economics

LGS has gotten ridiculous

I arrived at the range and paid my $20 (plus tax) range fee. I used to have an annual pass (cost $650 for both the wife and I) but we let it expire during 2020 because the COVID shutdown made it silly to pay for a range pass we weren’t using. Once they reopened, we didn’t renew it because ammo had gotten so expensive that we couldn’t go shooting enough to make it worthwhile.

Why? At $20 an hour per shooting lane, we need to go to the range at least three times per month to make it worthwhile to have a membership. Even if the wife and I each took a lane, that still means a range visit every three weeks. Ammo has gotten to be so expensive that we just couldn’t pull that off.

In January of 2020, I bought a 1,000 round case of 9mm for $150. So 15 cents a round for 9mm. Then the ammo supply dried up. When I finally DID get a ‘good’ deal on 9mm, it cost me $150 for 500 rounds of 9mm. That’s right- 30 cents per round, for this stuff:

I took it to the range this morning. That was a disaster. After firing one magazine of it, the RSO came over and told me that I couldn’t shoot steel case ammo, because they were unable to sell the casings to their scrap dealer. He invited me to buy some ammo in the store to continue shooting. Here is a cross section of what they were selling:

Norma .22LR for $10 a box?

Remington .38 Special for $1 a round.

Winchester 9mm for 50 cents a round. I can get the same stuff from 2A warehouse for 37 cents a round.

This means that shooting 2 boxes of ammo at this range using their ammo is going to cost me:

  • A $10 annual “membership fee”
  • $20 for the range fee
  • $13 in extra ammo costs.

Over the course of a year, a monthly trip to the range using their ammo will cost me $406 in range fees and extra ammo costs. Also, I don’t reload, but if I did, this would bug me: They won’t let you take your brass with you.

So I will make sure that I have brass cased ammo next time.

By Divemedic, ago

Rent Increases were Predictable

News of large rent increases are coming in from all over the state of Florida. Orlando, Jacksonville, Orlando, and Tampa, to name a few. Rents in Florida are up 29% year over year.

The causes are obvious. I’ve been warning of this for more than a year. The eviction moratorium was killing landlords. Many landlords are leaving the business, while tons of northerners are moving to Florida in a bid to escape the increasingly socialist policies up north. This is increasing home prices, so many rentals are now being sold. Taxes and insurance rates are climbing.

On top of that, there is inflation to deal with. Florida minimum wage just increased 17 percent over the 2020 rate. The increased costs, increased risk, increased demand, and falling supply has combined with record inflation to put a lot of upward pressure on rental prices.

Tampa has decided that they are going to do an end run: a voter referendum declaring a housing emergency and enacting rent control. This will be the Democrat issue for the 2022 election. Expect a State constitutional amendment on the ballot for rent control.

If rent control is enacted, there are steps I can take: Each year, I will raise rents by the highest permitted under the new law. On top of that:

  • I will no longer provide lawn service as a part of rent. That will shift $900 a year of expense to the tenant.
  • I will no longer provide a free washer and dryer. I will recommend a company that will rent the tenant one at an additional cost, if they don’t have one. That company will be owned by me. The going rate for that is $144 a month.
  • I currently pressure wash the outside of the property twice a year. I can push that off to the tenant, and make it their responsibility as a part of cleaning.

There are many ways that I can maintain profitability. Just taking the three steps above will have the effect of increasing the cost of renting by 15 percent without increasing the rent itself.

Landlords will have to be creative.

By Divemedic, ago

Rent Control

The Democrats in Florida are losing their shit because rents are increasing so much. Now they are putting forward a plan where they accuse landlords of price gouging. They are also wanting to pass a law that implements statewide rent control. They themselves are the ones to blame for increasing rent.

For a year and a half, renters lived in homes without paying rent, and there was nothing landlords could do about it. During that time, those same tenants received government checks and many of them didn’t pay a single dollar of it in rent. This increased the risk of investment for landlords. As anyone with a lick of economic sense knows, an investment with increase risk always comes with a higher price tag.

That’s exactly what we see happening all over the country- rents have increased by as much as 25% per month. I’ve been warning that this was coming for over a year and a half.

Communism always begins by vilifying landlords. I raised my rent by 7.3 percent this year. I could have raised it more. I am keeping a close eye on this, because a statewide law capping increases will force my hand. The exact wording of this proposed law can cause all sorts of reactions. For example:

  • If the law caps increases at 10%, I will simply raise rent by 10% every year.
  • Rent on my property currently includes lawn maintenance. If such a law passes, it no longer will. That cost is the same as a 4% increase in rent.
  • If it’s too onerous, I will simply sell the property and take the equity out in profit, as many others will. My rental property has increased in value by more than 32% since I bought it. Now there will be no rentals at any price.

Nice job, commies.

By Divemedic, ago

Social Media

When I was still teaching, I saw a distinct shift in the attitudes of my students from years past. When you would ask tenth grade students what they wanted to do for a career, you would get sensible answers mixed in with answers about being professional athletes. In 2018, something interesting began to happen: students began telling me that they wanted to be social media influencers and stars.

When I first heard about Tik Tok, it was because one of my students became famous on the platform. She had over a million followers and was becoming a quasi-celebrity. We would host other schools for sporting events, and she was the captain of the cheerleading squad. Students of other schools would approach her and ask for her autograph. This made every other student of the school want to try out Social Media as a career.

