a student - but perhaps left unsaid in print.
Claire,
Leaseholds in the US are more common around Palm Desert and sometimes on Indian reservation land (vacation houses on 99 year leases). I have never seen one in Boston.
DinOR - who owns the A paper - we have some PIMCO in our 401K, but that's because I thought that was the safest one (even though it's not gaining as much as the others) - do you think they will be affected? Also Vanguard Target Retirement IRA - I guess that'll get hit?
Sorry to interrupt the prankathon, but I am trying to figure out what the age limit below refers to in the link Anthony posted yesterday.
http://www.nysscpa.org/cpajournal/2006/1206/essentials/p40.htm
Parents may gift up to the annual exclusion (currently $12,000), presumably in appreciated stock, to each child over the age of 13 to avoid the “kiddie tax.†The child receives the asset at its (lower) carryover basis, sells it at a gain, and pays the 5% capital gains tax. The same strategy is employed by other donors for other donees (e.g., grandparents and grandchildren).
SFWoman - my bad - I thought I had read somewhere that some of the stone built houses in Boston proper were still leaseholds. But I can't bring anything up on the net about it so maybe I got it wrong.
Claire,
We've had posts in the past that dealt with "cleansing" one's self of MBS exposure and concluded that it's nearly impossible for plan participants. I've had an ongoing feud w/ Bill Gross (at PIMCO) for longer than I can remember so I can't speak to the quality of paper he holds. I will say to his credit that Bill has refrained from "juicing up" the yield w/"wallpaper". Without knowing what your plan is offering in the form of alternatives it would be conjecture on our parts. Cash?
I bailed on MBS back in '04 and haven't looked back other than these "rear view mirror Mad Max post apocalyptic" moments. Which I rather enjoy thank you. :)
Claire,
Oh, I'm sorry! Typically insurance companies get the brunt of the A paper. What has occured to me lately is just how "disposable" these mort. shops are! They spring up like mushrooms in the good times and drop like flies in the bad times? What's more is that the founders of a lot of these relative start-ups is that they learned everything they know from their former (and larger) employers before they defected. Weird huh?
Some forms of real estate a lose-lose situation
Buyers should think twice about leasehold estate
By Robert J. Bruss | July 13, 2006
Boston.com
It's only a Dear ....kind of article, but I guess I concluded there were leaseholds in Boston from it. I guess he could be syndicated?
Claire :
PIMCO has many funds. I stayed away from it in my 401K as I saw that fund was holding MBS.
I have a Vanguard Target fund and I like it a lot. Every target fund has a "Total Bond Market Index" fund. This portion definitely has exposure to MBS - about 35% of it IIRC. So there is a risk. I am in two minds about getting out of it. It's not a big portion of the entire fund depending on which target date you are using, and it provides other diversification - I like their mix of international funds in it.
NIA, YMMV and all other disclaimers.
DinOR - thanks, for enlightenment - I figured these guys are all selling this stuff and chopping it up and selling it again and that somehow it gets in with what I would think were safe investments - but I guess we'll still be hit as I'm sure the funds own insurance company stock too. I only have bonds, because it is recommended - but I'm not sure that they are worth having - maybe in the long long run I will be glad, but right now I'm not sure they are worth having with a retirement 30 odd years away.
I can't actually envision not being hit by this train wreck - if insurance companies get hit - then they will just up everyone's premiums on everything to pay for their risky gambling in other areas. If they are publicly traded then you can bet mutual funds are into them as "safe" stocks. If pension funds (especially state) get hit, then they will have to get the money from somewhere to support the pensions - increase taxes to bail everyone out?
DinOR :
The sense of vindication is, well……. intoxicating! (Hick’) :)
Oh yes. I am generally long on stocks - Never shorted a stock, but did buy puts on occasions when I thought the market is overbought in the short term.
But in this case, seeing one billion of market cap evaporating in mere 2 days is more vindictive than seeing Colts finally win it. One BILLION US$ in such a short time. OUCH OUCH OUCH.
Claire,
Actually StuckinBA has a good point. PIMCO has more than "one" fund. But like every firm they have their "flagship fund" and for PIMCO that would be the "Total Return Fund". It's first in their product placement and what their wholesalers "lead" with to secure 401K business so I apologize for the assumption.
(I swear these guys have the fund fact sheet "stapled to their forehead" when they walk into your office!) Meaning if you distract them in the slightest you've thrown them totally off balance.
