{"id":36227,"date":"2016-10-19T13:40:28","date_gmt":"2016-10-19T17:40:28","guid":{"rendered":"http:\/\/www.technologyinvestor.com\/?p=36227"},"modified":"2016-10-19T15:58:22","modified_gmt":"2016-10-19T19:58:22","slug":"more-on-real-estate-the-stay-at-home-portfolio-and-lead-ups-to-tonights-last-presidential-debate","status":"publish","type":"post","link":"https:\/\/www.technologyinvestor.com\/?p=36227","title":{"rendered":"More on real estate, the “Stay At Home” portfolio and lead-ups to tonight’s last Presidential “debate”"},"content":{"rendered":"

Learned, with pain:<\/strong><\/span> If you work in “The Cloud,” i.e. over the Internet, you must save everything you do, every few minutes. And you must keep backups.<\/p>\n

The Internet is unreliable. The Cloud (no matter who runs it) is even more unreliable.<\/p>\n

All this is why this column is late.<\/p>\n

Eventually I’ll figure “Auto-Save,” but meantime I do backup manually by hitting the “SAVE” button, often. You should too.<\/p>\n

Real estate’s positive investment thesis:.<\/strong><\/span><\/p>\n

+ If you keep the leverage low. No more than 65% LTV (Loan to Value).<\/p>\n

+ A strong earnings to interest coverage. At least 1.6 times.<\/p>\n

+ Not too many large tenants.<\/p>\n

+ Tenants who can afford the rent if the economy goes kapluey.<\/p>\n

Then are are the tax advantages. Donald Trump uses them. Why not you and me? This is from the New York Times earlier this week:<\/p>\n

Just Like Trump, I Avoided Paying Federal Taxes<\/strong> by Bert Stratton OCT. 17, 2016<\/p>\n

Cleveland Heights, Ohio – I’m like Donald Trump, somewhat. We both inherited buildings from our fathers. I’ve kept my father’s properties and bought a couple more buildings. For my first couple of years I had “loss carry-forwards.” I lost money and paid no federal taxes.<\/p>\n

Some dads teach their sons fishing. My dad taught me to do taxes.<\/p>\n

He kept two sets of books – one pencil, one ink. Self-made guys, like my dad, often kept two sets of books, a retired accountant later told me. The second-generation, like me, usually goes legit, he said.<\/p>\n

I went legit. I got audited, didn’t take an accountant with me, and left the Cleveland federal building with a credit. Landlords handle a lot of cash – first month’s rent, security deposits. That’s probably why I got audited.<\/p>\n

Years later, my younger son got a certified letter from the I.R.S. with a handwritten Post-it attached. (The government usually sends me unsigned computer-generated letters.) What did the government want with him? My son, then a college student, played drums for the Michigan Wolverines women’s basketball pep band. He was paid $25 per game plus free hot dogs. The I.R.S. gave him a credit, too: $68. I was proud of him.<\/p>\n

I haven’t been audited since 1982. Thirty-four years of saving bills and income\/expense statements and checks – and nobody wants to see them. Yes, I periodically throw out nonessential records, but I replenish.<\/p>\n

Mr. Trump claims to be an expert on taxes, but he isn’t that interested in his own taxes, according to his former accountant, Jack Mitnick, who said Mr. Trump’s former wife Ivana asked more questions at their annual visit to the accountant than her husband did.<\/p>\n

I don’t keep two sets of books, but like Dad, I do use a pencil. A couple of years ago I went to a major downtown Cleveland accounting firm and showed my returns to an accountant who nearly flipped out. “I’ve never seen this before. You do it by pencil?” he said. Yes, so when I make mistakes I can easily correct them.<\/p>\n

I sign my name by pen. I report withheld security deposits, every first month’s rent pocketed, and I take all the legal deductions, just like Mr. Trump.<\/p>\n

Apartment buildings have lives – it’s called depreciation. For instance, apartment buildings last, according to the tax code, 27.5 years. Commercial buildings last 31.5 years or 39 years; the law keeps changing.<\/p>\n

Luckily for laymen, the I.R.S. literature is good reading. The 1040 instructions are clear, and the I.R.S. is often accommodating: “If you have suggestions for making these forms simpler, we would be happy to hear from you.”<\/p>\n

Every January I wear a camping headlamp and crawl around my attic, culling old receipts and folders, making room for new files. Why do I save all this stuff? I get insulation flecks on my fleece jacket. It’s freezing up there, and there are mouse droppings and desiccated rubber bands.<\/p>\n

The first commandment of real estate is, “Save all old records” (you might get sued someday and want to prove you’re the good guy). The second rule is, “Never sell a building” (because then you’ll have to pay capital gains). But if you do sell, defer those gains by buying another building almost immediately. The best strategy: hang on to the building forever, and when you die, your heirs can sell it without paying a big capital gains tax. (Hillary Clinton is thinking of changing that law.)<\/p>\n

