late night venting !!! - Posted by John

Posted by Frank Chin on August 05, 2005 at 07:52:42:

Sean:

When I took over the business 3 years ago, I decided to keep things the same during the transition. She’s one of the holdovers.

The employee in question is an older Italian women, lived in the neighborhood years and years, and worked at several nearby businesses before. She seem to know most of the customers on a first name bases, and usually asks “how’s your mom, your dad”, did you son finish college yet, etc. It’s invaluable in a retail business environment.

Not to mention older folks have more common sense. We had to let a young fella go yesterday because of this. For a job as simple as answering the phone, we get complaints about “who’s that stupid guy answering the phone”. Or, “he’s pretty stupid for a Russian kid”.

Just as an example, part of his job in answering the phone is to find out what the customer’s problem is, take care of it, and get someone else if he can’t. But for weeks and weeks, he’ll answer the phone, ask the customer to hold, and page for the manager immediately. So I asked him, “when a customer calls, get name, number, find out what they want, and get the manager after if you don’t know the answer.” He said “OK”.

I further added "the manager has to drop everything when someone calls because you can’t handle things as simple as “what time do you close today”.

I since asked the manager if there’s any immprovement. My manager replied, “you’re running up a huge phone bill now, because instead of paging me immediatley when someone is on the phone already, he takes messages from everyone now, and tell them someone will call them back later. I have to call every customer, and play phone tag. He’s just too lazy”.

So we put a notice up in the local Church bulletin board again hoping to find someone older, and local.

Often, with employess, you have to take the good with the bad.

Frank Chin

late night venting !!! - Posted by John

Posted by John on August 01, 2005 at 23:11:30:

I was just reading the posts today before crashing after a long and frustrating day. Tonight takes the door prize.

I read about someone making 10 bucks an hour asking how to borrow 2 mil with bad credit. Someone else ask about getting a 100% Ltv NOO loan with 400 credit score. People want to buy appartment buildings with no cash, no credit, and no reserves, hoping to get repair fund back at closing.

People need to realize most of the country is a sellers market. You need a strong credit profile and some cash reserves to get into this.
I met with a group of down on their luck R/E investors this weekend. Out of the 4, 2 were 2 months behind on their mortgage payments. One had a tennant move out because they could no longer live with a leaking roof that he could not afford to repair. The other 1 is complainig he paid 140K with 100% financing and has 300 neg cash flow per month, and just got laid off from his job delivering auto parts. No deals here.

Is this common place investors buying property just to be called Real Estate investors? They had no education as to what you need to do or have to be an investor. As the R/E market cycles which it will. I don’t hold to the buble busting theroy nationwide. But it will slow, decline and slow some more before it has another upward cycle like we have had way too long in my opinion.

New investors, Please read and study before jumping in. Don’t buy a property just to say you own one or more. Make sure you have some cash reserves and a decent credit score before you jump. Make sure your property cash flows positive. Above be prepared for a 20% drop in value. Remember you don’t figure appreciation into the numbers. The best investment maybe the one you didn’t buy today.

Sorry for the vent. I didn’t even read what my fingers typed.

Re: late night venting !!! - Posted by KPC

Posted by KPC on August 02, 2005 at 12:44:53:

Yeah, yeah, you’re an investor and I am the Queen of England. Everyone is jumping in without a clue. I just shake my head over what I am seeing under the heading “investor”. I wish all good luck, which comes right after hard work.
I am just hoping for the rats to start jumping ship and let the games begin.

Re: late night venting !!! - Posted by John Sheridan

Posted by John Sheridan on August 02, 2005 at 12:15:54:

Quote: “Is this common place investors buying property just to be called Real Estate investors? They had no education as to what you need to do or have to be an investor.”

What you describe is exactly the same phenomenon that pushed the NASDAQ stock index up over 5,000 in 1999. When CSCO stock was hitting $60, I knew people who, with big grins, were saying “I own 1000 shares of CSCO”. What they didn’t tell you was, they just bought it a week ago at $59. They wanted you to think they got in years ago at $10. When CSCO came tumbling down, they lost their collective shirts.

Whenever I see the number of these clueless investors increasing, I always assume that the market is topping.

