BILL CHERRY'S GREATEST DALLAS PARK CITIES REAL ESTATE BLOG: December 2009

In the Preface of this 7-part series of blogs, I explained that my daddy was always a salaried employee, yet by following seven rules he went from being recently out of college to a millionaire-plus twenty-five years later. My mom never worked, and they fully-funded the education of their two sons. He passed away in 1980.

I suggested that with the 2010 New Year ready to begin, this would be the perfect time for each of us to initiate Daddy's 7 Rules for Securing Your Financial Future.

Here, stated again, are the rules:

• Save at least 10% of your gross income
• Know about, understand, and use the principal of Dollar Cost Averaging
• Intellectually know that you don't have a profit or a loss in an investment until you sell it.
• Secure your family's well-being and your retirement income stream with life insurance annuities
• Pay off the mortgage on your home as quickly as you can
• Accumulate a portfolio of income producing real estate
• Diversify

HERE'S NO. 3:

(STOP WORRYING) YOU DON'T HAVE A PROFIT OR A LOSS UNTIL YOU SELL

One of the reasons financial advisers have clients is because most investors don't want to have only themselves to blame if they make an investment mistake. 

They want to be able to hold someone else responsible if they buy a dud of a stock, or they make a big investment only to see the stock or the market or both take a dramatic discount a few days later.

By switching that responsibility to a financial adviser, they get to blame him for the screw ups.  Heck, they can even fire him if he does, or give him a second chance.

But there are two parts of this equation that are often overlooked.  Like it or not, it is not in a financial adviser's best personal interest for your account to remain stagnant.  For him to make money, your account has to have activity.

Turning the assets in an account too often is known as churning, and churning is illegal.  The problem is, it's hard to prove unless it is blatant.  So churning is going on all of the time.

And second, those who earn their fees for representing you by sales commissions rather than by charging you a management fee, often limit the majority of the products they sell to those that pay them the highest commission. 

So here was my daddy's logic.  Buy investments where management has a good track record; where, when possible, the company manufactures, owns and sells tangible products, and then just hold your position.

If the stock goes up, great.  If it goes down and nothing about the company has changed, buy some more to average your price.

I'd say to Daddy, "Your Georgia Pacific took a hit today."  And he'd say, "What do I care?  They've still got trees in their forests and builders still need lumber.  The only time I'll care what the price is is when I decide I need my money for something else, and that won't be anytime soon."  Then he'd give me his toothy, all-knowing grin.

Interestingly, Daddy was right.

When you buy an investment, you have to have the stomach to ride out bad times and not be tempted to sell in good times.  If you don't have that temperament, for your own mental well-being, you will either 1) need an investment adviser or 2) have ready access to a coffee can buried in your backyard.

Tomorrow we'll discuss annuities, and hopefully settle this debate for you once and for all.

BILL CHERRY, REALTORS

DALLAS - HIGHLAND PARK

Our 45th Year

214 503-8563

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There are a number of my high school friends who live in Dallas.  Two of them, Martin Bowers and Erben Schuldt, join me for lunch from time to time to talk about what it was like to grow up in Galveston, and to discuss our Ball High School friends.

Martin and his brother, Ralph, were excellent students.  Martin is a mechanical engineer with an MBA.  Ralph is a civil engineer who had an appointment to one of the military academies, but washed out when his entrance medical found he had an astigmatism.

Martin and Ralph's daddy. A.A. Bowers, was a general contractor in Galveston.  I had a nice home that I had bought from an estate for a rent house.  The neighborhood was so good that I asked Mr. Bowers if he'd add a garage apartment on top of the garage.

Ralph drew an exceptional set of plans.  By adding a carport and small storage room to the existing garage, he was able to increase the size of the apartment to about 700 square feet.  The result was a two bedroom, one bath garage apartment with plenty of closets, a swell kitchen and a big living-dining room.

One day after they had pealed the roof off of the garage, and framed the addition, Mr. Bowers came to see me.  "I don't like the way that framing crew framed the apartment.  I'm going to make them tear it down and do it over," he said.  "I just wanted you to know what was going on in case you drove by and saw that it had been taken down."

While I never quite got to the bottom of why Mr. Bowers chose to completely tear the unit down rather than correct what he found as errors, nevertheless, A.A. Bowers was like that.

When he built or remodeled anything, it was always as close to perfect as humanly possible.  He and his crews did a lot of work for me over the years.  I don't recall ever calling them back to correct a mistake.

It's the small town work ethic of citizens like A.A. Bowers that I miss now that we live in Dallas.  One more thing.  Patty's maiden name was Bowers.  They're no kin.

BILL CHERRY, REALTORS

DALLAS - HIGHLAND PARK

Our 45th Year

214 503-8563

WEB

In the Preface of this 7-part series of blogs, I explained that my daddy was always a salaried employee, yet by following seven rules he went from being recently out of college to a millionaire-plus twenty-five years later. My mom never worked, and they fully-funded the education of their two sons. He passed away in 1980.

I suggested that with the 2010 ready to begin, this would be the perfect time for each of us to initiate Daddy's 7 Rules for Securing Your Financial Future.

Here, stated again, are the rules:

•·     Save at least 10% of your gross income

•·     Know about, understand, and use the principal of Dollar Cost Averaging

•·     Intellectually know that you don't have a profit or a loss in an investment until you sell it.

