Welcome to Chez Cliff!

This article by Ben Stein.  His phrase "Capitalism requires flexibility" immediately captured my attention.

Ben bluntly summarizes the state of affairs in Detroit, Michigan.  The automotive industry is suffering.  People are losing jobs.  And the mentality of the laid-off workers is they can’t find another job.  Yet trying to get a plumber to unclog a drain is nearly impossible: their work-load is too great.  As for income, we all know customers pay a lot of money for the privilege of seeing their plumbers butt-crack.

The notion that people have to do the same job, for the entire life-time, has become ludicrous.  Ponder this thought:  a 23 year old college graduate finds themselves working for the next 40+ years.  And to think that someone would be condemned to do the same tasks day after day, year after year . . .

There is one other class of this society which performs the same tasks every day, year after year:  people in prison. 

My cubicle is grey.  Coincidence perhaps?

The idea that our society allows for people to change careers or profession at any time is wonderful.  And when this transition does occur, nobody really seems to wonder or care.  Why?  Society only asks one question of those providing a service:  Are you qualified?

One morning, a wife comes out of the bathroom yelling.  The shower drain has become completely clogged.  Black sewage is spewing up all over the shower basin.  Now the toilet is backed up and the PlayStation 2 stops working.

The husband calls the plumber and asks "So did you graduate from high school?  Which one?  Did you attend a four year or two year university?  Is that a Bachelors of Science?  What was your GPA?  How many years have you been a plumber?  Do you have any job references?  Can you bring a copy of your job history?"

Um . . . no?  That’s not reality.

The husband probably said "My wife is about to claw my eyes out!  When can you get here and fix this *%*#@ thing?!?!"

Do not mis-interpret my message.  I am not saying that we should all run out and become plumbers.  Admittedly there are a few people who I would love to see work a plunger.  But the message Ben is driving home is we live in an economy that thrives on flexibility.  The more flexible someone is, the more chances they have at providing an income.

Getting the qualification is easy.  It is clear that universities do not discriminate based on age.  Graduating at 95 years old? Any school, university, or trade-skill shop is more than happy to train an orangutan as long as he has the money to pay.

And for us who are investors or becoming investors, we are OJT.

On the Job Training.

It was my sincerest desire to announce the funding of my loan.

That isn’t going to happen.

Arms raised in victory, I wanted to proclaim that the new houses were officially mine.

That won’t happen either.

The loan did not fund. 

Why? 

I’m glad you asked.  The lender reviewed the housing inspection report and wanted a few items fixed prior to funding.  The items that were selected were actually very minor.  Ceiling light fixture, cracked window . . . . and the major items such as rusted out hot water heater, meth lab, dead body, etc. were ignored.

How these particular items were chosen is beyond me.  Maybe there is some high level scientific method involved.  Roll the dice?  Maybe.  Eenie meenie miney moe?  Probably.  Tack the report on the wall and toss darts at it?  Who knows.  But providence has allowed me to escape having to have major repair-work done prior to closing.

Believe it or nuts the repairs were completed.  Digital photos were sent.  However the lender didn’t believe us.  Their chosen representative, the appraiser, must journey out once again and view the repairs first hand.  Word has reached me that the appraiser has been dispatched to view the premises.

Maybe today the loan will fund.

In the middle of all this, an email floated into my box.

The front house tenants decided to squeal on the back tenant.

"You know someone moved in, right?"

In my conversation with the back tenant, he took it upon himself to find a roommate.  But not just any roommate . . .

An actress.

Um . . . ok . . .

But he personally vouches for her.  After knowing her for three days, he has determined she’s a good person.  And her child.  And her dog.

Four people, sharing a two bedroom teenie, tiny house with one walk-in closet . . .

But I guess it’s alright.  After all, if the acting career doesn’t take off she has other talents.  Like her budding singing career . . .

ohmigod.

This time, escrow went much smoother.

It is with a certain pleasure to deal with people who actually know what they are doing.  Last Friday, the Notary handling the paperwork really had no clue what I was signing nor the origins of the various forms.

Yesterday, that was different.  Yesterday was pleasant.

The next step is to wire the money.  A lot less money than before.

This means the loan will fund one day late.

The hour was 10:30 a.m. on Friday.  The Escrow office called; the documents were ready to sign.

Seated in the office, the paperwork started.  My signature was imprinted itself on form after form.  Until I got to the closing costs sheet.

The number was too high.

Going in, I knew the ball-park figure of what I would have to pay.  This number they were providing far exceeded that. 

There were two charges not taken into consideration.

First: the mortgage payment.  Depending on where escrow falls during the month, the bill for the mortgage comes due either right away or the following month.  Usually if it falls during "the following month", people claim they get a month for free.  Not so.  They pay this as part of their closing costs.  So this means my first mortgage payment will not be due until July 1st.  Ok, this is not so bad.

Second:  Paying a point.  The reason why the loan was setup for paying of points is beyond me.  The loan had a 6.125% interest rate.  Pretty good.  The sacrifice for this rate: paying down a point.  The price tag: over $4500.

The difference in the mortgage payment would be a little over $100 per month.  While that may be something to get excited about, the return on that $4500 would be slow.  If you think about it, almost 5 years would have to pass before the benefit of paying the $4500 would be realized.  Also if I were to refinance anytime during those five years, then this point being paid would essentially become lost.

For the uninitiated, "paying down points" refers to the customer paying a percentage of the financed portion of the purchase in exchange for a lower percentage rate.  So for a payment of 1% of the portion financed, the client would be 1/8th percentage point break or 1/4 or whatever the scale happens to be.

To be perfectly blunt, I know of no one who has ever paid points on a loan.

The loan docs are being rerun.  Today I’ll receive another phone call from Escrow.  I will, once again, go in and sign more documents.  But the $4500 will stay in my pocket.

Yes, I am extremely annoyed this occurred.  My objective was to have all the papers signed last week.  Today, my bank would wire the funds to the escrow account and all I would do is sip champagne.  Instead my morning will be spent driving here and driving there.

On a good note: on Friday the squatters had a trailer filled with their belongings ready to go.