Citrus Growers Forum

morphinelover · Posted: Mon 23 Mar, 2009 11:25 pm

If anyone noticed the stock market is up 500 points today. Maybe we are finally seeing the turnaround we need. The experts are saying that this year there will be a upturn in the economy.

829 · Posted: Tue 24 Mar, 2009 12:06 am

I sure hope so. Housing was strong in January.

JoeReal · Posted: Tue 24 Mar, 2009 1:06 am

That's a good start, considering that we still have more than 2,500 points to catch up!

I lost 75% of our stock investments by being lazy to move them into CD's just before the fall! Our CD has been making nice interests and we're not moving them. Am glad that we set aside half of our retirement unto CD's and half on stocks. But then, I felt bad for the loss, especially those of others who had their entire retirement in stocks.

829 · Posted: Tue 24 Mar, 2009 3:20 am

The housing in large parts were people like me buying up cheap properties for rental.

JoeReal · Posted: Tue 24 Mar, 2009 4:02 am

I sometimes don't get the reasoning of the banking bigwigs or CEO's. It practically make sense to retain the REO properties or foreclosed properties and rent them out. They would earn much more money than the current scenario that has unfolded. It would have helped stop the downward spiral of house prices. But no, they would think that managers of rental properties would be paid like their CEO's and it is too complicated for them to manage properties. So it was better to bite the bullet and help put us all in the mess that we are in right now.

829 · Posted: Tue 24 Mar, 2009 11:50 am

One of my bankers told me there are a couple of reasons for it.

First and foremost it is a liability issue.

There are government restrictions on banks owning real property.

JoeReal · Posted: Tue 24 Mar, 2009 1:12 pm

Many people have used liability issues as a BIG Concern and convinced many that it is so... That is why we have expensive insurances, car and health, home, etc... because of the fear of liability issues. That's just my opinion. But the current situation is already a big liability issue on their laps, so there is nothing to lose but some to gain.

One of the causes of our economic downfall is the Arrogance, Incompetence and Greed (AIG ) company happens to be an insurance underwriter that was left holding the bag of toxic contracts and liabilities. They didn't buy these real properties, they underwrite them.

Some companies have begun the buying spree and mined the properties for rental, and that is part of report last February in our area, but it will depend on economics of employment. Already the population of tent city "homeless" people has been featured in the news. These will stop renting as well.

We would have bought properties as well, but it is just my feeling that these are minor bumps of recovery and we haven't bottomed out yet until 2011 when we are projected to have the highest unemployment since the last depression. But this is a game of speculation as to when. There are promising signs of economic recovery in the Green Tech area, the Game Industry, and the new breed of Automakers.

JoeReal · Posted: Tue 24 Mar, 2009 1:26 pm

Millet wrote:

Here locally in Colorado's agricultural area, a lot of farmed land is not actually owned by the farmer, but is planted and farmed on a 1/3 - 2/3 bases. With 2/3 of the profit going to the farmer, and 1/3 to the land owner. When land is foreclosed, and taken over by the bank, normally the land goes out of production. Most banks will not allow any farming due to concern over insurance and "possible" law suits in the event if anything should happen. Even though the chance is small, a bank just will not take the chance. If the land is not farmed for two successive seasons, then the land is in danger of losing it agricultural zoning, therefore the taxes increase sharply, enough so that the land may never again be profitable for farming. The state coffers benefit in such a situation. - Millet (1,397-)

When there is no fund to construct houses on the rezoned land, or when there is no demand to construct new residential or commercial areas over the rezoned agricultural lands, it will hardly benefit the state. The land would become perpetually useless, a type of catch 22, unless the economy recovers or the state law changes to handle the deadlocked situation.

Over here, we have the Williamson Act, which when you classify your land as such for agriculture, you will have the lowest tax on your land, and is a step closer to be eligible for farm subsidies or USDA guaranteed loan. But there is a catch. You can only build a maximum of 2,000 sq ft residential house, and all the other structure you want to build should be related to farming. And the contract lasts for 15 years, and the contract is inheritable or passed on to the next owner. Even if the land will not be farmed, it will remain under the Williamson Act, and will be rezoned only after the contract expires. This Act was passed to encourage surrounding farmers of a city to lower their taxes and receive subsidies while at the same time halt urban sprawl and city expansion. Land under the Willimson Agricultural Act cannot be rezoned for any other purposes, and the contract renewable every 15 years. I like this act because, the road to our place remained open space for farmlands, and even though the 250 acre farm is for sale, it is still under the Williamson Act which must be honored by the next owner. So developers cannot go around it unless there are retroactive penalties to be paid by violating the contract.

The Williamson Act is in part funded by the county, and the cost is passed on to us, the city residents. We pay the county hefty amounts each year, part of our city tax goes to support it.

Anyway, I may not get the whole details right, just joggling from glitchy memories. We do have complex agricultural land laws over here.

JoeReal · Posted: Tue 24 Mar, 2009 1:34 pm

Millet wrote:

Here locally in Colorado's agricultural area, a lot of farmed land is not actually owned by the farmer, but is planted and farmed on a 1/3 - 2/3 bases. With 2/3 of the profit going to the farmer, and 1/3 to the land owner. - Millet (1,397-)

Millet, I like this kind of "feudal" type of farming contract. Is it based on profit sharing (possibility of loss sharing) or harvest sharing?

One of the common farming contracts in the Philippines is similar, but on 1/4 to 3/4 ratio, and there are 1/3 to 2/3 ratio as well as 50-50. But commonly, 1/4 of the harvest goes to the owner and 3/4 goes to the tenant farmer. It is a very safe arrangement for the land owner with minimal risk. The farmer has to subtract all the farming expenses on the remaining 3/4 harvest and should strive to be profitable in this arrangement to make his while.

829 · Posted: Tue 24 Mar, 2009 1:51 pm

My wife and I were having this discussion in 07 and at the time, I thought Q4 09 - Q2 10. This was before all the things that have recently happened though. I will stick to this time table though, because we are a great nation and we need to pull our heads out of the ground and wake up. Today we are giving up the gains we made yesterday on profit taking, but the 10yr is still slightly up. I have been learning to flip pennies, but they are so volitiel, I have been holding too long and I may just start trading them on green. The only problem I have is, I only have a limited amount of cash in my margin account, because I have lost a lot learning the game. My other account I can only buy with the money in my account.

The problem with some landlords is that they want to price the rent too high. I feel that way about myself sometimes too, but the market dictates the rent. The largest gap I have is $335. The mortgage on the property is $265 and we charge $600. However, it is furnished and we take care of the lawn and maintenance. There are a lot of slumlords out there and they are only looking for a quick buck. Here in Arkansas, we have largely been unaffected by the real property downturn, but the problem is starting to increase.

I was hoping to pick up a couple of duplexes this year, but I paid off my house instead, so maybe if your predictions are correct, I will still have time to get some cheap.

dauben · Posted: Thu 26 Mar, 2009 3:13 am

I'm glad for the downturn in the housing market also. I never thought at the age of 34, I'd be able to own two homes. I have paid off a good chunk of our first house before buying our second, but I don't like being in debt on two properties either. Ohh well, with I'll just go to my printer and print some more money like the Fed is doing. Smile

My new monetary policy is to keep my debt in US dollars and my savings in Norweigan Krone. When the dollar gets devalued and the Krone becomes the safehaven, then I'll pay off my debt with cheap dollars.

Phillip

829 · Posted: Thu 26 Mar, 2009 3:53 am

Regardless of what people say, real property is a good investment now, maybe the best since the mid 90's.