Saturday, February 13, 2010

More guidelines for investing....

Guideline #12: Budget money for management. Always.
Successfully managing real estate investments takes time,
discipline, and some acquired learning. If you are managing
your own investments, pay yourself for your time. Not only are
you earning it, but that way, once you get sick and tired of it,
there will be money available to pay a professional.

Guideline #4: The value of real estate is derived from its
use, or from its potential use. Over time, that often changes.

Guidelines for investing....

Guideline #33: You never truly know how well your
investment has performed until you have sold it and
paid the tax. The IRS always bats last.

Friday, February 12, 2010

It was a lucky day for us all.......

when Cheri Hottinger accepted the job offer to
become the new President of the Licking County
Chamber of Commerce.

If you harken back to 2004, the Chamber was
not perceived as being very community friendly. There
is no question that the Chamber had a terrific history
of supporting Southgate Corporation as it successfully
brought new industry to the Newark Ohio Industrial
Park. A very good thing.

However, the Chamber's relationships with the other entities
and people interested in, and working toward, the over-all
health of our community were strained at best.

Cheri started as President in 2004 and brought with her
a complete change in tone and attitude. The Chamber of
Commerce, while still supporting all efforts at economic
development and community enhancement, has strived
under Cheri's leadership to increase the value of Chamber
membership for its members. The simplest and best
scorecard for that effort is that, in theface of some interesting
economic times, the Chamber membership has increased
from 490 when she started to 725 today.

People seem to understand the Value she has added
to the organization.

Last night, the Chamber of Commerce Executives of
Ohio made it official. Cheri was named their 2009
Professional of the Year. A well deserved honor.

Well done!

Cheri with Board Chair Kim Lust and Chair- elect Pat

What Licking County needs more of is......

people like Jerry Jurden.

Back in 1984 Anderson Layman Company had its first
downtown office on the second floor of the old First National
Bank at 1 South Park Place. Looking out from our windows
across Third Street we could see through the storefront glass
into the old W.T. Grant Building. There sat Jerry and Martha
Jurden, at their desks, on their phones. Pretty much just the
two of them. Every day.

We eventually discovered that our neighbors were buying
"fleece", t-shirts and sweatshirts, directly from mills and
wholesaling via telephone and mail order. Their company was
called Heritage Sportswear. They worked steadily and provided
superb customer service.

They soon out grew the building they shared with ARWebb
Office Supply and moved to the former Fink Sign Company
building on East Main across from Blessed Sacrament. In due
course they outgrew that facility and so built a 35,000 square
foot distribution center in the Newark Ohio Industrial Park. It
will come as no surprise that they outgrew that space and have
had to expand twice, enlarging their building to its current size
of 115,000 square feet.

Jerry does not work as hard these days and the next generation
of the Jurden family is fully engaged in the business. The
Jurdens still work steadily and Heritage Sportswear provides
superb service to their customers.

As they say on their website, "If you are a returning customer,
we sincerely thank you for your business. If you are a potential
new customer, we welcome you and encourage you to “bring on
the business!”

The good news for Licking County is that this successful small
business, that grew from a husband and wife sharing a vision in
1982, now provides employment and opportunity to 200 people.

Thanks Jerry.

Thursday, February 11, 2010

I have a shelf full of those.....

small, read-in-an-hour, self-help type books they sell in
airport book stores. The Max Strategy is one of those
books. Author Dale Dauten tells of a chance meeting that
saves his career.

His protagonist, Max, suggests "Experiments never
fail", that we avoid "goal poisoning", that "today's goal is
tomorrow's rut". Max's one goal was "To be a different
person tomorrow than I am today...You can't get to better
without first getting to different." Therefore, experiment.

Max ends with, "I wish for you that you find joy in your
experiments. Be wealthy in ideas. Try everything. Be
different tomorrow from the man you are today. Be one
of the happy warriors, eager for the morning."

A pretty generous wish.

Googled Dale Dauten. Found among other things
that he is a fan of Ralph Waldo Emerson. Here.

Its a funny, and fun, world we live in.

We've been down this path before....