I once had an in depth conversation with her after watching one of her YouTube videos. The videos are of nothing but teenage mindlessness. She told me that she was making about $5,000 a month of of those videos. I told her that the only reason that she was making so much is that she was young, pretty, and female. My advice to her was that she invest the money for the inevitable day when she was no longer young and someone younger and prettier came along, “After all,” I said, “do you see 17 year olds still watching you when you are 30?” She ignored that advice, and was busy spending the money on designer purses and clothes. She and her mother (who was helping her spend the money) were trying to get her a movie or TV role in California.

That was three years ago, and I just looked at her page: At 19 years old, that young lady has over 600 million views and 5 million regular followers, JUST ON HER TIK TOK page. Her Instagram page has another 1 million, her YouTube has over 200,000. So a total of 6.2 million people tune in to watch her videos. To put that in perspective, ABC’s World News Tonight has only 7.3 million regular viewers. A 19 year old making videos about putting on make up, how to do your hair, and the latest Social Media dance moves is scoring as many eyeballs as a nationwide television news show.

The impact that social media is having cannot be overstated. Influencer marketing is a $14 billion industry. Businesses report that they receive $5.78 return on investment for every dollar spent on influencer marketing. Teens are largely turning away from conventional media and turning to Social Media.

We need to pay attention to what is happening on Social Media. Teens are our future, and their future is being sent out on Social Media.

By Divemedic, ago

Rent Inflation

As many of you will recall, a rental property that I own is coming up for renewal. Right now, I am renting that two bedroom, 1900 square foot house for $1700 a month. That price includes a washer/dryer, pest control, and lawn maintenance. Two years ago, when we began renting to this couple, that rent level put us near the upper end of the area rental market. We didn’t raise the rent last year when they renewed.

A month and a half ago, we looked and decided that rent was probably going to be increased by $100 to $1800 a month when the time came. That was a month and a half ago. The time has come, and things are a bit more complicated than they were in October.

Zillow has a useful tool that landlords can use to compare their rental property to other rental properties in the area. Looking at the recent rental listings, there are only a handful of rentals available in the area. Houses are renting as quickly as they are being listed, and that is driving up prices. The ones that have recently been listed indicate that our home should be renting for somewhere between $2,200 and $2,700 a month. This means that, in the last 5 months or so, rents have increased by about 25% in my area!

If this keeps up, by the time of lease renewal on Feb 1, my house will have a rental value of $2400 to $2900 a month. In a year, who knows?

My wife says that she doesn’t want “to screw them” by renting the place for market, and wants to stick with no more than $1850 a month. She also says that too large of a rent increase will cause them to move out, and then the home will require cleaning, painting, etc. on top of being empty for a month or two. I must admit that it would make be feel guilty to raise rent by $400 or more dollars month. On the other hand, if rents keep increasing like this, every dollar that we don’t increase the rent now is two dollars of an increase that we will have to make next year.

Not matter what, inflation is hitting the rental markets in a big way. Rents are increasing at an astonishing 40 percent per year, at least in this area. Real estate is skyrocketing. We bought this rental two years ago, with the idea that we wanted a passive income stream. We put $150,000 down on the purchase price of $250,000. Every dime that we have collected in rent over and above expenses has gone to paying down the mortgage. We now owe $45,000 on that house. We were just contacted by a real estate agent and were offered $350,000 on that house. A $155,000 profit in 24 months corresponds to more than a 50% annual ROI. That house is increasing in value by $4400 a month. We are increasing equity at double the amount we are collecting in rent. That is going to be reflected in our property tax bill next year, and needs to be factored into the rent.

The only reason we don’t boot the tenants out and sell is that we don’t want to covert income producing real estate into dollars that are decreasing in value every day, thanks to President Biden and his insane economic policies.

Setting rent is tricky. If you rent at too low of a price point, not only are you leaving money on the table, but you are running the risk of getting tenants who will trash the place. (Sorry, but people without money don’t value your rental as much. They are more likely to destroy the place.) Too high, and the place sits empty for an extra month or two, and that costs you more than simply renting for a bit less.

The kitchen countertops need to be replaced in that unit, and that will cost around $3000. The renewal letter goes out this week, so we need to make the call. I think that we are going to offer the renewal at $1850, unless they want the countertops replaced. If that happens, I will have to raise rent to $2000. If they don’t want to renew and instead move out, then I will relist the place for rent at $2300. I am sure that I will get it.

By Divemedic, ago

Retirees lose 1/4 buying power

For decades, the returns that one can expect from the stock and bond market have dictated how much a retired person can withdraw from their retirement savings without fear of running out later. That rule of thumb has been 4% per year. That is, a person with $400,000 in retirement savings could withdraw $16,000 per year and be comfortable knowing that their nest egg would last for the rest of your life (well, at least 30 years, which for most of us is the same thing).

Not anymore. The lower performance of the market has reduced that rule of thumb to 3.3%. This means that every retired person in the country just saw their retirement income drop by nearly 18%. That person with the $400,000 retirement fund can now only afford to withdraw $13,200.

Now couple that with inflation, officially at 6.22% for the 12 month period ending October 2021, and you see that the retired person with the $400,000 retirement savings now has seen the $16,000 they had to spend last October only able to buy $12,400 worth of stuff. That’s right, retired people have just lost a quarter of real purchasing power in just a year.

By Divemedic, ago