I must admit, the FatCat did not see that Hurray! Holding Co., Ltd. (NASDAQ: HRAY) , a leader in artist development, music production, wireless music distribution, and other wireless value-added services in China, today announced that it has been awarded a contract by China Telecom to design, develop, sell and support an application software for China Telecom's future nation-wide 3G portal.
However, FatCat brought HRAY when it was close to 52wk low. Then it went lower. Why FatCat brought the stock when everybody is selling? Because FatCat knows buying a stock is not buying a piece of gaming paper that prices goes up and down at random. It is the intrinsic value of the company. As a company, Hurray! is a leader in artist development, music production and offline distribution in China and a leading online distributor of music and music-related products such as ring tones, ring-back-tones, and true-tones to mobile users in China through the full range of wireless value-added services platforms over mobile networks and through the Internet. China, the world's largest mobile market and its' still growing. Hary is its largest player in content delivery.
An other reason FatCat brought HARY is that the US currency is constantly depreciating against other currencies. However, unlike the dip against Euro or Canadian Dollars, the dip against Yuan is unlikely to bounce back. So invest in a good Chinese stock will make you a FatCat.
Thursday, September 27, 2007
Monday, September 10, 2007
Fixed Cost in rental Properties
Invest in rental properties is the same as invest in anything else. In fact, it is like any other business. The profit is the net between the income and expense. Therefore, the business carries the goal of increase the income and reduce the expense.
In the case of rental properties, the income generate from a given property mostly determined by the market condition and does not vary much. The only thing an investor can do is to reduce the vacancy.
There are, however, many ways to reduce the cost.
First, the real estate tax associate with a given property, in Duval county, is associate with the transition price. So it makes sense to purchase a property and fix it instead of purchase a turn key property. The saving on tax remains true regardless the level of handiness of the landlord.
Second fixed cost is insurance, shop for a high-deductible, reasonable insurance company and receive a reasonable bulk discount is all that one can hope for. Some landlords try to under insure the property or only carry liability. FatCat disagrees. Under insure a property is worth than no insurance at all. Insurance is for disasters that hopefully not going to happen but count on it to happen. To not insure or self insure only if one owns sufficient amount of properties that serves the purpose of diversification in the case of unseen disaster.
The third cost is the cost of the property itself, which must be depreciate according to very specific rules. This will be discussed tomorrow.
In the case of rental properties, the income generate from a given property mostly determined by the market condition and does not vary much. The only thing an investor can do is to reduce the vacancy.
There are, however, many ways to reduce the cost.
First, the real estate tax associate with a given property, in Duval county, is associate with the transition price. So it makes sense to purchase a property and fix it instead of purchase a turn key property. The saving on tax remains true regardless the level of handiness of the landlord.
Second fixed cost is insurance, shop for a high-deductible, reasonable insurance company and receive a reasonable bulk discount is all that one can hope for. Some landlords try to under insure the property or only carry liability. FatCat disagrees. Under insure a property is worth than no insurance at all. Insurance is for disasters that hopefully not going to happen but count on it to happen. To not insure or self insure only if one owns sufficient amount of properties that serves the purpose of diversification in the case of unseen disaster.
The third cost is the cost of the property itself, which must be depreciate according to very specific rules. This will be discussed tomorrow.
Thursday, September 6, 2007
to HUD or not to HUD
To HUD or not to HUD, this is a difficult question. FatCat dose not have an answer. The only logical way to look at the option of rental market is from the money view.
However, before we dive any further, let's take a look at what is HUD?
The department of Housing and Urban Development section 8, provides low income family with rent assistance through a voucher program. Landlords accepts voucher issued by HUD as part of the rent owed usually refers to as HUD.
Reasons to accept HUD voucher:
1. HUD is never late on the rent. No landlord has ever received a phone call from HUD, say "eh, we are having a budget problem, is it OK I mail you the check on the 10th instead of 1st?"
2. HUD tenants are usually reasonable because they are afraid of losing the assistance.
3. There is no need to worry about the tenant break the lease because the rent payment does not go through the tenant.
4. In the case of eviction or lost of tenant for other reason, HUD will continue to pay its portion of the rent until the property is rent again.