If the number of clueless RE investors is on the rise, this could be an interesting parallel; maybe it means a market top is near in RE…

Early morning venting !!! - Posted by Frank Chin

Posted by Frank Chin on August 02, 2005 at 07:40:07:

John:

To add to your observation, I live in NYC, where in the last 20 to 30 years, it became a place where the foreign born is replacing native born at an increasing rate. A lady working in my office remarked that 20 years ago when she moved into her home, everyone on the block (over 20 families) was “American”, whereas she’s only one of three families now. All her neighbors come from China now. And she asked the same question all my American born friends ask:

“Where do these people find the money to buy these expensive homes”??

This is quite mysterious as most of them who are not highly skilled work as cooks, waiters, delivery men etc. Putting it another way, in the American mindset "how are they going to BORROW 100K, 200K or whatever, and can’t even SPEAK ENGLISH??

The answer is really simple. They don’t borrow.

Then the next question is, do they do creative RE, post bandit signs, knock on doors looking for motivated sellers in a HOT market giving away their homes.

The answer is again NO simply because they can’t even speak English.

What I do know is they work two jobs, maybe 15 hours a day, hoping to net perhaps $750.00/week. And those that work in restaurants also get 3 meals a day for free.

Then the next trick is they don’t buy an expensive cars, or rent a fancy apartment. It’s not unusual for them to ask the boss if they can sleep at the back of the restaurant at night, and in return, they’ll clean the toilets for free.

With all of this, some guy making $750.00 a week actually saves $700.00 week. That comes to $35,000/year. This actually boggles the mind of an American.

After three short years, these guys buys themselves a small takeout, have the whole family work it, make 70K to 100K a year, and does the same thing, save $75,000 out of $100,000.

What we see here is work, work, work, and save, save save. Not really fashionable today, but this was America 100 years ago.

Meanwhile, my American friends spend time figuring how they can borrow, borrow, borrow, go into deep debt, then hope to borrow some more while deep in debt. As a business owner, I got two employees under garnishee right now, and one of them still drives a fancy car.

While I’m not saying that the Carleton sheet type success story does exist, but for every Carlton success story, there’s another 10 frustrated students because creatrive investing involves skill, persistance, and business sense, traits that’s hard for most people to acquire.

Where as work, work work, and save, save save requires less skill, and luck, but quite a bit of persistence.

Bottomline.

The good life can be had, but as in the fable of the turtle and the hare, the path to quick riches is often a frustrating one.

Also, see a related post of mine:

http://www.creonline.com/wwwboard/messages/75225.html

Frank Chin

Re: late night venting !!! - Posted by Mike (Seattle WA)

Posted by Mike (Seattle WA) on August 01, 2005 at 23:44:08:

Tomorrow’s another day. Perhaps tomorrow someone will have an actual wholesale deal for you :slight_smile:

BTW, I agree with you completely. Life in REI is much easier with Credit/Cash and Education to go along with desire and drive.

Re: Early morning venting !!! - Posted by Barry (FL)

Posted by Barry (FL) on August 02, 2005 at 14:42:34:

Great post as usual Frank.

I spent a week in the Bahamas last month and I noticed alot of “shells” of houses that looked like they had been abandoned and asked the taxi driver about it. He said that unlike in the states, Bahamians don’t like having huge mortgage payments because of the fact that the rates are higher, mostly Canadian banks and that their economy is mostly based on tourism which has it’s ups and downs.

They will work and save their money, buy a piece of land and work some more. Save the money, lay the foundation and maybe the walls, and work some more. Save the money, put the roff on etc., you get the picture.

If they borrow anything at all it is to do the finish work in order to have a small if any mortgage. They also work together and help each other out building, to keep expenses down, like a barn raising in the old days.

I just read this article and thought I’d throw it in on the subject of saving in the U.S., it’s actually hit zero according to this article…VERY SCARY. Oh, well, just more distressed owners for us to buy from.

TUESDAY’S PERSONAL FINANCE STORIES

By MarketWatch
Last Update: 2:52 PM ET Aug 2, 2005
Most Americans are treading water, financially speaking. If it weren’t for mortgage refinancing and the cash being taken out of homes, a whole lot of folks wouldn’t be on vacation this summer or driving a new “friends and family” car or stocking up on fall fashions.