"It is said that the world is in a state of bankruptcy,
that the world owes the world more than the
world can pay, and ought to go into chancery, and
be sold.

-Ralph Waldo Emerson, essay Gifts, 1844

Since we're quoting Emerson....

"If I have described life as a flux of moods, I must now
add, that there is that in us which changes not, and
which ranks all sensations and states of mind. The
consciousness in each man is a sliding scale, which
identifies him now with the First Cause, and now with
the flesh of his body; life above life, in infinite degrees.
The sentiment from which it sprung determines the
dignity of any deed, and the question ever is, not,
what have you done or forborne, but, at whose
command you have done or forborne it.

-Ralph Waldo Emerson, essay Experience 1844

Wednesday, February 10, 2010

That was then.....

This is how the northwest corner of Third and
Church looked until the mid-1970's.

This is now........

This is how the northwest corner of Third and
Church looks today.

A bit of clarification......

Fred Schwed Jr., in his wonderful little book, Where Are the
Customers' Yachts? or A Good Hard Look at Wall Street,
opines about speculation versus investing:

"Investment and speculation have been so often defined
that a couple more faulty definitions should do no harm, the
science of economics having reached the point where further
confusion is impossible. Thus,

Speculation is an effort, probably unsuccessful, to turn a
little money into a lot.

Investment is an effort, which should be successful, to
prevent a lot of money from becoming a little."

More from Fred later.

Tuesday, February 9, 2010

"Knock it off with them negative waves........

why don't you dig how beautiful it is out here?
Why don't you say something righteous and hopeful
for a change?" So says Donald Sutherland's character
Oddball in the 1970 comic/action movie Kelly's Heroes.

Good advice.

There is much to praise and be thankful for in our
community. Things we don't often think about or hear
about, like good citizenship.

For instance, did you know that several years ago
Licking Memorial Health System provided 12 Lead
EKG machines, and the proper training to use them,
to all the local EMS squads? Big deal? It might be if
you think you are having a heart attack and call 911.
When the squad arrives they can start hooking you
up to the EKG machine and while you are being
transported to the hospital the machine will be
communicating with the Emergency Room doctors.

Where hearts are concerned, speed and good, accurate
information matters. That is what these machines are
now providing our community. It is a big deal.

The cost to the local EMS squads- zero.

Cost to LMHS -a bit over $300,000.

Investing in healing and saving lives- priceless.


Monday, February 8, 2010

Three words you never want to hear again...

Developer driven economy.

Successful economies need to grow. Growing and
sustainable national economies often have an “engine”
or three. Sometimes an engine can be new
infrastructure development like canals, railroads, the
interstate highway system, or the wireless networks.

Sometimes it is an industry like automobiles,
appliances, or computers. Sometimes it is intellectual
property like software for all those computers.

I am pretty sure it is a bad idea to have real estate
development as an “engine” for a healthy national

According to a market study completed around the
year 2000, Central Ohio (defined as Franklin County
and seven neighboring counties) was expected to
absorb the new construction of 6,500 single family
homes per year.

In the seven year time period 2000-2006, mostly
“production” home builders built an extra 8,500
houses, or about 1,200 more houses per year than the
market could handle. Multiply this behavior by several
hundred regional markets around the country and we
get a serious amount of oversupply.

In a rational world, when the market signals an over
abundance of product, the producers of that product
slow down production. But, by 2003 we were all having such
a good time and housing starts were the “engine” of our
economy. A slowdown probably should have happened in
2003-2004 to let the housing market catch its breath.
A slowdown though, perhaps leading to a short and modest
recession, was strictly verboten from a political
point of view.

So…..if slowing down the engine was not in the cards,
then some sleight of hand was required. Voila! The
proliferation of sub-prime mortgages and rather
inexpensive money broadened the market of home
buyers to include those who could not afford them.
Add the infamous no document (liar) loans and
residential housing market became a “flippers”

In 2007 we calculated that it would take until the end
of 2010 to absorb all of the extra single family new
construction inventory- all other things being equal. As
2008 and 2009 have shown, all other things are not equal.