Two years ago I sold a 17-suite apartment building, and as stipulated by the federal tax code, I had 45 days to identify a new property or else pay capital gains. I hired a “1031 company” – a firm that exists solely to hold your money while you do a “1031 exchange” – both named for a section of the tax code. You buy a more expensive building. If I touched the money, even for a second, the transaction would be taxable.<\/p>\n

I couldn’t find an appropriate apartment building in 45 days, so I bought a medical office building. The elevator – the only one in the building – often had bad moods; I didn’t like the calls from doctors about how their patients had to hobble up three flights of steps because the elevator was out.<\/p>\n

I sold the building this year and owe the capital gains tax. Fine. As a banker once told me, “You make your money, and we make ours.” If you’re paying taxes, you’re making money.<\/p>\n

The only problem is my taxes are now too hard to do myself. I owe capital gains taxes going back to 1987 – the year I bought the 17-suiter. I’m not saying how much. I’m like Mr. Trump that way. But I’m paying.<\/p>\n

Things learned<\/strong><\/span><\/p>\n

+ Cramer has found a neat trend — Stay at home.<\/strong>\u00a0Stocks include Netflix (NFLX), Dominos Pizza (DPZ), Google (GOOGL), Amazon (AMZN) and Facebook (FB).<\/p>\n

+ Your company’s phone system has problems. Most common: You have no operator. Dumb! Your phone system sends the call directly to an executive’s voice mail. But there’s no way of busting out by dialing “O” (zero). Bad for customers.<\/p>\n

+ Pretend you’re a customer. Does your web site actually work? Can you actually buy something? Are your executives’ email addresses listed?<\/p>\n

+ Widgets on the iPhone are useful. Turn your phone on. Swipe right and they appear. Swipe up and scroll between them. Here are the Widgets I use: Up Next, Top Stories, Weather, Calendar, Kindle, Map Destinations, Batteries (iPhone \u00a0and Watch), Reminders, Stocks, The New York Times, the Economist, Bloomberg, and Fidelity Quick View — tells me how much by the minute I’m losing.<\/p>\n

+ Never include more than one action item in an email. Most people read only the first item, and answer it. They forget to read further.<\/p>\n

+ You must wear sunglasses outside. And they must<\/strong> block 100% of the UV rays. Otherwise your eyes will suffer when you get older. More on sunglasses, click here.<\/strong><\/a><\/p>\n

+ You can get free trades with your online brokerage account — if you give them money. You must work the deal in advance of giving them money. I just snagged $3975 of free trades on Fidelity.<\/p>\n

+ The instant you buy a new dishwasher, the old one will start working again. It happened me this week. But, if you do buy a new one, insist on a service manual and the most common replacement parts that break — like the door switch.<\/p>\n

+ 20 Ways to Never Get Sick.<\/strong> From BestLife. <\/em>Tips include: Sleep, carrots, stress, salmon, yogurt, salmon, \u00a0flu shot, wash your hands and stay away from people (work at home). click here.<\/a><\/strong><\/p>\n

Locker room talk. \u00a0<\/strong><\/span>My friend dragged one of these out of his bag. I pounced:
\n\"speedstickantiperspirant\"<\/a>\"speedstickantiperspirant2\"<\/a><\/p>\n

Look at the main ingredient. It’s ALUMINUM. That stuff is dangerous. Put it on your skin. Your body will absorb it. And you’ll get stupid.<\/p>\n

\"aluminium\"<\/a><\/p>\n

You want this one. It’s straight deodorant and has no aluminum.<\/p>\n

\"speedstickdeodorant\"<\/a><\/p>\n

Tonight is the last “Presidential” Debate<\/strong><\/span><\/p>\n

The good news is Hillary is winning and Trump is fun to watch, and great grist for the comedians. To wit:<\/p>\n

+ If Trump wins, it will be the first a white Billionaire family has moved into public housing vacated by a black family.<\/p>\n

+ Walls absolutely work. Two thousand years ago, the Chinese built a wall. Since then not one Mexican has tried to scale the wall.<\/p>\n

Fun videos:<\/strong><\/span><\/p>\n

\"alecbaldwin2\"<\/a><\/p>\n

You can watch the above one here.<\/strong><\/a><\/p>\n

\"colbertandmelaniatrump\"<\/a><\/p>\n

You can watch this one here.<\/strong><\/a><\/p>\n

\"HarryNewton\"
\n<\/a>Harry Newton, whose grandkids don’t care about the stockmarket, this election, or future interest rates. Courtesy Apple’s \u00a0fantastic PhotoStream, here are the latest wonderful photos.<\/p>\n

First, Eleanor, then Eleanor pushing Peter and finally Sophie. I am feeding them a little while pill which keeps them this size and age forever. It’s marketed by Trump Enterprises.<\/p>\n

\"eleanorscreaming\"<\/a>\u00a0\"eleanorandpeterinsupermarket\"<\/a> \"sophieinpark\"<\/a><\/p>\n

