Sunday, October 14, 2018

When you buy a house, you lose

My friend posted on social media recently that she had just bought a house and she was #Winning. The truth is that when you buy a house you are making a terrible investment. You’re not winning. You’re losing.
Many believe that homeownership equals wealth. But that’s simply not true. The average person is much better off renting and putting extra money he or she would use for a down payment into liquid investments.  By liquid, I mean something you can sell immediately if you get into a financial pinch, such as stocks or bonds.
First, renting is often cheaper than ownership. For some reason there’s disagreement about this, but renting is clearly cheaper. Nationwide, from 2012 to 2016, the average median monthly gross rent was $949. That’s rent plus utilities. Comparable homeownership via mortgage plus taxes and other costs averaged $1,491.
And then people say, “But if I buy a house, and it appreciates in value, I earn the difference and I get a place to live. Paying rent is like flushing money down the toilet!”
Let’s debunk that myth now. First, shelter is one of humanity’s basic needs. So if you’re flushing money down the toilet paying for rent — as in a roof over your head — you’re not flushing money down the toilet.
Renters also save money by not having to pay things like homeowners association fees, property taxes, realtor fees, and closing costs, not to mention fixing anything that goes wrong with your home, such as the water heater, furnace, air conditioning system, plumbing, roof, septic … Everything.
Home ownership is a bad investment
Home ownership is a bad investment

You lose

When the toilet — the one I’m flushing my money down — breaks in my apartment, I call my apartment manager or supervisor and he takes care of it. For free.
And secondly, sure, houses can appreciate in value, but not as fast as the stock market. Between 1969 and 2004, home prices rose by an average of 6.4%. That’s great until you realize that the average size of a house doubled during that time. Throw in inflation, and that basically accounts for the increase.
Then there’s what happened after 2004. Prices plateaued and then fell off a cliff, dropping 30% in just three years, between 2008 and 2010. The S&P 500 has risen an average of 9.8% every year since 1909,  including even the Great Recession.
As Ken Fisher, the founder and executive chairman of Fisher Investments, wrote recently, “Yes, you might make money if you spot some trend, then buy right, at the right time and the right location, then put lipstick on a pig (which few do well), and flip it. It’s a comforting mythology, like reality TV. Folks routinely fool themselves by calculating returns dead wrong.”

You lose

Third, homebuyers who take out a mortgage don’t actually pay the sticker price. For a $300,000 home with a 10% down payment, the average buyer is going to end up paying an additional $251,790 in interest over the terms of a 30-year mortgage. Then they’ll pay another $72,000 in taxes and an additional $38,775 for insurance and homeowners’ fees. That’s not even counting property taxes and fees to real estate agents and brokers.
This graphic from shows the total cost of a mortgage, including HOA fees, interest and fees.
This graphic from shows the total cost of a mortgage, including HOA fees, interest and fees.
Yes, you can write off a portion of your mortgage interest, but that portion is just that — a portion —and there’s a lot of red tape around what you can and can’t deduct thanks to the new Tax Cut and Jobs Act.
So even if you sell your home for twice what you bought it for you might not break even.
And that’s if you pay it off. For the first few years of a mortgage, most people are just paying off interest because mortgages are structured to keep them from paying off the principal — the actual money that goes toward the home — until the very end.

You lose

This graphic from shows how most mortgages are structured to put interest payments at the beginning of the loan, so home buyers don’t end up paying most of the actual cost of the house until the end of the mortgage.
This graphic from shows how most mortgages are structured to put interest payments at the beginning of the loan, so home buyers don’t end up paying most of the actual cost of the house until the end of the mortgage.
When investing, you want to weigh the evidence and find the investment that is going to provide you the best return.
And evidence says that, “On average, renting and reinvesting wins in terms of wealth creation regardless of property appreciation, because property appreciation is highly correlated with gains in the traditional financial asset classes of stocks and bonds.” Those were the findings of a 2017 study from Florida Atlantic University, Florida International University and the University of Wyoming.
Instead of paying $300,000 of interest, you could be earning it. As interest rates rise — as they’re doing now — it means it’s more expensive to buy a house. You can also earn more on investments. Now is the time to invest that money and let the bank pay you, rather than paying the bank. Home ownership is a crock, it’s a sham, it’s a bad bet. You can play if you want, but odds are you’ll lose.
Dion Rabouin is a global markets reporter for Yahoo Finance. Follow him on Twitter: @DionRabouin.

