Saturday, February 20, 2010

Guidelines, guidelines, guidelines....

Guideline #19: Read the fine print before you get to closing.
We once signed mortgage papers with a "yield maintenance"
clause. Thinking it was just other pre-payment penalty
clauses, we did not pay close enough attention. Ooops. Think
of "yield maintenance" as a prepayment penalty on steroids.
Very stiff. Stiff enough that it kept us from being able to sell the
property at the peak of the recent commercial real estate mania.
Read the fine print before you get to closing.

Guideline #7: There is no such thing as bad real estate, only
wrong owners. If you can't feel good about a particular investment
property, don't own it.

Guideline #8: The trick to being a long term investor in real
estate is surviving that first investment. Pay attention to both
your comfort and your competency zones.

That was then........

This postcard was postmarked on November 30,
1910. Picture is of The Park National Bank at 32
North Park Place. Notice that the currently adjoining
Midland Theatre has not yet been constructed.

This is now...................

The law offices of Schaller, Campbell & Untied.

Wonder if those old columns are still there, hidden
behind the facade renovation?

Are hats in style this season?

The Curmudgeon doesn't explain
and I'm not about to guess.

Friday, February 19, 2010

A man ahead of his time........

A few quotes from Abraham Lincoln.

-"Prohibition will work great injury to the cause of

-"If the policy of the government upon vital questions
affecting the whole people is to be irreversibly fixed
by the decisions of the Supreme Court... the people
will have ceased to be their own rulers, having to
that extent practically resigned their government
into the hands of that eminent tribunal."

Happy belated 201st birthday Abe.

If I had a dollar for everytime...

I've heard the phrase "we can't compete with the Chinese in
manufacturing" I could take your family and mine out for a
nice dinner.

Of course, that phrase is just nonsense. Yes, they are aggressive,
low cost producers taking advantage of low shipping costs, a cheap
currency and our free trade attitude. But....

Let's talk quality. Next time somebody tells you how great the
Chinese are at manufacturing, ask them if they would like some
Chinese drywall. Next time somebody tells you we cannot
compete, ask them if they want their children handling toys
made pretty by lead based paint. Toothpaste anyone?

American manufacturers have been focusing on quality for
thirty years. From my recent car buying experiences, I'd say
they are getting it right.

My dad always bought high quality stuff (with the exception of
that 1969 black Plymouth Fury, but that was a long time ago).
He said it was cheaper in the long run. Healthier too.

America can compete. Let's start by valuing Quality.

I'm noticing a trend here...

Guideline #26: By its very nature most real estate investing
is profitable over significantly long time periods. For faster
returns, there must be "value added".

"Value added" can mean, among other things, annexation,
zoning change, sub-dividing, building roads, extending water
and sewer lines, constructing a building, combining with an
adjoining property, renovating existing improvements, or
merely cleaning and painting.

Thursday, February 18, 2010

Three very important words......

that everyone has heard make up Guideline #5.

Guideline #5: Location, location, location.
An acre of commercially zoned land, on a busy commercial
street, situated on the far corner of an intersection with a
traffic light, may be worth twice as much as the acre
adjacent to it that is not at the corner and ten times as
much as an acre located a half mile away on a side street.
All real estate is not created equal. See Guideline #4.

Postmarked: August 30, 1909...



Wouldn't it be cool if the Old Jail could be cleaned
up, showing off that rose colored sandstone, and be
put back into some productively adaptive re-use?

Wednesday, February 17, 2010

Not wanting to rush things......

however, every once in a while, borrowing from the
inspiration of the future helps me be more present
This redbud photo was shamelessly borrowed from

There is this great scene in Animal House

where Boon and Katy are in the bathtub singing.....

"Hey, Paula.
I wanna marry you
Hey, Paula.
Nobody else could ever do
I've waited so long
For school to be through
I can't wait no more for you"

while Pinto and Professor Jennings are
discussing life's possibilities......

That means that...our whole solar system...
could be, tiny atom in the
fingernail of some other giant being.
This is too much! That means...-one tiny
atom in my fingernail could be--
-Could be one little...tiny universe.
Could l buy some pot from you?
(Snorting loudly)"

What if Pinto was right?

Globular Cluster M22

Happy Birthday Wally Horton...

