Tuesday, September 29, 2020

Essence de mildew

You'd think after working on and renting out the last victorian apartment up in Southport we'd be done with old properties for a lifetime. Not so though it would appear, that would be far too smart...(rolls eyes) 

Oh contraire...heaven forbid we were to buy a fairly modern place we could simply roll up and move into. 

Fact is one can only spend so much of ones retirement progressing up the duolingo league tables, playing old classic Grieg tunes on the piano or swinging a golf club so many times before one gets another hankering to once again fill ones lungs with that now familiar heady concoction of dust and mold. 

Walking through the door to the retch-inducing toxic essence of eau de musty...how could we not miss all that?

So, once more into the breach we go..

Our muse this time is a 130 year old, 2 bed townhome/terrace here in Cowes on the Isle of Wight.

Buying a property in the covid environment is now, it has to be said, incredibly tricky. The market here on the Isle of Wight generally has gone seven shades of insane in the membrane (hahaha you see what I did there? I got a damp-proofing membrane joke in. That's old house renovation comedy right there)

It seems a bunch of folks from London have been given the green light under covid to work from home and have decided to take the opportunity to cash out of there and move here. En masse. The Bentley convertible count has literally gone through the roof. It's madness.

...and boy can these folks throw money around. Yeesh. Talk about making it rain. Pretty much every house you go look at get's bid up into the stratosphere way beyond any shade of actual valuation. Leaking roof? Woodworm chewed floorboards? Zero modernization? Doesn't matter, the asking price still get's bid up insane here in our new little part of the world. Fk. You can find yourself renting forever in this environment.

So we kinda dropped lucky, our place has no central heating, old windows as well as the as-stated old familiar eau de rancid musty mildew. It's the only way you actually can get a chance of a decent buy here. It's pretty much a combination of luck and buying something nobody in their right mind would want to live in. 

Ok I exaggerate a little here...ours is maybe not so bad. Hopefully(nervous laugh)

So far we have woodworm evidence, no airbricks (leading to decades of moisture with nowhere to go) corroded wall ties, rotted floor joists and maybe some roof leaks we need to fix. That's us just getting started, already makes the Southport pad look like a walk in the park. Facepalm.

Still up for the challenge? 

It'll be right, let's get stuck in. We'll discover more issues with Chez White Elephant as we go along no doubt but for now it's the usual whack-a-mole issue solving.

This week we tore the inside of the bay window area off and started with the re-pointing of all the brickwork, at the same time we discovered some rotten joists and floorboards but on the positive we also found gold. Some original 130 year old victorian paneling that we can re-use. We can bring the house back to it's original style again, similar to our path in Southport. Check out this pic, the panels most likely got painted in the 70's judging by the color scheme:-

As for the remainder we've chosen to start re-adding refurbished period features back in to the property:-


So you can maybe see how this is now beginning to hot up into an exciting new project for this re-retirement era. The most important lesson is definitely to pace it though, not like last time where we got through it as fast as we could in order to start getting our UK passive income stream going before heading back to the USA.

On that same subject Southport has been rented out since march this year and all seems so far so good, the tenants appear happy enough with the place and we are now at least able to use that income in UK pounds to pay our UK gas, electricity, water, council tax overheads and free up the USA income for our groceries and savings. 

But pace this one we will, taking our time and making the project work on the house just one part of our busy retirement weeks. So yeah the French lessons on duolingo will continue, as will the golf lessons, the piano dabbling, cycling, running, hiking and the gouache artwork. Eventually progressing towards volunteer work for any local charity organizations. Point is we have no plans to get burnt out on house DIY work once more destroying all the fun so we'll be taking days off a lot more than ever. A lot less tiring this way.

This time we can do that though, we have the luxury of a 6 month apartment rental in East Cowes we can retreat to in order to regularly clear our lungs of the dust and must. The plan right now is to be in the Cowes place by Christmas and drop the East Cowes place, maybe even sooner if a covid lockdown happens again for some reason.

The plan is also that this time around the property is for us to live in. Not a rental for a change like the Southport and Savannah properties. A nice small place with low overheads in the sailing community of Cowes for the long term.

Within easy reach we have the beautiful turquoise waters of Freshwater Bay:-

Or even the Needles among a great many other attractions all on one little island.

The strange irony is that if we'd stayed a moment longer in Oklahoma we'd never have got this property, in fact any extra money earned beyond our June au revoir date would have been negated by having to pay more for a property here. Perhaps a ridiculous amount more. Sometimes we really understand the idea that everything happens for a reason and each moment has it's time.

So in conclusion that's it for this update, we'll keep you updated on the progress of our Chez White Elephant as and when we can slot it in between all the other retirement activities we've been slowly accruing. This time around life has definitely gotten a lot more hectic and our plates are now most definitely full compared to last time.