Even those who are moving ahead are doing so only a glacial pace, if salary data are any indication. The latest look at U.S. pay raises show companies planning on handing out 3.7% hikes, on average, this year – barely enough to keep pace with inflation. Next year, companies will be only slightly more generous, predicting salary boosts of 3.8%.

One positive trend: the increases that companies said they would hand out last year were actually delivered, an average 3.6%. Again, though, “official” inflation of 3.3% chewed up most of that and “unofficial” inflation – for those who pay for things like gas and property taxes – ate a lot more than that. Is it any wonder our savings rate has now “officially” hit zero?

Our lead story looks at the most recent salary survey from WorldatWork. Read it, plus find out how new layers of management at your company could spell doom for your career and see why one newsletter editor is learning the hard way about international investing, on Tuesday’s Personal Finance pages.

One other bit of good news from the survey: bonuses are also on the rise. The problem is that for millions of Americans, their paycheck is their only bonus.

http://www.marketwatch.com/news/story.asp?siteid=mktw&dist=nwhpf&guid={26166EAB-089F-441B-BA3B-4CFDC93DD312}&cbsReferrer=

Seems like the non savers are spending on depreciable assets, what a surprise, gotta have those toys! Kind of reminds me of an appointment I went on with a guy in my neighborhood facing foreclosure. All he could talk about was his big screen TV. I just sat there thinking to myself, so where are you going to plug that thing in under the bridge? Needless to say, he lost the house!

Excellent Post! - Posted by John Sheridan

Posted by John Sheridan on August 02, 2005 at 10:59:47:

Excellent post Frank, if only more people would listen, then the savings/investment rate in America could be something better than a paltry 2% and the economy would benefit greatly from that…

Also I was glad to see your other post regarding Stanley’s “Millionaire Next Door” – possibly the single best book on personal finance ever written. It ought to be required reading in all high schools across the nation…

Re: Early morning venting !!! - Posted by IB (NJ)

Posted by IB (NJ) on August 02, 2005 at 10:26:11:

"With all of this, some guy making $750.00 a week actually saves $700.00 week. That comes to $35,000/year. This actually boggles the mind of an American. "

Especially since the savings rate of this nation is a mere 2%.

Good post Frank. Correct me if I’m wrong, but isn’t another reason for the strong wealth accumulation among 1st generation immigrants attributed to the pooling of their economic resources (i.e. susu) to start businesses and buy homes?

Re: Excellent Post! - Posted by ski

Posted by ski on August 02, 2005 at 18:56:04:

Yes, providing that some high school students and grads can read above an 8th grade level.

Re: Early morning venting !!! - Posted by Frank Chin

Posted by Frank Chin on August 02, 2005 at 10:54:01:

IB:

Exactly right. My dad belonged to one, and everyone in the group pledge a certain amount every month, which goes into a pot. Then someone who’s looking to open a business, do a deal, would then make a proposal and funds would be made available.

I’m not sure what interest rates are involved, and repayment terms are. But its more of an investment pool as compared to a credit union. The only reason I knew about it was my dad missed a payment or two, and they had a few guys come by looking for him, and as a little boy, a few guys looking for dad makes a lasting impression.

Frank Chin

Re: Early morning venting !!! - Posted by IB (NJ)

Posted by IB (NJ) on August 03, 2005 at 19:08:57:

But aren’t there susus where folks take turns taking money from the pot?

Re: Early morning venting !!! - Posted by vacationlover

Posted by vacationlover on August 02, 2005 at 20:48:26:

This concept is used in other cultures, too. In the Caribbean/West Indian cultures, it’s called “The Hand”.

Susu - Posted by Cappy

Posted by Cappy on August 03, 2005 at 06:14:23:

In African cultures its called a “susu” The concept exists in almost every culture except our highly competitive one, unfortunately.

What differerent about this is … - Posted by Frank Chin

Posted by Frank Chin on August 03, 2005 at 07:29:34:

Cappy:

… in these groups, your word is your bond. Traditionally, the way a “susu” is run in the Chinese community, there’s no such thing as a “credit score”, “debt/equity” ratios. But the requirement is it’s someone known or related to the group, usually from the same village or town from China.

In other words, they’re not giving money to an idiot regardless of “credit score”.