Wednesday, October 10, 2018

Part 1 of what REALLY happened to Acapulco Inn in Long Beach

LBPD Backs Somali Pirates in Business Hijacks

Stephen Downing
Tracy Alcantar and his attorney, Jerry L. Steering, call them the Somali Pirates. Their names are Eugene Rotondo, Jerome Chiaro and James Wieser.
When telling his story to the Beachcomber, Tracy Alcantar, 60, a retired mortgage broker said, “We use to refer to them as the knuckle heads, but I decided that Somali Pirates was a better description. My attorney liked it.”
Alcantar was referring to the year 2000 piracy attacks off the coast of Somalia that threatened international shipping when Somali Pirates were enabled to hijack ships with impunity because of the absence of an effective national coast guard.
Alcantar said, “It fit perfectly. These guys take over a business and sell its goods with impunity just like those pirates did when they hijacked the ships. And the LBPD helped them get away with it.”
Alcantar began his story by showing the Beachcomber a videotape date stamped August 25, 2016, 7:20 a.m. – a Thursday.
Two men he identified as Eugene Rotondo and Jerome Chiaro stroll up from different directions, look around and casually stop on each side of the sidewalk leading to the front door of the Acapulco Inn (AI) on 2nd Street in Belmont Shore.
A third man, James (Jimmy) Wieser approaches from a vehicle parked at the curb. Wieser glances around and strolls casually past Rotondo and Chiaro to the AI’s front door.
Wieser glances around and then stoops to look into the mail slot.
Alcantar, whose investment made him one of the majority owners of the Acapulco Inn four years prior, narrates the video, “So, that’s Jimmy. See him looking though the mail slot, trying to see if anyone is inside?”
Alcantar explains that Wieser owns the Thirsty Isle bar on Carson Street near Lakewood Boulevard and Jerome Chiaro is owner of The Annex, on Stearns Street at Lakewood Boulevard.
He told the Beachcomber “both places are watering holes for LBPD’s East Division. Both of them have the Police Officer’s Association (POA) membership support plaques hanging in their bars.”
The Beachcomber reviewed the POA website and found that it solicits business owner’s financial support with the message, “Whether you are looking to create brand visibility or direct response, we’ve got you covered.”
Alcantar points again to the video screen, “Now, Wieser is going to go back to his car.”
The video shows James Wieser turn, give Rotondo and Chiaro a furtive nod and walk back to the vehicle parked at the curb, leaving the video frame for several seconds.
Wieser then re-enters the frame holding a power drill close to his chest. Rotondo and Chiaro alter their positions giving Wieser cover from the street.
Alcantar continues his narration, “See the drill? He’s got both Gene Rotondo – one of the guys I bought the place from – and  his backup, Jerome Chiaro, giving him cover as pedestrians are walking by with their dogs.”
The deadbolt is cut, Wieser pushes the door open and the three men enter Alcantar’s business.
Alcantar continued his story as the interior security cameras pick up the three men inside, “So, this guy Gene Rotondo, he used to be an owner of Legends and an owner of the Acapulco Inn (AI). The AI was a dead zone back in 2010 and Rotondo and another one of his partners, Timothy Moriarty, wanted to sell.”
Alcantar shuts off the video and continues, “Me, I’m a retired mortgage guy but my friend Hawaiian Bob (Aristides Gascon) who knows about running a place like the AI says, ‘well why don’t you and I join forces and buy those guys out?’ So, I check with my wife and she says, ‘Heck yeah! We can turn that place around.’ So, we bought them out, and over the next couple of years we made the AI a real success. So much so that these guys wanted it back.”
Alcantar continues with the complex story involving years of litigation he and his partner underwent “With them pushing to make something out of some worthless shares they bought from the bankruptcy court, their fraud, phony legal filings and us spending hundreds of thousands in legal fees to fight this complete nonsense.”
Alcantar said the day of the break-in his attorney had “just wrapped up the case in Judge Klein’s Long Beach courtroom and finalized a sanction for attorney’s fees in our favor.”
Alcantar continued, “So, our attorney is in court getting that done the morning these pirates break into my business. I’m at home and around 9:25 a.m. and I get a text message from a number I’d never seen before but later found out it came from Jimmy Wieser’s cell phone. It reads, ‘You might want to come to AI for a change of management.’“
Alcantar said, “Right away I smelled something. So, I called my attorney who was just finishing up in court to meet me there. I got in my car and headed out. On my way I saw a LBPD black and white and waved him down.”
Alcantar said that Sergeant Mark Kosoy, working out of LBPD’s East Division, occupied the black and white. He briefed Kosoy about his suspicions that an illegal takeover was in process at the AI and asked the sergeant to accompany him, which he agreed to do.
When they arrived, Alcantar said, “My attorney was waiting for me outside and the three of them, Rotondo, Chiaro and Wieser, were inside sitting at the bar with all these so-called legal papers spread out to allege their phony ownership.”
