Welcome to Chez Cliff!

Huh?

Did I just say that?

Oh yeah, today’s quote:  The man who reads nothing at all is better educated than the man who reads nothing but newspapers. - Thomas Jefferson.

The Wall Street Journal published this relatively cool map, showing the delinquency rates around the US.  The map and the data look all pretty.  But much like many of the first dates I’ve been on, the authors opened up their mouths and screwed things up.

"Home resales have fallen steadily, prices have flattened and mortgage delinquency rates have risen especially in red-hot markets, where prices rose higher and fell harder, creating more delinquency risks."

If we take a look at the top 5 markets, notice Detroit and Flint, Michigan (Represent!) are listed.  Detroit was a party to this huge real estate bubble?  Flint was a "red hot" market?

Not hardly.

The statement that "house resales have fallen, prices have flattened" are not plausible reasons why delinquency rates increase.  House values drop 10% and suddenly people are going delinquent?  I’m not an economist but I’ll take a stab in the dark here.  Maybe it has something to do with ARM’s and interest rates?

And who edited this statement:  "mortgage delinquency rates have risen, where prices rose higher and fell harder, creating more delinquency risks."?  What in the world is that?  That’s like saying "Heart attack rates have risen thereby creating more heart attack risks."

I are smart.

It’s nice to know that if I had dropped out of high school, I could have found work as a newspaper editor.

Maybe the WSJ uses the same editor Donald Trump uses.

I’m being too negative.  Let’s be more positive.

If your belief is "Investors buy when the market goes down." then search no further than Detroit.  Where else can one buy a 6 bedroom house for $20,000?

I make no recommendation with regards to buying property in the area.  Admittedly, I am biased.  Here’s a picture taken the last time I left Detroit.

Thanks to Phoenix Real Estate Guy for the info!

Always acknowledge a fault.  This will throw those in authority off their guard and give you an opportunity to commit more. - Mark Twain

It was agreed upon an hourly rate would be charged for the project.  I’m weird when it comes to people’s income; the exact rate will not be disclosed.  A clue: it was definitely higher than minimum wage.

When discussing the blown budget, my mentor asked me one simple question:  You’re paying a flat hourly rate no matter what the job?

That’s when my stomach sank.

In review of the listing of work to be done, most was pushed off onto the hired help.  My interest was giving as much work as possible to help support an independent entrepreneur.

The hourly rate charged was equivalent to that of an electrician.  The same rate was applied for two people which easily pushed the hourly rate above $100/hour.

The missed realization: no matter what the job the pay rate was the same.  In essence, by paying the same rate I was saying that a dry-wall person makes as much money per hour as an electrician.  That is simply not the case.  Installing tile costs as much as installing electrical?  Not a chance.

Even if I had known exactly how many hours it took the first crew to install drywall, the numbers would have been skewed.  The labor rate for that specific task was too high.

Change is inevitable - except from a vending machine. - Robert C. Gallagher

Please forgive the dust.  I’m renovating the blog.

The old design was cluttered, busy.  Attacking it with a brillo pad, the non-essential stuff falls away.  But nature abhors a vaccum: new stuff is coming in.  I’ll try it out, see how it works.

Feedback is always welcome!

Before continuing with the budget analysis, a few points need to be explained.

It was agreed on Day 1 that the labor would be charged on a "per hourly basis".  Not by the job.  As stated previously, I love the "pay by the job" concept.

I agreed to this billing method; I was hoping to be able to determine how many hours it would take to perform a specific task. For instance, if 25 hours were required to redo the drywall on the ceiling, then I wanted to be able to create a formula using the pieces of data.

• 1000 square foot to be dry-walled
• 25 hours of labor
• $1500 material costs
• Labor rate is $X per hour

From this data, a constructed formula for a new project show how much the total cost would be by knowing the square footage.  Similar to the hardwood floor calculation of $1.50 per square foot.

This exercise was to be repeated for the electrical, the plumbing, the travertine installation blah blah blah.

In the first few weeks, the invoices for the work were pretty much electrical and plumbing.  Each day was not broken down into "4.5 hours electrical, 3.5 hours plumbing".  For two people putting in an 80 hour work week and I knew that one person was doing electrical, one person was doing plumbing, The assumption: 40 hours on electrical and 40 hours on plumbing.

This worked fine up until other work started creeping into the work scope.  For instance, 80 hours would be charged to electrical, plumbing, kitchen demo.  The "divide by 2" methodology no longer applied.  And since the week had already passed, going back and asking how many hours were spent on each activity, each day, for each person would result in guesses or a lot of "I don’t know".

Even if the number of hours were known, the data would have been skewed.  More on this tomorrow.