Reasons Not to accept HUD voucher:
1. Any government program means a lots of (annoying) paper work, and (unreasonable) detail requirement on the property.
2. Government inspections means delay in process. Delay leads to vacancy which leads to lose of profit.
3. Certain HUD client seems to know exactly how to abuse the system.
4. Because HUD assistance is income bases, it attracts people with insufficient funds for security/cleaning deposit.
5. The actual rent is set by the government housing inspector, not the landlord.
However, before we dive any further, let's take a look at what is HUD?
The department of Housing and Urban Development section 8, provides low income family with rent assistance through a voucher program. Landlords accepts voucher issued by HUD as part of the rent owed usually refers to as HUD.
Reasons to accept HUD voucher:
1. HUD is never late on the rent. No landlord has ever received a phone call from HUD, say "eh, we are having a budget problem, is it OK I mail you the check on the 10th instead of 1st?"
2. HUD tenants are usually reasonable because they are afraid of losing the assistance.
3. There is no need to worry about the tenant break the lease because the rent payment does not go through the tenant.
4. In the case of eviction or lost of tenant for other reason, HUD will continue to pay its portion of the rent until the property is rent again.
Reasons Not to accept HUD voucher:
1. Any government program means a lots of (annoying) paper work, and (unreasonable) detail requirement on the property.
2. Government inspections means delay in process. Delay leads to vacancy which leads to lose of profit.
3. Certain HUD client seems to know exactly how to abuse the system.
4. Because HUD assistance is income bases, it attracts people with insufficient funds for security/cleaning deposit.
5. The actual rent is set by the government housing inspector, not the landlord.
Wednesday, September 5, 2007
IFC: sub prime mortgage, credit cards, car loans
It is no surprise that subprime financial market is leading the down slop to abysimal. Is this much different from the last industry wide correction of airline, auto, or hi-tech? How much is correction and how much is panic? Should I enter? double-down or pull out? There are many times, FatCat just want to cover her eyes and ears and hide under the bed. Unfortunately, the thunder dose not disappear just because you cannot see or hear it. This world is so full of that!
Still, FatCat believes that the investment is fundamentals of the company. Not the hype or anti-hype of the media.
An excellent example is IFC. It just hand out a handsome dividend. If you have bought the stock at its 52wk low a few weeks ago, you would have scored a more than 10% gain in less than a month. Again, investment is not gambling. It is not about score 10% in a month. It is about double or triple your money in a much longer period of time like 3 to 5 years. With its heavy load on consumer real estate and current political condition in the US, FatCat anticipates IFC to out perform the index after the next Clinton get into office. Not because she thinks Clinton has anything to do with the specific stock but FatCat anticipates the new Clinton administration will benefit the severely plighted low in come --thus the sub prime mortgage, credit cards and car loans and other consumer credits that focus on the low income.
Still, FatCat believes that the investment is fundamentals of the company. Not the hype or anti-hype of the media.
An excellent example is IFC. It just hand out a handsome dividend. If you have bought the stock at its 52wk low a few weeks ago, you would have scored a more than 10% gain in less than a month. Again, investment is not gambling. It is not about score 10% in a month. It is about double or triple your money in a much longer period of time like 3 to 5 years. With its heavy load on consumer real estate and current political condition in the US, FatCat anticipates IFC to out perform the index after the next Clinton get into office. Not because she thinks Clinton has anything to do with the specific stock but FatCat anticipates the new Clinton administration will benefit the severely plighted low in come --thus the sub prime mortgage, credit cards and car loans and other consumer credits that focus on the low income.
Where do we go from here
More than once, someone has asked FatCat if he or she should dump the ABC or XYZ stock. Why? Because the stock you hold has lost 20% or 30% or even 50% of its face value? The obvious but often ignored fact is that when stock is bought or sold, it is the ownership of a corporation that is bought or sold. If the fundamentals of the corporation is not changed, why should the value of the stock? If a piece of property was great buy at $5 why would it become a hot potato at $2? Should it be a better bargain? Of course, things could change in the fundamentals of a company and cause it to become a hot potato. In this case, it should be sold regardless of the market price.
FatCat believes that investment is not gambling. She buys a stock when it is worthy of purchase and sells it when it is over valued. In plain English, buy low sell high. Unfortunately, many people do the opposite. Hope you are not one of them.
FatCat believes that investment is not gambling. She buys a stock when it is worthy of purchase and sells it when it is over valued. In plain English, buy low sell high. Unfortunately, many people do the opposite. Hope you are not one of them.
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