Alcantar said, “So, I walked in and went up to Rotondo, took him by the arm and said, ‘You got to go. Now! Rotondo says, ‘Don’t touch me’ and then the sergeant steps in and says, ‘You can’t touch those people.’ I told the sergeant, like I had told him before, they don’t belong here. I don’t even know how they got in here.”
Alcantar continues, “Then my attorney steps up and tells the sergeant about having been in court that morning. He shows him the papers related to the hearing and tells the sergeant how the judge put sanctions on Rotondo, pointing out that they had no legal right to even be in the place.”
Alcantar shakes his head, “And the sergeant says, ‘how do I know any of that’s true?’ That’s when Rotondo starts showing the sergeant all the so-called legal paper’s he’s got laid out on the bar and for some reason the sergeant starts buying into his phony side of the story.”
Alcantar told the Beachcomber that at about this time he was getting hot and Sergeant Kosoy told his attorney that he should, “Get me out of there.”
“I objected,” Alcantar said. “This was a hijack; I didn’t even know how they got in there. It had to be some kind of break in. I said, how can the police back something like this up?”
Alcantar said his attorney told him that the sergeant was not listening to any of it and advised that they should leave and get a court order, something that the three men who broke in did not have.
“A court order; that’s something that Sergeant Kosoy should have been asking them for,” Alcantar said.
Alcantar continued, “So, I gave up. We left, hired another set of attorney’s that cost us another $10,000 and went back to Judge Klein’s court the next morning.”
Judge Kline was very familiar with the case, “Alcantara said, “and not at all happy with the blatant violations pulled by Rotondo and his pirate friends. We got the court order and they were removed from the premises that afternoon.”
Alcantar showed the Beachcomber a copy of the court order, as well as court documents that supported the litigation to which he referred to in his story.
Alcantar said that after he took possession of the AI he discovered that the pirates damaged the security videos and it took several days to be restored by a specialist.
Alcantar played the eight-camera security video (no audio) for the Beachcomber.
It showed the break in at 7:23 a.m.
It showed Wieser make a phone call and while on the phone step outside, look up at the building to verify the address and then re-enter and end the call at 7:26 a.m.
It showed Chiaro clean up the inside and outside debris from the break in at 7:39 a.m.
It showed a uniform LBPD officer (Herrea) arrive at 7:40 a.m., shake hands with each of the three men, enter into a discussion, look at their papers and then shake hands again before exiting the premises at 7:45 a.m.
It showed Weiser texting on his cell phone at 9:25 a.m., the same time that Alcantar received the mysterious text that read, “You might want to come to AI for a change of management.“
It showed a technician enter and install a temporary credit card processing machine at 9:36 a.m.
It showed Sgt. Kosoy and another officer (Herrea again) arrive on scene at 9:59 a.m. Alacantar’s attorney is present. Alcantar arrives seconds later and leaves the scene a few minutes later.
At 10:07 a.m. Sgt. Kosoy shakes hands with the pirates and exits along with the uniformed officer (Herrea).
Alcantar told the Beachcomber that after reviewing the video he called East Division and informed them that he wanted to report a burglary.
Sgt. Kosoy responded.
Alcantar said, “I showed the sergeant the entire video, pointed out how they broke in, showed him the temporary credit card machine being installed, showed him test receipts on the machine and told him what several of my customers reported the pirates did the night before selling our inventory, taking in cash without ringing it up and running sales though their bootleg credit card machine.”
Alcantar told the Beachcomber that the sergeant shrugged, told him the burglary and theft of his inventory was a civil matter and refused to take a crime report.
After reviewing this story, Tom Barham, a former Los Angeles Sheriff’s lieutenant, combat veteran and distinguished constitutional rights attorney commented as follows:
“The crime of burglary is committed if a person enters, among other things, a shop, store or other building with the intent to commit grand theft, petty theft or any felony. Penal Code 459.
The police are obligated to take reports of alleged crimes and convey those reports to either a city prosecutor or district attorney. In Long Beach, the city prosecutor is responsible for misdemeanor and infraction prosecutions whereas the Los Angeles County District Attorney prosecutes felony crimes.
“It seems that the good sergeant didn’t stay in his lane when he decided for the prosecutors that this was a civil matter,” Barham said.
Alcantar and his partner went back to running the AI – but there would be a second take over by the Somali Pirates 13 months later – their criminality would again be immunized and protected by the LBPD and this time Tracy Alcantar would report it to the LBPD’s Internal Affairs Division.
Part Two of this two-part series will report on Alcantar’s experiences with LBPD Internal Affairs and the staff of the Citizen Police Complaint Commission (CPCC), the classification of police conduct during the second criminal invasion as No Further Action (NFA) and how – as Alcantar said, “I came to learn just how deep the cover-up of police misconduct is allowed to thrive in the City of Long Beach.”

Stephen Downing is a resident of Long Beach and a retired LAPD deputy chief of police.