John T. Reed’s news blog

Our son Mike, my wife, and I bought a house in June. Termite report obtained by the owner said we had termite damage $2,200. We called and told him to do it. He jacked the price to $4,400 and said we had to tent it. . I told my son I had no experience with tenting and told him to get a second, and maybe third, opinion. . Orkin said there are no termites at all in the garage of house, just in a tree and stump in the backyard. Absolutely no need for tenting. Tenting was also going to...

Cost accounting tells a typical company something like this: You are overall profitable with your 20 products, but after examining your business with a microscope figuratively speaking, we must tell you that only 20% of your products are profitable. Eight are around breakeven and another eight are losing money. Your belief that everything you are doing is profitable because it is overall profitable is incorrect is an example of the ignorance-is-bliss phenomenon. You need to either make the 16 unprofitable products profitable or discontinue them. Now let’s apply that to real estate investing. Many novices seems to be collecting as many cash-out refis, LLCs, and separate buildings as possible and some are overall profitable when they sell after five years or so. So...

USPS reports a 37% increase in permanent changes of address to exurban areas. The National Association of Home Builders says there has been a 20% increase in new home construction permits issued in exurban areas. . I call that dispersion. I have been predicting it since the invention of the Internet in the 1990s. . I myself have been an example of it since having a new home building in an unincorporated exurban area in 1983. There is a state park at the end of my street. I drive past cattle pasture and deer and wild turkeys daily. Less frequent...

Income stock versus growth stock Rental property was the equivalent of an income stock—one that pays dividends like utility stock—until 1971. Then rental property turned into the equivalent of a growth stock—no dividends, just stock price increasing, like Apple. Double-digit cap rates To put it another way, before 1971, cap rates were double digits. My first rental property in 1969 had net operating income of $1,711/year and cost $14,000 for a cap rate of $1,711/$14,000 = 12%. It had been on the market for a couple of months for $16,000 when I offered $14,000 and got it. Average deal then. The first book that...

For decades now I have watched wannabe real estate investors and beginner real estate investors say their goal was to accumulate enough properties that they could live off the cash flow from them. Is that possible? Yes, but in the sense that you can live off the cash flow from a savings account. Let’s make $50,000 a year the target cash flow. The median household income in the US today is $79,900. HUD Savings account On 8/18/21 Internet said you could get .5% on a savings account. To get $50,000 a year before tax, the amount in the savings account...