My dad got his financing when he was 26 years of age, and bought his own business, a laundry. At that age, no “gringo” bank is not going to give him a loan, even if they finance such an enterprise. But in the Chinese community, its a given that if someone only earns $200.00/week (that’s in 1948 dollars) he can pay $100.00/week or more if he had to.

In more recent times, about 20 years ago, we know a family friend in Philly who saved $12,000.00 while working thru college. Needed a loan to buy a 2 family after graduation. Got financing from such a group, and was able to pay it off in 3 years. She would’ve had a hard time getting financing at a traditional bank back then (NOO loans are far more liberal today), and no American banker would believe a recent college graduate can a mortgage, let alone pay in off in 3 years. But in the Chinese commununity, it is not only common, but expected.

After living in the 2 family house for several years, she moved out, bought a SFH, and rented the entire “free and clear” “2 family” out at $600.00 per apartment, and had over $1,000 rental income per month before the age of 30.

Yes, “susu”'s are important sources of financing in the immigrant communities, and its importance are little discussed.

Frank Chin

Re: What differerent about this is … - Posted by John Sheridan

Posted by John Sheridan on August 03, 2005 at 09:07:56:

Quote: “in these groups, your word is your bond”

So – what happens if someone doesn’t pay back what they borrowed?

Re: What differerent about this is … - Posted by Frank Chin

Posted by Frank Chin on August 04, 2005 at 07:48:20:

John:

I wouldn’t go as far as Dale an call it a Loan Shark operation. But because the funds are made available to you because of the groups trust in you, on the reverse side, there’s the element of shame and humiliation if the one does not pay. So, often family members help out so as not to bring shame to the family.

I recall my dad was a guarantor for his older brother in one of these. His brother fell on some hard times and my dad had to make good on payments. I recall three to four guys coming out of a car coming out to to make the collection.

OK, so maybe there’s a bit of intimidation involved.

On one of my previous jobs, we did international financing where goods are sold on “accepted drafts”. Sometimes, a customer does not honor the draft on its due date due to finacial difficulties.

In Latin America, one procedure was to do a “Protest”. What happens here is the creditor publishes the name of the Debtor, and the amount not paid in newspapers the same way as Legal notices are done here. The idea is that when people finds out about it, no one will want to deal with this debtor, let alone extend credit. I hear its incredably powerful in certain places.

So the idea here also is also “shame and humiliation”.

This contrasts to one of my employees who currently have over $200,000 in judgements against her. As her employer, we’ve been served with a “garnishment levy” notice. But because she only holds part time jobs, and the weekly pay of each is below $152.00/week, she is actually exempt from the levy, according to Federal and State laws.

She drives around in a nice new car under her sister’s name, because it could be subject to seizure.

Recently, she collected a settlement on a “slip and fall” accident, which no one beleives happened, netting 85K after attorney fees,and her biggest fear was that her creditors will find out about it. I heard she since transferred the funds to her daughter’s name.

I asked her if she considered filing bankruptcy. She says doesn’t see the need for it as she’s judgment proof. I didn’t argue as she seems to be the EXPERT on the subject.

Of course, we thought it was very funny when she bought a “credit card” offer to the office where a credit card company offered her a card if she would only sign her name on the dotted line.

What do I see??

"Shame and “humiliation” replaced by “who cares”??

Frank Chin

Re: What differerent about this is … - Posted by Dale

Posted by Dale on August 03, 2005 at 14:34:38:

Think loan shark… they come looking for you. this is the bad part. My sister in law lives in Taiwan, where this is very common, the lender was a Village Friend, her
godparents. The money was spent/invested and lost, now after 10 years, she still cannot show her face in her own
village, for fear they will come after her. Many have been beaten, and or forced into various means of payback…

Just out of Curiosity… - Posted by Sean

Posted by Sean on August 04, 2005 at 11:56:17:

Why do you have someone with such low integrity on your payroll? I know I wouldn’t.

Re: What differerent about this is … - Posted by John Sheridan

Posted by John Sheridan on August 04, 2005 at 09:45:14:

Frank – Thanks again for your interesting post.

As for "shame and “humiliation” being replaced by “who cares”, I would go even further. There are lots of people out there who seem to be proud of the fact that they have avoided paying their debts. These are the same kind of people who are proud that they graduated high school, or in some cases, college, without doing any work or learning anything at all. And their number seems to be growing all the time.

It really makes me wonder what this country is coming to.