Here is whats going on in California.. Im sure its as bad or
worse in NYC. Not promising if you dont enjoy being
compromised by slime bags.
(my post to a financial NG)
I attended a seminar for real estate heavies, I managed to
slide in under false pretexts. The speaker long time in the
business delivered a speech that went entirely over my
head..... until I got home and started drafing marketing
plans. In drafting those these issues and past experience
suddenly came very clear..
Then the light bulbs went on...about 90 of them.
why for instance could I bid 50k on a job and not get it, then
find out later that the 'winning' contractor had quoted
150k...and does bad work often not even functional work..?
Whats up with *that. Clooless .... thats me, I had no
faintest idea for some time.
I do now.
Those who wish to get all snitty or claim that just because
they are not corrupt or don't see any of that.. so wish to say
it doesnt exist... go right ahead, I am too old to give a
rats ass what those think.
The speech was entirely coded but unmistakeable in intent. He
was addressing massive fraud in the commercial real estate
business and with property management and the
ramifications...specifically with REIT's the pruning of the
small investors in these via corrupt property managements.
All of his speech was delivered in an ultra casual, disarming
style that one would not suspect in such a bombshell of a
He pointed out the low ball nature of many property managers
(admiting being one himself for decades ..now a top dog on the
east coast)... and the nasty graft situation going on, but
in very carefully structured terms..all seeming like trivial
side bars and stories.
So why am I posting this here?.
A few will be interested.. the idiots won't be of course but
for others this will be of interest.
Have you ever wondered why you might be working so hard and
struggling financially yet you see armies of dingbats and
morons drivng SUV's.. living high and relaxed?
Summary of whats going on:
Graft across the boards in many industries.. its old as the
hills... for instance a contractor wanting work at a facility
can 'put the manager of the facility on his payrol as a
'consultant'... :) or arrange with someone else
entirely to put the person on *their payroll and visa versa.
thats an unlimited, untraceable, tax legal, and otherwise
'legal' means of paying off decision makers... that goes down
to the lower middle manager levels. these earn 50K a year,
but live in million dollar homes and have two SUV's.
One of the inside jokes among this set of people. "Hey Bob
how many payrolls are you on no".. thats an old joke.. since
then the mess has gone exponentially worse.
thats how its done. There are many other tactics...use of
temp agencies to run the money to the managers 'on contract'..
or without paying the 15% cut to the temp agency in these
cases one can simply pick up the managers tab at high end
clothing store or car dealership.
Tax deductable of course.
These tactics are so common in most of Europe that these pay
offs and kick backs are tax deductible. But in the US its
still illegal... these tactics decimate legitimate interests
and legitimate investors.
adding in corrupt civil service fraud by these very same
means, not to mention the bogus pay and retirement
arrangements you get a good size chunk of the populaton not
entitled to be rich by dint of capability, production or
wits..... but well off none the less... its rampant.
Where did the money come from? It came from investors who
have no clue that the fraud at Enron, World Com, Global
Crossing and a thousand other corporations was also rampant
but at much more fragmented scale... all of the way down the
line in many industries... in some industry its not prevelant
at all. lets make that clear.....in others its massive.
Recently a charter school founder, on state contract is
charged with 25 million dollars in fraud for instance.
Fraud in middle and upper management is becoming the rule, not
The tactics are decimating legitimate business and forcing
them to become complicit or go broke. .. thats a severe net
degradation all the way around.
What started all of this? A reasonably legitimate attempt to
keep income and profits away from ruthlessly destructive
taxation levels. Now as bloated and corrupt goverments go
broke they must come after these people.
its not going to be pretty or pleasant.. and its not going
to encourage risk taking, investment or entrepreneural
endeavors... and that is going to fruther decimate the states
The net cause with real estate has been what the speaker
called that 'other peoples money' attitude.. and he went on
at length about past disasters and guys being shuffled off the
parking lot under guard.
This other peoples money attitude, affording the graft and
high prices has created a massive real estate bubble that he
ceased speaking in code about.... and said that the REIT
(real estate investment trusts) are buying like drunken
sailors at unwarranted prices (using other peoples money, not
their own of course)... *and that the high rollers he knows
in commercial real estate..and he would know ust about all of
them well.. and he named a few that didnt mind being named..
have ALL of their properties curently up for sale and are not
buying with their own money about 50 billion dollars are
currently side lined by these people.
For those with no clue that will go over your head... for a
few others that is a bomb shell.
Currently as the state of calif is going broke, and the
federal govt is next... taxation of real property is going
into high gear like you cannot concievable fathom.. that was
addressed at this forum as well.
In summary the state of calif is trying to legislate that
every change of ownership by 51% or more, or with many other
common changes will require a re-assesment of the property and
capitol gains taxes paid etc..a complete nightmare from
countless angles. This will kill real estate shuffling and
depreciation advantages to a major extent.
A citizen might say...well great... its about time these high
roller paid taxes... and that is not entirely without merit.
However all this action is also a golden goose on which the
average citizen gets meat for his bowl of rice. Bloated
government ruins all it touches..and those it doesnt touch it
ruins by sucking up all the energy...then wastes it.
for instance currently commercial property can be effectively
depreciated to near tax free income levels over a 7 year
period or less... players in the industry simply trade
property back and forth..no taxes. The rental income is
sheltered by the depreciation.
If this legislation passes, despite the heavy industry
opposition, the commercial real estate bubble will burst big
time..as it will eventually anyway...
the State has aleady driven off huge sectors of its economy
to Nevada, other states and China and its working class tax
base is in steep decline as govt continues to bloat..
Accordingly commercial real estate is about to get nailed...
the new 'home owners' will be next...anything that can be
levied against. Levying bag ladys didnt work or well..
What is not seen is that the 'haves' only got it by these
means, when the state eliminates these, and the middle class
is moving now to the lower middle class...the net tax base
collapses.. then govt loses empire, and / or collapses.
That will kill the golden goose as it has in other nations.
Random comments follow, sorry I didnt have time for a better
The management companies for these properties of course remain
in place through many successive ownerships.. now seen by moi
here to be raking off 20% of the building services action by
covert and often completely nasty and ruthless means.. (the
speaker was from this contingent himself in his earlier
years, described these as failed stock brokers, the near do
well offspring of corporate officers, grifters and used car
salesmen...so it was a bit of an insiders expose..and maybe an
attempt to clear ones conscience or blow the whistle as a
little graft has turned into nationally devastating
Most recently in my personal experience... 20,000 dollars
skim was asked from a $17,000 base of work (material costs
$9,000, labor 3 man days). Resulting in a 37k billing to the
actual owners (the cash paid suckers investing in that
particular REIT or range of snarled up corporate shells.).
The speaker at the most recent event got a horse laugh from a
few in the audience when he referred in very coded terms to
'this vertical integration' :)
So what I am saying here is that we are living in a culture
gone suddenly corrupt almost to the core within the last 20
years..at all levels... and in the last 10 years exponentially
corrupt. Excepting the clooless bottom level of water
carriers.. without the leverage to be corrupt or in some
cases with a cleaner work ethic than that.
Its easy to be clueless these days.