StuckinBA - yes I like Vanguard too - why can't 401k's offer Vanguard - let me guess they don't give any kickbacks to the 401k "managers".
Claire,
Here is a link to an old (1925) article introduction that has people questioning why the US government didn't retain more land initially and let it as leaseholds in order to keep speculation/land values lower.
http://links.jstor.org/sici?sici=1548-9000(192507)1%3A3%3C322%3ATPLSIT%3E2.0.CO%3B2-5
We really don't see too many leaseholds here. In upstate NY they had vacation cottages on Iroquois land, and when I was about 18 the 99 year leases expired and the Iroquoi told the people to take their cottages and go. Of course some people sued, but they didn't have a legal leg to stand on and they had to leave.
DinOR - Hope you don't mind.....but,
this is what I hate about our "Plan" - all the names of the funds are "slightly" changed so you do not actually know what you have and no way of tracking prices - the PIMCO one is PIMCO Total Return Admin - I'm guessing it is the one you refer to. Also offered are Maxim Bond Index, Maxim Loomis Sayles Bond Portfolio, Maxim US Government Securities Fund, and Lord-Abbett Bond-Debenture A - and then they charge fund operating expenses on top - but you never see a $ figure.
SF Woman,
I believe that some builders in Inland CA are trying to sell leaseholds, it's possible they are trying them elsewhere.
Claire,
I happen to have a lot of respect for Lord Abbett and Loomis Sayles. At least when you call them (in Jersey City, NJ) they're right on top of it. Great service, decent returns.
NIA
I think there is a lot more rental stock in the core Bay Area now than 2000, precisely because many companies saw the rental frenzy and started building like crazy. So rents will not go up as much.
One of the rental complexes I lived in 2000 got converted into a condo complex. It's not clear to me that rental properties have grown in number. :(
Claire,
I can't see why anyone would want to buy a leasehold house in the US, unless they wanted a specific site on BLM land or something. It's not like it's London, where freeholds aren't common.
I guess it's cheaper, and people figure they'll be dead before the lease is up, so they don't care.
I guess trailer parks are mostly leaseholds. I have read about $2 million trailers in Malibu, I am going to suppose that's all land value.
Commercial leases can be quite long term and can be quite valuable (or detrimental) to a company's bottom line. Often times, long term RE leases will be the most valuable thing in a business bankruptcy.
SFWoman,
I know, I know, but that would be one way to revive the market for the REIC, right? I would not buy a leashold myself, but I'm sure if they put the right spin on it, they could sell anything, they certainly managed to sell all those toxic loans didn't they?
DinOR - thanks, maybe I will look at it all again closely, my problem is that they add on this extra component "Maxim" to some of the funds which in the small print are managed by sub-advisers and "they are not directly related to any mutual funds" and "their preformance may differ substantially" - that makes me more wary.
Peter P
2007 Feb 9, 4:14am
OT, but interesting:
Which Sci-fi/Fantasy character are you?
http://sqt-fantasy-sci-fi-girl.blogspot.com/2007/02/i-love-these-things-so-sue-me.html
Sorry - didn't mean to drag it all back to finance, but I am still trying to learn it all, most of all my other fund picks are doing really well. Not had the courage to actively trade though (plus I don't have a huge amount that I could invest and be happy about loosing anyway). I keep thinking the whole market (stock) will tank when the housing market gets real bad.
When I moved to the bay area from the east coast in 2000, my wife's then company actually hired someone to help us find an apartment! And he drove us around to 15 or so apartment complexes and at the end of the day we could find none with a vacancy.
In fact, some landlords would chase us away even before we parked. Luckily we found something a couple of days later for the low price for just $1750 (2 BR 2 BA) in Santa Clara.
To go back to the original question, I think renters should be allowed to turn around and subrent their apartment. When everyone starts doing this for a higher cost, it would be touted as an investment opportunity and banks would start lending to people to do just that. Bad credit, no problem.
Soon, everyone will be renting $10,000 a month studios even though they cannot afford it because they can always rent it to someone else for more!
What would be cool is if all the renters got together and formed a renters strike. All the renters could then move out of the state for the rest of the year and come back in 08' to claim your pick of the distressed FB's properties. I think that would speed things up considerably!
@EBGuy,
Re the age restriction on gifts to children: That was written with old rules in mind. Investment income for children 13 and under has had to be taxed on parents' return for donkey's years. The age limit has now been changed to 18. Write your Congressdroid and thank them.
