CRAVER'S COMMENTS

June 2003

IN THIS ISSUE

·         WHAT’S IN YOUR PORTFOLIO?

·         FUND SCHOOLS FIRST

·         YOU WON’T GET HUNGRY

              

FUTURE ISSUES

        EVERY COUPLE OF MONTHS OR SO. I HAVE REALLY BEEN SLOW THIS TIME.

 

THINGS TO BE PROUD OF

 This type of news happens so often now that it probably should have its own permanent column heading. Grandchild number eight is on the way and scheduled to arrive at Jeff and Kirsten’s house in Columbia, Mo in October. If my Dad were still alive it would be his 20th great grandchild and the first great grandson named Craver to carry the name to the next generation.

DID YOU KNOW?

        In Newsweek Magazine’s recent rankings of the top high schools in America the Triangle placed four high schools in the top ten in North Carolina. They  were Raleigh Enloe, East Chapel Hill, Chapel Hill, and Durham Jordan.

 

WHAT’S IN YOUR PORTFOLIO?

     I looked it up. The last time I discussed the economy in this newsletter and, by the way, told you that it was improving, was the August 2001 issue. Then came September 11th. To me there is no greater testimonial to the underlying strength of the American economy than the fact that it did not collapse completely after the events of September 11th. Unemployment figures are easing now and despite the fact that the stock market has made steady gains since March people are still afraid of investing. The other problem is that some people lost so much money in the last market downturn that investment funds simply are not available. History no doubt will show us that the economy of the 90’s, and especially the stock market, was driven by a false since of accomplishment, greed, sudden outbursts of technology, internet day traders, and corporations lying about their bottom line to falsely inflate their stock values. At a recent economic conference it was pointed out that if you showed the growth rate of the Dow Jones index on a graph since 1970 it is exactly where it should be at this point in time. The problem was the rapid rise of the market in the 90’s. This encouraged a flood of investors trying to ride the wave that eventually crashed upon the shore when it was discovered that there was no solid value in many of the new internet stocks, not to mention some old stalwarts with fake bottom lines.

   What about investing in real estate? The track record is better and more reliable but not without pitfalls. For the individual investor rental property remains your best bet. Real estate speculation investments are risky and rely almost entirely on the expertise of the person doing the developing. What I am suggesting as an investment alternative is high-end rental opportunities. I say high-end for several reasons. Your tenant tends to be more financially stable and usually will rent for a longer period of time. The nature of the property itself tends to need fewer repairs. With lower income housing rentals it is almost a requirement to hire a large management company to handle the property since the laws in recent years have swung drastically in favor of the tenants.  In a price bracket where tenants often get behind in their rent it has become difficult to get a delinquent tenant out and another in without a lot of down time for the unit. The high-end houses tend to have fewer problems and a small number of investment units can be handled by an individual investor.  Interest rates have never been better so see your favorite Realtor if you want to know more.

FUND SCHOOLS FIRST

     I am going to need your help on this one. Our local politicians, who are constantly looking for ways to take money from our pockets and put it into their pockets, have come up with a new idea called impact fees for the Public Schools. The Durham County Commissioners are studying this proposal and will likely vote on it in late August. Impact fees are relatively new but not unique. Orange County has impact fees that go into the general fund. In case you don’t know what I am talking about, an impact fee is an upfront charge to a builder or individual building a new house or apartment. The proposed Durham fee would be $2,500 with the eventual ceiling being $5,000. What makes the Durham proposal unique is that they are attaching the proceeds to the schools.  This opens the door to an unlimited number of potential future fees. You need to pay attention to this because all of the other counties are watching the Durham case. If Durham County wins this battle every other county in the state will try the same thing.

     At a recent meeting between County officials and a few local Realtors, including myself, the officials tried to justify the new fee (if it looks like a tax, acts like a tax, and smells like a tax, then it is a tax) by saying that all of the new growth had caused shortfalls in the funding for schools. They went on to say that the new folks in town had not paid their share over the years and therefore should pay extra. When asked by one of the Realtors about the life-long resident who just wanted to build a new house, they did not have an answer.

     Here is my argument.  I reminded them that years ago we welcomed new growth since that would increase the tax base. I realize that was when your taxes paid for police, fire and schools and not all of the pet projects and social programs, no matter how well meaning, that we have today. I maintain that we have plenty of money for the schools and that we should FUND SCHOOLS FIRST. The politicians should be honest with the public, and, if they need extra money for the extras, then call it just that. There is only one thing I can guarantee you and that is that if you are looking the other way when that August meeting rolls around this thing will pass. The Commissioners failed in their attempt to get the state legislature to pass it for them so now it is up to you to stop it on a local level. One of their big arguments is that the builder will absorb this fee and not pass it along to the consumer. Did I mention I had some swampland in Florida for sale?

 

YOU WON’T GET HUNGRY

     There are so many new restaurants in the area that I can’t get around to them. But I am trying. Meadowmont, where the village square atmosphere is very pleasant, has three new places—O’Neils Neighborhood Grille, Carolina Café, and Brix Pizza. Just up the road is Nantucket Café where the lobster bisque is really good. If you like pigs, try the Q Shack at the corner of University and Chapel Hill Blvd.

 PS.    This will make you feel better. Some recent rankings for the Triangle include:  Best Places for Business and Careers---# 3;  Best Cities for Corporate Headquarters---# 9 ;  Best Places to Reinvent Your Life---#3; Hottest Cities for Manufacturing Expansion and Relocation---# 17; Strongest Economy---# 6;  and Best Business Climate---# 1.