Without Wally Horton the central Licking County
community might be a lot poorer today. When the
Newark Air Force Base was put on the chopping
block in 1993, Wally led the charge locally to save
the "Base" and keep the workloads and jobs in Heath.
With help from the Air Force, privatization-in-place
came into being. Read the story here and here.

Wally, along with folks like former County Commissioner
Don Hill, helped create the Heath-Newark-Licking
County Port Authority as a vehicle to make the
privatization-in-place function.

The whole venture was considered incredibly risky
in 1995. "White elephant" was a phrase widely heard.
Fifteen years later, one does not hear that phrase.

Wally truly built better than he knew. He deserves
endless thanks from the community.
Happy 93rd birthday Wally!

Tuesday, February 16, 2010

A good guy and a good neighbor....

Larry Morrison of the Buckeye Winery is our
Hero of the Day.
Snow plows tend to leave mountains of hard packed
snow between the street and the sidewalk. They are
hard to shovel through. Makes it tedious for customers
to get from their cars to the businesses.
Larry brought one of his toys to work today. After
cleaning up on North Third Street, he went across
the Square to clean in front of the Natoma and
Heartland Bank.
Thanks Larry!

These are really not rules...

we just consider them guidelines.

Guideline #27: Profiting quickly by "flipping" is
speculating, not investing. Flipping is buying a
property with the intent of immediate re-sale for
a significant profit. A flipper has no intention of
either using the property or adding value to it.
Two situations make flipping possible. The first
is a bubbly hot real estate market. The second is
where the flipper knows something of significance
that the person who sells to him does not know.
For more on speculation, read the 1/30/10 post.

They don't build 'em like they used to....

Postcard of the old Newark High School on
West Main Street

Monday, February 15, 2010

Happy Belated Valentine's Day

Yet more guidelines for investing......

Guideline #14: Another word for "cash flow" is "deferred
maintenance". It is fairly important to maintain your
investment. Yes, it costs money in the short term. But,
that discipline really makes you money in the long term.

Guideline #15: All roofs leak. It is just a question of when.
As with Guideline #14, setting up a reserve for replacement
account is a necessary evil in owning real estate. Leaky roofs
have a way of reducing a property's value. Roof replacements
are expensive. Start at the beginning to put some of the cash
flow aside to prepare for those large expenses that are in your

The first guideline for investing....

Guideline #1: "I found the road to wealth when I decided
that a part of all I earned was mine to keep." So says Arkad,
the hero of George Clason's classic book, The Richest Man In

The idea is that out of any paycheck or income stream we
must first set aside a percentage for savings and investing,
then we can spend what is left. If we do it the other way and
spend first, there will never be any money left for savings and
investing. Something about human nature. Something about

Most of our economic troubles in this country would soon
disappear if reading and understanding the principles of
The Richest Man in Babylon was a requirement for high
school graduation. Do yourself a favor, read this small tome
once a year.

To summarize Guideline #1 for investing- just do it.

Part of a poem for Monday....

While not a big fan of Samuel Taylor Coleridge, the
almost-the-last verses of Part the Seventh of The
Rime of the Ancient Mariner makes the list of

"He prayeth well, who loveth well
Both man and bird and beast.
He prayeth best, who loveth best
All things both great and small;
For the dear God who loveth us,
He made and loveth all."

Sunday, February 14, 2010

Let's celebrate positive energy.......

Fish, another one of those small, but mighty, self-help books
says, "Life if too precious just to be passing through to
The authors offer the following four suggestions:

-choose your attitude (why be bored when you can be
world famous).

-Play (treat the work with respect, but fun is energizing).

-Make their day (engage your customers with high energy).

-Be present (don't be multi-tasking when engaged with
a customer or co-worker).

Do yourself a favor and read Kurt Harden's well written post of
2/13/10 about Vaughn Brothers Barber Shop in Newark.
His description of this long time downtown fixture makes you
understand why people are sitting in the chairs waiting.
Sounds like they could write their own book.

Still more guidelines for investing.......

Guideline #3: You make your money when you buy.
It takes hard work, discipline, and time to consistently
earn money as an investor. If you overpay for an
investment it just makes it that much harder and takes
way more time. Buying at cap rates below 8% is to be
avoided at all costs. (See February 4th's posting for a
brief discussion on cap rates)

Guideline #10: Landlords and Tenants have a
relationship based on business, not friendship. Likewise,
Lenders and Borrowers have a relationship based on
business, not friendship.