20 May 2019 FT — Articles to Read

20 May 2019


Question: According to MSN: Money, what mistakes should not be made when downsizing?


Big farms use loopholes to tap Trump largesse – Pg. 2

–          A tenth of US farmers have received more than half the money from the federal bailout designed to offset the costs of the Trump administration’s trade battles…

–          Some use the legal loopholes to collect multiples of a $125,000 cap on payments

–          No other US industry has received direct payments to relieve losses caused by tariffs

–          The government limited payments to $125,00 per person or legal entity in each of three commodity categories.  Farmers were also ineligible if their adjusted gross income topped $900,000

–          The three commodity categories were livestock and dairy, specialty crops and field crops such as soyabeans and corn


Fighting for fairer access to the jobs market – Pg. 15

–          According to minimum wage legislation, interns who are classed as workers must be paid at least the National Minimum Wage or the National Living Wage.  But according to a report form the Sutton Trust, employers are exploiting the lack of clarity in the law where employers pass their internships off as “voluntary” positions

–          (Prof Note: This is tough.  People need experience and a young graduate often is not contributing, through no fault of their own/only lack of experience, to the bottom line.  I will say I have ONLY paid interns in my history and recognize a pride of receiving a paycheck.)


Private equity moves into trailer parks – Pg. 19

–          Housing is a human necessity.  It is also a tradeable assets.  Those two facts were at the core of the 2008 subprime mortgage crisis

–          …disturbing trend: the financial exploitation of one of the last remaining areas of affordable housing in the US, mobile homes

–          Institutional investors accounted for 17% of the $4bn in sector transactions in 2018, up from 9%…in 2013

–          In America, trailer parks are a fragmented, “mom and pop” business, making them ripe targets for consolidation.  They are also a shorthand for “poor” – most people who live in them are part of households earning less than $50,000 a year.  Some 22m individuals live in trailer parks; roughly 1 in 15 Americans.  Most own their trailers, which depreciate just like cars, but rent the land underneath them, since traditional mortgages on such properties aren’t available

–          For investors, trailer parks are cash cows.  They offer relatively strong and steady returns of 4% or more – around double the average US real estate trust return,…

–          …growth business

–          …lot rents on private-equity-owned properties are rising sharply – as much as 15% over two years in some parks

–          If all this sounds familiar, it should.  In the wake of the 2008 crisis, many Americans bought into the false narrative that poor people borrowed more money than they should have.  But at its core, the crisis was about a system that incentivized financial engineering.  It was the system that was flawed (Prof Note: I disagree!  I believe the crisis was about lack of education/understanding.  I truly believe that individuals do not understand mortgage finance.  Mortgage finance needs to be taught in every grade starting in the 7th grade!)


Answer: Not asking whether downsizing makes sense; (2) Accepting a low-ball offer; (3) Underestimating the cost of selling; (4) Not trying before you buy (Prof Note: This can be a HUGE mistake for retirees on Nevis.  You should rent for two years to determine where/if you want to purchase.  Some of the expats have been there for decades.  It is a very close(d) community.  If you purchase and then have issues with your neighbours, it will not be good.); (5) Being too quick to part with valuables (Prof Note: I have a beautiful credenza given to me by an elderly person.  I made a point of saying that during their lifetime they could have it back if they repaid me for any improvements I made to the piece and moving expenses.  I wanted it clear I did not want them having any regrets if they changed their mind and I would be absolutely fine if they did.); (6) Storing stuff you do not need (Prof Note: Depends upon cost.); (7) Or forcing it on those who do not want it; (8) Sorting everything by yourself; (9) Bringing furniture that is too big; (10) Moving away from family (Prof Note: A support system is critical.  On Nevis a neighbor had an unfortunate event occur.  They solved it as one would solve the issue in the states.  In my opinion, it should have been solved differently.); (11) Leaving no room for visitors; (12) Not budgeting for condo fees (Prof Note: Do NOT forget about special assessments by the condo association); (13) Forgetting about taxes; (14) Ignoring whether you can age in place (Prof Note: All my renovations are ADA compliant.  Not because they must be, i.e. personal residences, but because they should be.  I am all about single-floor living and ensuring a wheelchair can navigate the homes); (15) …or even live with some new roomies; (16) Acting too quickly….; (17) …or waiting too long