This is what retirement is now all about, being busy if you choose to be but also having the flexibility to do none of the above also if you so choose. Nice to have finally figured that out this time around.

Until next time..

Love to all,


Tuesday, September 8, 2020

Cut yourself some slack

Pretty much everywhere you look at the moment there seems to be dividend investors either licking their new reset wounds or burying their heads deep in the sand and denying it's all happening. 

Or that other statement that the cut is "for the good of the company" and will be right back up there in a decade or so, like you're somehow working there, leaning on the photocopier talking to a colleague rather than an investor.

At DD4L we've been through the gambit of these emotions quite extensively for the past few months. The issue we quickly realized was that we were taking the resets personally, or at least our investing ego was. There was even a guilt attachment to the outcome, like it was all our fault. The shame of it, what were we thinking? Morons.

Investing ego is a part of your persona that when you find a stock to invest in it then stakes it's reputation on the success or failure of that particular company. Much like following or becoming involved in any particular sporting team the emotional attachment leads to a feeling of internal disappointment or joy at the success or failure of your decision making.

Read all that back to yourself a few times and you start to see the futility of the entire exercise, I promise you. Ego is crazy when you think about how it operates.

Fact is you could have done a mountain of research on WELL and never in a million years could you have predicted that they would reset their dividend in order to free up cash to buy back their stock. Push comes to shove that was the first time they even hinted to not being dividend investor friendly.

Same with VTR, Deb Cafaro even went on CNBC and swore categorically that the dividend was safe, (not that we watch the program, just saw a clip.) couple of quarters later and the cut happens.

As for Westrock they make cardboard boxes and packaging for crying out loud, the cornerstone of the Covid mail order stay at home and order online or "get a six pack beer package from the off-licence while the bars are shut" economy and they still cut. Yeesh!

Same story with numerous others. RDS.B and BP to name but a few, most even had reasonable balance sheets so you had a decent idea when carrying out the research that they could weather a recession pretty well.

Yet when it came to it you still found yourself wrong. Then took it personally or tried to rationalize away that it was good for the company longer term, you and a whole host of other burned dividend investors, yours truly included.

Fact is this is the reason we set out to accumulate over 100 stocks, now down to 159 post-Covid. 

It's because within the exact same industry you can't predict how one particular CEO is going to respond to a crisis like Covid versus another, or how their particular part of the same industry reacts totally different to other like-companies. Case in point look at Ivan Kaufman over at Arbor Realty, the company is an mREIT with a high yield but so is NRZ, so is NLY but all these businesses are run differently by different human beings and one size doesn't fit all. When the FED intervened in all their businesses you had no idea how each would be affected, and that it would come down to non-Agency versus Agency debt. Picking the winner was a crap shoot and you just weren't to know back in early 2020.

You do now though, and that's experience. As an investor you will get burned at times, it goes with the territory that you can't expect to be correct 100% of the time. Again this is why you keep a lofty number of stocks in your portfolio with smaller principal invested, in direct contrast to pretty much every piece of advice out there that suggests keeping to 5 diversified companies. Yikes!

So where did this investing ego originate and if it's so detrimental how can we stop it and just roll with the gut punches?

This involves more of a fundamental mindset change, the issue is we have all been instilled from birth by our parents, teachers, fellow humans with an instinctive need to be the best, better than all our peers at whatever we turn our hand to and investing is no different. So when we see our investments take a cut something internally tells us we got it wrong, we're no longer winners and it hurts our pride/ego accordingly.

The solution is to simply accept that you can't be the best and you will make mistakes and learn to be ok with it. Think about Buffett's airlines investments or Icahn's losses with Hertz bankruptcy, these two alone took losses in the millions and they are professional investors with a lifetime of experience each as opposed to yours and my amateur sunday league status. All we can do is work to the balance sheet information staring us in the face, do our own due diligence and make our best gut call. 

Guess what sometimes a Covid will come along and kick us in the pants, thankfully they don't happen often though but when they do we just need to be thankful for the learning experience from mistakes that we will never repeat again. That is all. 

No more guilt trips, enough already.

In conclusion, if you want to beat yourself up that you picked a bunch of dividend stocks that got a reset pounding that you could never in a million years have predicted feel free to beat yourself up, drip hot candle wax on yourself, rock the gimp mask...whatever floats your boat, by all means have at it.

But none of it makes any sense, not a single jot...

Unless of course it was so damn obvious it was ridiculous, like they were running up huge debts to keep paying a dividend they obviously couldn't really afford in which case you're a silly goose or just crazy fast and loose with your money.

Still no need to beat yourself up though just learn from the experience, cut your losses and refocus on quality diversified names, all you can do. Oh and retain your sense of fun and thirst for knowledge and experience as an investor.

Love to all,