Thought of the Day

I am currently reading Buddhism Plain and Simple by Zen Master Steve Hagen.  The book has some interesting observations arising through Buddhist philosophy that are helping me cope with a very difficult time in my life right now.  Here's an excerpt.  His example is of a leaf fixed to a tree in the fall.

When we insist on hanging onto our branch, in our ignorance, we think this is freedom.  "I can do whatever I want, and if I feel like falling in midsummer, I will.  And if I want to cannonball, it's my business."  We don't see that what we're calling freedom is actually bondage.

When we act this way, we become the prisoners of our own whims and desires.  As a result, we're unable to act out of seeing our situation for what it is, moment after moment.  We're only able to act according to our cravings.

We think that freedom lies in making choices based on our desires.  But when we see our circumstances, we see much more than just our desires.  We see how the current situation has come to be.

True freedom doesn't lie in having choices.  We always have no choice but to act.  Even if we choose not to act, we're still acting — and still making a choice.

Our only choice of consequence lies in whether or not we're awake. 

[emphasis added]

In my situation, the bold statement really hits home.  It seems like it is very easy to fall into this trap of want, desire, greed and selfishness.  Furthermore, once we do, we no longer objectively consider other options in life.  Unfortunately Freud's Id is a powerful force in the world of the human mind.  Not that our wants, needs and desires are not important.  However, they should not cloud our judgement.  It is important to understand the root cause of such feelings in order to property analyse them and ensure that they are dealt with.

If you are at all interested in learning more about Buddhism, I have found this book to be an nice introduction to the philosophy. 

Just some food for thought today, something off-topic to spice things up. 

50cm (20″) of snow… and counting!

Over the last 24-hours, South-Western Ontario, and specifically London was drenched in 50cm of snow and there is still a snowsqual warning. Looks like we could get another 10cm throughout the day today.

From Christmas, sn…

Here are a couple of photos of my neighbourhood just for interests sake. My house is burried, the snowblower could barely get through it… but… my dog was having a blast!

From Christmas, sn…
From Christmas, sn…

The best part is that my car isn't capable of getting off my street, so I'm stuck. Gotta love a good old snow-day!


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Casey Serin… strange dude.

There was more activity on Serin’s blog again today. This-time he spent 18-hours coming up with an explanation of everything that happened on his Phoenix trip.

It is becoming more and more clear that Casey has some mental difficulties. He is terrible at making decisions, is extremely impulsive, has little regard for the well-being of others, and has no idea how to predict the consequences of his actions.

Here’s my comment from No Limits Ladies‘ account of the story.

guess would be that NLL offered to take on Casey’s properties, sell
them for a profit, make sure Casey broke even on the deal, and also
take a significant chunk of any media (print, film, documentary and
what-not) royalties to-boot.

Not a bad deal for NLL… and if Casey was smarter, he would realize
that it is a good deal for him too. Unfortunately, he doesn’t realize
at this time that he is incapable of selling his properties himself and
bailing himself out of debt. So… the floundering will continue.

I mean really, who spends 18-hours on a post admitting that you’re
stupid, you aren’t a man of your word, and that you can’t make a

My thesis adviser, a wise man by my standards, once said “there’s
nothing worse than a man who can’t take a decision.” (no, he was not
referring to me, thankfully 🙂

If I were NLL, I would consider holding Casey to his word. He signed
the agreement, now he should have to live with the consequences of his
actions (FOR ONCE!!!).

Casey entered a contract with these ladies, and has now backed out of it (kind of like a child might do once they realize that the deal will entail some kind of sacrifice in order for them to ultimately get what they want). Why would he back out? Greed… greed is the only reason I can figure why Casey would back out.

NLL were trying to help bail him out of hot water. In return for their hard work (selling his properties where he had failed over the last several months), they likely would have taken some or all of any profit, as well as rights to some of his book royalties.

Now… it seems here that everyone is getting something of the deal. I believe, and have stated in my comment, that Casey at this point in time does not realize that he is incapable of digging himself out of trouble. He has consistently shown his lack of tenacity and drive by choosing to spend hours and hours writing blog entries when every minute of every day his debt, and missed payments stacks up.

Casey… its time to play Let’s Make a Deal!

And remember:
1) Deals are always negotiable, think of every possible way you could restructure the contract and propose them all to NLL.
2) You’ve already accepted the deal anyway.

Economics of Flipping

Yesterday my wife and I stopped by an open house just one block from our own home. The house for sale was purchased almost one year ago now, for approximately $210,000 (it was listed for $230,000). The obvious intention of the purchasers was to renovate and flip the house.

For approximately the next three months, we watched the new owners driving in and out with a pickup truck, hauling junk, and renovating like crazy. The house was placed on the market about six months ago.

The online listing looked good. They had redone all of the kitchen cabinets, and created a beautiful master bedroom suite on the whole 2nd floor. The master suite included cherry hardwood, a spacious bedroom with 3 dormer windows, and a large bathroom with a corner jacuzzi and standup shower. Original list price, $345,000.