In case you’re not sick of interesting anti-Trump stories, this is one good. It came out at the time Boy Dylan got a Nobel Prize.<\/p>\n

How Dictatorships Are Born<\/strong> ,by Roger Cohen<\/p>\n

PALO ALTO, Calif. – “Something is happening here but you don’t know what it is, do you, Mister Jones?”<\/p>\n

Of course Bob Dylan deserved the Nobel Prize for Literature. We’re all Mister Jones now. It’s the wildest political season in the history of the United States.<\/p>\n

Just to make his pedigree clear, Donald Trump is now suggesting that Hillary Clinton “meets in secret with international banks to plot the destruction of U.S. sovereignty, in order to enrich these global financial powers, her special interest friends, and her donors.”<\/p>\n

What was it the Nazis called the Jews? Oh, yes, “rootless parasites,” that’s it. For Stalin they were rootless cosmopolitans.<\/p>\n

Just saying.<\/p>\n

Societies slide into dictatorship more often than they lurch, one barrier falling at a time. “Just a buffoon,” people say, “and vulgar.” And then it’s too late.<\/p>\n

I’ve been reminded in recent weeks of the passage in Fred Uhlman’s remarkable novella, “Reunion,” in which a proud German Jewish physician, twice wounded in World War I, and convinced the Nazis are a “temporary illness,” lambasts a Zionist for trying to raise funds for a Jewish homeland:<\/p>\n

“Do you really believe the compatriots of Goethe and Schiller, Kant and Beethoven will fall for this rubbish? How dare you insult the memory of twelve thousand Jews who died for our country?”<\/p>\n

Germans fell for the rubbish. The Republican Party fell for the garbage.<\/p>\n

Today, millions of Americans who plan to vote for Trump are apparently countenancing violence against their neighbors, people who might be different from them, perhaps Muslim or Latino. It’s easy to inject the virus of hatred: just point a gun.<\/p>\n

That Trump traffics in violence is irrefutable. His movement wants action – deportations, arrests, assassination and torture have been mooted. The most worrying thing is not that Trump likes Vladimir Putin, the butcher of Aleppo, but that he apes Vladimir Putin.<\/p>\n

Speaking of Latinos, here’s what happened the other day to Veronica Zuleta, who was born in El Salvador and became an American citizen more than a decade ago. She was in the upscale Draeger’s Market in Menlo Park when the man next to her said:<\/p>\n

“You should go to Safeway. This store is for white people.”<\/p>\n

Zuleta was shocked. Never had she encountered a comment like that about her brown skin. But even the Democratic bastion of Silicon Valley is not immune to the Trump effect: Once unsayable things can now be said the world over. “Go back to where you came from” is the phrase du jour.<\/p>\n

In the three months after the Brexit vote in Britain, homophobic attacks rose 147 percent compared to the same period a year earlier. It’s open season for bigots.<\/p>\n

Financial and emotional pressures have been mounting on Zuleta. She lives in what the visionaries of Google, Facebook and the like consider the center of the universe. Where else, after all, are people thinking seriously about attaining immortality; or life on Mars; or new floating cities atop the oceans; or a universal basic income for everyone once the inevitable happens and artificial intelligence renders much of humanity redundant?<\/p>\n

Y Combinator, a big start-up incubator, has announced it will conduct a basic income experiment with 100 families in Oakland, giving them between $1,000 and $2,000 a month for up to a year. Just to see what people do when they have nothing more to do. Oh, Brave New World.<\/p>\n

Back in the present, prices for real estate have soared. Zuleta lives in a modest rented place on what used to be the wrong side of the tracks, in East Menlo Park, east of Route 101 that runs down the Valley. As it happens, her home is now a couple of blocks from Facebook’s sprawling headquarters designed by Frank Gehry that opened last year. She asked about a job in the kitchen, to no avail. She struggles to make ends meet.<\/p>\n

Facebook, she told me, “is intimidating for people like me. It’s like, get out of here if you don’t know anything about technology.”<\/p>\n

For its part, Facebook says it cares about and invests in the local community – $350,000 in grants donated to local nonprofits this year and last, new thermal imaging cameras for the local fire district, and so on. Its revenue in 2015 was $17.9 billion.<\/p>\n

Zuleta works from 6:30 in the morning until midnight, cleaning homes, driving children to school and activities, running errands for wealthy families (like shopping for them at Draeger’s), and cleaning offices at night. In between she tries to care for her two young children. The other day, she was in the kitchen, collapsed and found herself in the hospital.<\/p>\n

“The doctor said I need to sleep and relax,” she told me. “But I can’t!”<\/p>\n

Life is like that these days for many Americans: implacable and disorienting. As a Latina, Zuleta said she would never vote for Trump, but she feels overwhelmed.<\/p>\n

Something is happening here but you don’t know what it is, do you, Mister Jones?<\/p>\n

 <\/p>\n