If you soon feel the urge to develop a new residential
sub-division, please be advised that there are over 5,000 ready
to build on lots in Central Ohio (disclaimer: we own some
of them. If you are looking for a fabulous wooded lot, please
call). Or if you are planning on selling your farm to a developer,
please note that there are over 20,000 platted, but not
developed, lots in Central Ohio. It may take a while.

It should be noted that the condominium, office, retail,
and industrial market segments were also overbuilt, or as
we like to say “crushed”, by 2006. The only market
segment not overbuilt was apartments. The only reason
that market is doing well is that during the boom years
vacancy rates were historically high because so many
tenants were becoming home owners. Now that many of
those folks are back renting, vacancy rates are very
modest. A good thing. In the old normal times that would
signal that the market was ripe for some new apartment
construction. In these new normal times, financing for
such a project is too hard to find so those developers will
not be crushing that market any time soon.

On a local note: we believe that property values have
stabilized. Licking County never truly “boomed”, the way say
Las Vegas or Florida did, so we likewise we will not truly “bust”.
Not to say there is not pain out there. It is estimated that 20%
of the home sales last year were sold because of defaulted, or
defaulting, mortgages. Many of the buyers of these mortgage
troubled houses believe they made fantastic deals. It is most
likely so.

The good news is that stabilization means our local
marketplace in general is not experiencing deflation, which
really and truly hurts. The bad news is that stabilization means
that prices will not be increasing anytime soon.

That is not all bad. My parents bought their first house in 1952.
Eight years later they sold it and considered themselves
lucky to have made a small gain after paying the realtor fees.
Homes back then were simply homes, shelter, a place to
raise a family. It may be like that again for a while. One
should not expect housing appreciation anytime soon.

We binged on real estate. It was a long binge. We now have
the hangover. Only time will cure it. Several more years

So, in our continuing saga of the roads to the current economic
turmoil, we add a “developer driven economy” to our previous
list of mistakenly classifying investment real estate as a
“security”, speculation, and governmental policies.

There are still a few more paths to trod.

Monday's Poem

"The Journey"

One day you finally knew
what you had to do, and began,
though the voices around you
kept shouting
their bad advice—
though the whole house
began to tremble
and you felt the old tug
at your ankles.
"Mend my life!"
each voice cried.
But you didn't stop.
You knew what you had to do,
though the wind pried
with its stiff fingers
at the very foundations,
though their melancholy
was terrible.
It was already late
enough, and a wild night,
and the road full of fallen
branches and stones.
But little by little,
as you left their voices behind,
the stars began to burn
through the sheets of clouds,
and there was a new voice
which you slowly
recognized as your own,
that kept you company
as you strode deeper and deeper
into the world,
determined to do
the only thing you could do—
determined to save
the only life you could save.

-Mary Oliver

Sunday, February 7, 2010

Economic Development, circa 1900...

In 1899 The Newark Board of Trade (forebear to the
Licking County Chamber of Commerce) made a road
trip to Jewett, Ohio (north of Cadiz, half way between
Uhrichsville and Steubenville).

They had heard that the Jewett Car Company was
considering relocating because of a shortage of skilled
labor in the Jewett area. The Board of Trade had heard

After some negotiations, they enticed Jewett Car to
move to Newark in early 1900.

The Board of Trade acquired the former Wyeth-Davis
wagon works, a ten acre site on South Williams by the
railroad tracks. They gave the real estate, and the sum
of $8,000, to Jewett on the condition that the company
would employ at least 125 men.

Expansion quickly followed the re-location and Jewett
Car Company soon employed over 400 men. They
produced over 2,000 wood and steel rail cars and sold
them throughout the United States.

A refurbished Jewett rail car is on display at the

The business closed in 1919. Kel-Par Co. now owns
the site, which is being used among other things for
the making of pallets.

Flash forward to 2009. The State of Pennsylvania,
fearing competition from The State of Ohio and your
local Port Authority, offered HelioSphera, a "green"
technology company, $49,000,000 worth of
incentives to locate their new plant in the old Navy
Yard in Philadelphia.

Projected payroll- 400.