Sriram Gopalan Says:
> I think renters should be allowed to turn around
> and subrent their apartment.
Most apartment leases prohibit subleasing, but it is hard to stop it. Many renters in San Francisco make thousands every year renting out rent control apartments and Berkeley has even more “Tenant Landlords†making money by subleasing rooms or their entire apartments…
On another note entirely, my wife, sick and tired of cold and damp, decided we had to get away to sun and warm. I suggested getting in the car and driving south randomly until we encountered same but, instead, she has booked flights to Lost Wages.
I don't gamble - unless the odds are hugely in my favor, in which case it's not exactly gambling, eh? - and I'm not much into spectacle. All suggestions for worthwhile entertainment are welcomed.
I do figure I could have a lot of fun visiting desperate realtors or condo projects. I have cash. I could write pretty substantial offers without financing contingencies but only at lowball prices. What's a decent haircut? 40% off asking? 60% off asking?
In fact, some landlords would chase us away even before we parked. Luckily we found something a couple of days later for the low price for just $1750 (2 BR 2 BA) in Santa Clara.
Wow... I wasn't as lucky in the year 2000. I ended up paying $2000 with a 2 year contract for a 1.5/1.5. :(
"Which Sci-fi/Fantasy character are you?"
Yoda.
---
eburbed - I had a nice 2br in MV for $2000 back in 2000. I pay less than that now for an even nicer place in a better neighborhood.
Yesterday I said:
Don’t forget to do this with appreciated stock. Then the little ones can sell in 2008-10 and get the gains tax free. (see Anthony’s post above).
Then StuckInBA asked:
Interesting. What if they already own the stock ?
To follow on further to Punchbowls reply, if the childs unearned income is above $1700, the parents tax rates apply (this is, I believe, the "kiddie tax"). So you (well, your child) may be able to get away with selling the stock in small bits from 2008 to 2010 to keep the earned income (cap gains) under the limit. Not much help if the stock is greatly appreciated.
All this is giving me a headache. Anybody want to give a plug for the best state 529s....
Definitely NTA.
See below for more info on kiddie tax changes:
http://www.smallbusiness.adp.com/accountants/newsletter/af_sept06_2.asp
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Please help the REIC and banksters! (for those unfamiliar with the term, please refer to the Housing Bubble Glossary).
They need our help. Signs their beloved mega-global housing/credit bubble is beginning to falter are now everywhere and unmistakable. No matter how low toxic-mortgage lenders lower "standards", it appears that they've exhausted their supply of typical FBs (innumerate 'tards and Marshall Reddick-worshipping specuvestors) and now they're even running short on falling-knife-catchers.
Sure, they're counting on a taxpayer-funded federal bailout of banks/lenders and GSEs --after all isn't that what taxpayers are for? They don't call it "Privatize profits, Socialize Risk" for nothing, do they? That's a gimme. Problem is, even with suckers like YOU footing the bill for some f***ing idiots' mistakes, there's still no way to avoid some pain for the industry players. Some toxic lenders have already gone out of business, while others are restating incomes/losses and teetering on the edge of insolvency --and this is only the beginning! Plus, lots of newly minted Realthwhores, fly-by-night mortgage brokers and hit-the-number appraisers are now facing unemployment.
This just will not do! Pain and negative consequences are for thrifty, responsible suckers like you --not the REIC!! Oh, the humanity... what to do, what to do?
Wait --I've got it!:
The biggest problem right now with maintaining that permanently high plateau is that rents cannot easily be inflated with debt, the way housing prices can. There is no such thing as a fraudulent cash-out refis, HELOCs or neg-ams for renters --they must pay their rent with real earned income and/or savings (yes, some people out there still have savings --can you believe it?!). Since renters must pay rent using real money vs. monopoly bubblebucks, there's no way to ignite crazy bidding wars on rentals. And global wage arbitrage is keeping wages firmly in check --no inflation happening there (crooked CEOs excepted, of course). Sadly, there's currently no way to funnel huge amounts of Fed/MBS/Chinese liquidity into the hands of renters, so they can bid rents to the sky.
And herein lies the solution: the REIC must create new debt vehicles for RENTERS!
Your assignment: How can the REIC and banksters create enormous new debt vehicles for renters, capable of inflating rents as high as house prices, thereby cancelling the rent-vs.-buy imbalance --without having to resort to any of that pesky wage inflation?
Discuss, enjoy...
HARM
#housing