Now, you might be thinking that there is something fishy going on. Why is the house still on the market after six months? Here are some of the major mistakes made by the owners:

  1. Incomplete renovations
    • Almost all of the doors, windows and some of the flooring were left original (50-years old).
    • The main floor bathroom remained untouched… and ugly.
    • The basement was untouched, and remains useless.
  2. Shoddy workmanship and cheap materials
    • Drywall and kitchen finishing’s were not well-done.
    • Exterior was largely untouched and has a very cottage-feel.
    • The upstairs shower enclosure is very inexpensive, but it is paired with an expensive showerhead.
    • The bathroom tile is the cheapest variety and looks quite mundane next to the high-gloss cherry hardwood.
  3. Bad planning
    • The bathroom is not well-thought out, the toilet is in an odd spot in the open in the middle of a wall, there is only one sink when most couples prefer two.
    • In the kitchen… they reused 20+ year old appliances.
    • The cook top is located in the corner of the counter, where it is less accessible and also sits underneath the upper cabinets.
    • Furthermore, because the appliances are old, I think future buyers will have trouble finding new appliances to fit the custom openings.
  4. No curb appeal
    • Slate tiles were used to cover the walkway up to the front door, this looks nice. However, the garden work is atrocious. Bad stone combined with mortar that blends in makes it look like they built concrete terraces for the garden.
    • The siding around the dormers was kept plain white, and looks dated.
    • The roof shingles were left green… it just doesn’t look good. The house needs a colour scheme on the outside that doesn’t remind you of christmas.

In general, I think the owners of the house just missed their target market all-together. The idea to renovate the 2nd floor and turn it into a master suite was a good one. However, the execution was not consistent throughout the house. Also, a couple who would appreciate such a large space for themselves with cherry hardwood would likely want nicer bathroom tile, and newer appliances. Furthermore, the outside looks like it is suitable for your grandparents, so I don’t believe it will attract younger buyers.

They have lowered their price to $299,000 now, but I still believe it to be overpriced for the neighbourhood. We purchased our house for $330,000 a little over one year ago, and it is larger, has a much larger kitchen, a much larger yard (we’re on a corner lot), an attached 2-car garage, and a 3-bedroom basement apartment (that conveniently pays our mortgage P&I). Thus, I think they will still have trouble selling at the reduced price given the above points.

On another interesting note, I would estimate that holding on to the property for these six months will have cost them about $10,000 in mortgage payments, utilities and insurance. So, I think it is very important to find the right price quickly rather than holding the property for too long and slowly lowering the price. Otherwise, the monthly expenses quickly cut into your potential income!

I also wonder if this house would have been better to flip over into a student rental. I live close to the university, and I think that lowers the quality of prospective buyers. However, the rental market in this area is booming, so I think the property would have been better to convert into a 6-7 bedroom house rented to students. The gross income would be up to $3000/month, with a net cash flow of approximately $1000/month depending on the mortgage terms.

On the bright side, the real estate agent was informative, young and friendly. He showed us a data sheet for a $128,000 quad-plex currently renting for $2000/month! Very cheap, but apparently it does need some work such as a new roof (not surprising at that price).

All in all, the timing was perfect. We were able to critique the flip, see many different examples of what not to do, make a new contact, and find out about a potential investment opportunity. Not bad for a Saturday afternoon.

Emotions vs. Decisions

Today Frugal wrote:

The bottom line is when you find a business that is trying its best effort not to give you any possibility of doing apple-to-apple comparison, you should know what it is up to.

Don’t forget about emotion!  Emotion is the single biggest factor affecting people’s purchase decisions.  The unfortunate thing is that emotions can be hard to get under control because they are instantaneous (since they originate in one of the most primitive parts of the brain).  Basically, your emotions kick in right away, and begin changing your decision making ability.

Take for instance, the standard couple investing in their first home.  They have no idea how the system works.  Furthermore, the banks, lawyers and real estate agents are usually behind schedule, so the documents don’t show up at the lender until the last minute.  Rarely do the lenders explain all their fees before-hand, and so… the couple finds themselves sitting in an office at the bank faced with a pile of service fees that they don’t understand.  And, the deal on their new home closes in a few hours…

They have options, I guess.  They could not sign the papers, but then they would risk losing the house that they’ve been dreaming about living and starting a future in… or they just bend over, take the fees and move on with their lives.

So, often times, the stores, banks, etc have the upper hand in this type of negotiation.  This is a major focus of advertising as well.  1) Develop an emotional attachment in the prospective customer for your product and 2) Develop a feeling of need in the customer (can you say iPod), so they’ll pay almost anything for it.

Of course, keeping yourself out of this trap is easier said than done!


Me + WordPress = Angry

Something is wrong with my WordPress account… I can’t add categories to any posts, or my blogroll.  It is very, very frustrating because links do not show up until they are added to a category…  unfortunate at best.

The good people at WordPress ensure me that they are working on it, but how long could it take?  I created a second account and it works fine… couldn’t they just delete and recreate my account?
Anyway, sorry for the off-topic ranting.

Categories have been fixed as of 10/26/2006!