The Early Point

Wednesday, August 23, 2006

Staggering Statistics about US Foster Youth

So I'm not one to use this blog as a venue to preach about social injustice, but after receiving this data from some friends of mine in the not-for-profit sector, I knew I had to find a way to share it.

Below are some unbelievable statistics about the future that awaits US foster youth as they "emancipate" out of foster care. What blew my mind was the statistics around Housing and Education. Give them a read and let me know your thoughts. I'm confident they will shock you!

Housing
?24-50% of former foster/probation youth become homeless within the first 18 months of emancipation.
?Nationally, 27% of the homeless population spent time in foster care.
?65% of foster youth are lacking safe and affordable housing at the time of emancipation

Education
?Fewer than 10% of foster youth that graduate from high school enroll in college, and less than 1% graduate from college.
?83% of foster youth are held back by the third grade.
?46% of former foster youth complete high school compared to 84% of the general population.

Employment & Income
?Less than half of former foster youth are employed 2½ to 4 years after leaving foster care, and only 38% maintain employment for at least one year.
?Nearly 60% of San Francisco’s emancipated youth live below the federal poverty level; this translates to less than $9,000 per year.

Parenting
?42% of all foster youth become parents within 2.5-4 years after exiting care.
?Females in foster care are six times more likely than the general population to give birth before age 21.
?Parents with a history of foster care are almost twice as likely to see their own children placed in care or become homeless than parents without this history

Incarceration
?Nationwide, over 90% of men in prison were either abandoned by their parents, abused, and/or lived in the foster care system.
?70% of San Quentin inmates grew up in foster care.
?20% of emancipating youth are incarcerated within 18 months of emancipation.

Health
?Nearly 50% of foster children suffer from chronic health conditions such as asthma, visual and auditory problems, dental decay and malnutrition
?50-60% of children in foster care have moderate to severe mental health problems

Friday, April 07, 2006

Scoring investments

As you walk down the path of real estate investing, there are many approaches to picking the ideal property. Allen Wastler of CNNMoney.com has an interesting approach thats worth a look.

Link to Wastler's scoring system

Monday, April 03, 2006

Middle Market Rentals

I was surfing the web and found this interesting report from the Joint Center for Housing Research of Harvard University about the middle market rental environment. It's particularly relevant, as most places I have or will invest in fall into this category.

The Executive Summary gives you a nice overview of the findings. It's worth a read.

The study itself is over 50 pages. There are some great information nuggests, so it's worth perusing. However, it really takes dedication to get through the whole thing.

Here's a link to the study pdf
.

Friday, March 24, 2006

Armchair investing

Everytime I tell my friends or family that I bought property outside of my state, they are always flabergasted. They quiz me to no end. They are in shock that I can feel comfortable buying a property i've never seen, from people i've never met.

The truth is, I live in California, and California is darn expensive. I'm young, and just starting out on this real estate adventure. The last thing I want is to take on a $500,000 rental property that most likely won't break even for the next 10 years.

So what is my only choice? Investing elsewhere.

I mentioned in my previous posting that there are a number of states (or provinces if you're Canadian) that have affordable houses that are ripe for growth. As they are all located elsewhere, I never thought it was possible to capitalize on the opportunity. I was flat out wrong. There are so many agents out there just dying for this type of business. I think the optimal way to find one is to go through an association or investing club. For myself, I chose Marshall Reddick. Based on my limited experience, I would definitely recommend them as a good place to start for your own investing adventure.

Thursday, March 23, 2006

The Economics of the Rental Property

I apologize for not writing in a few weeks. I've taken on a new job (at a small and very cool software company), and haven't had a chance to post.

So a few postings ago I talked about real estate investing being the solution to my investing woes. Even though some people argue a slow down is coming, you can see from data ive posted that the gains are still strong. In addition, if you are planning on renting your property, the number of active renters in the market actually increases when the market slows. So, you might not make a big return in the first few years on the value of your house, but your chances of finding a renter quickly increase substantially.

To dive in, I think a simple math exercise can most effectively show why I see so much value in real estate investing. Here we go...

If you buy a single family house (3 bedrooms, 2 bathrooms, 2 car garage) for $150K (very possible in most parts of the US and Canada), and put only 5% down, with closing costs you'll have a cash outlay of approximately $12K. (I will dedicate another posting to the absurdity of closing costs.) You close on the property and quickly find a renter. With a reasonable mortgage and a good property manager, on a monthly basis you should be able to collect enough rent to break-even on the property.

You hold the property for 10 years, and aside from the occasional month, it remains consistently occupied. After 10 years, given the average long term growth rate of 7% a year, the value of that house has now increased to $300K. It has doubled in value!! During that time, you have had no cash outlay, but an incredible thing has happened. Your renters have effectively been paying your mortgage for you. So, your 5% ownership in the house is now probably closer to 20%.

You sell the property for $300K. After paying the bank the remainder of your mortgage, your proceeds- $180K!! All on an investment of $12K made 10 years prior. Its an incredible return made possible by the leverage the mortgage system has afforded you.

Thursday, February 16, 2006

The case for real estate- part 1

Before I get into the math that convinced me to move my money into real estate, i think it is best to post a list that shows for all major metro US areas the increase in value in 2005, and the forecast increase for 2006. Even with the expected slow down, the numbers are still pretty amazing.

2005 gains and 2006 forecast

Wednesday, February 08, 2006

I digress...

Before I dive into the world of real estate investing, I have to mention a movie I just watched two nights ago. If you read my post entitled "What Company size is right?", you will note that I talked about working for Andersen- the Enron firm.

So a couple nights ago I watched an awesome movie about the whole Enron debacle (Enron - The Smartest Guys in the Room) that i'd recommend to anyone who wants to see a great example of how some company's just tailspin out of control.

Check it out. I warn you though, you may never trust a large company executive again...

Enron - The Smartest Guys in the Room