•·     Secure your family's well-being and your retirement income stream with life insurance annuities

•·     Pay off the mortgage on your home as quickly as you can

•·     Accumulate a portfolio of income producing real estate

•·     Diversify

DOLLAR COST AVERAGING

One of the easiest and most consistently successful investing strategies is called Dollar Cost Averaging.

The idea is to pick a particular vehicle for your investment, say it's a growth mutual fund or Hewlett Packard.  Next you pick a day of the month that you will purchase stock in your investment choice, and finally you decide the amount of money or the amount of shares you'll buy each time.

For an example, I decide that on the 5^th day of every month, I will buy one hundred shares of Playboy International, Inc. common stock.  So let's say the stock on January 5^th is quoted at $3.50 per share.  So I put in my buy order for $350 plus brokerage fees.  I do this every month...100 shares whether the price of the stock is more or less than my original investment per share price of $3.50 per share.

What happens is that over a period of time, you have an average price that you've paid per share, taking in the high prices, the low prices and everything in between. So you've accumulated shares by regularly increasing your investment each month, and since you've bought at many prices, your opportunity for appreciation has increased, and your chance of loss has decreased.

People who invest in mutual funds and who do not contemporaneously practice Dollar Cost Averaging will get seriously diminished results.

My grammar school principal, H. McKee Andrus had learned how to build houses.  So throughout the year he bought a subdivision lot, then accumulated the materials he would need to build a small rent house.  When June rolled around, he and the school janitor built that house. 

So Mr. Andrus was Dollar Cost Averaging real estate.  And when he retired, all of his rent houses were mortgage free, rented out, and in addition to having built quite an estate, he and Mrs. Andrus had an extraordinary income in their retirement years.

Dollar Cost Averaging goes a long way in solving the average guy's delimma: "I always seemed to buy when the stock is at its highest, so I don't invest in stock."

Try Dollar Cost Averaging, even if it's adding $50 bucks to your bank savings account on the same day of every month.

Tomorrow, we'll investigate the third of Daddy's Rules: Intellectually know that you don't have a profit or a loss until you sell.

BILL CHERRY, REALTORS

DALLAS - HIGHLAND PARK

Our 45th Year

214 503-8563

WEB

In the Preface of this 7-part series of blogs, I explained that my daddy was always a salaried employee, yet by following seven rules he went from being recently out of college to a millionaire-plus twenty-five years later. My mom never worked, and they fully-funded the education of their two sons. He passed away in 1980.

I suggested that with the 2010 ready to begin, this would be the perfect time for each of us to initiate Daddy's 7 Rules for Securing Your Financial Future.

Here, stated again, are the rules:

• Save at least 10% of your gross income
• Know about, understand, and use the principal of Dollar Cost Averaging
• Intellectually know that you don't have a profit or a loss in an investment until you sell it.
• Secure your family's well-being and your retirement income stream with life insurance annuities
• Pay off the mortgage on your home as quickly as you can
• Accumulate a portfolio of income producing real estate
• Diversify

SAVE AT LEAST 10% OF YOUR GROSS INCOME

Daddy said over and over that saving means saving, not saving-up to spend.  The point of saving is to prepare for a time when, through no fault of your own, you are unable to cover your current living expenses.

That can be the result of loss of job, illness, catastrophic loss or retirement.  It is not for the purpose of saving to buy a new washing machine, a new car, even your child's college education. 

If you and your spouse earn a total of $100,000 per year.  You should save no less than $10,000 of that income every year.  If you should be forced to use any part of that savings, you are morally obligated to yourself to pay it back.

The savings vehicle for this $10,000 per year savings account should be a risk-free investment such as an insured account with a commercial bank or US Government issues bonds.

So what would occur if you invested $10,000 every January 1st for 25 years, and your investment earned just 5% simple interest?  You would have put $250,000 into the pot, but the pot would have grown to about $475,000.

KNOW ABOUT, UNDERSTAND AND USE DOLLAR COST AVERAGING

This is the second rule, and tomorrow's blog will discuss it.

BILL CHERRY, REALTORS

DALLAS - HIGHLAND PARK

Our 45th Year

214 503-8563

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WIKIPEDIA

PART 1 - THE PREFACE AND PRINCIPALS

This coming Friday, we all have the opportunity to correct our financial indiscretions and begin methodically securing our financial futures.  Friday is the beginning of the New Year of 2010.

My daddy, William W. Cherry, passed away unexpectedly twenty-nine years ago; in fact on December 19th.  He would have been 72-years old the following February 7th.

I'm telling you that because it will put this into prospective: 1) my daddy was always a salaried employee, 2) he became a millionaire, and 3) starting from scratch, he accomplished his financial goal by following these rather uncomplicated rules:

1. Save at least 10% of your gross income
2. Know about, understand, and use the principal of Dollar Cost Averaging
3. Intellectually know that you don't have a profit or a loss in an investment until you sell it.
4. Secure your family's well-being and your retirement income stream with life insurance annuities
5. Pay off the mortgage on your home as quickly as you can
6. Accumulate a portfolio of income producing real estate
7. Diversify

Over the next few days, I'm going to take each of these seven "rules" and explain why Daddy made them his rules.  Interestingly, it is empirical that his formula works, and that it can work without taking extraordinary risks.

BILL CHERRY, REALTORS

DALLAS - HIGHLAND PARK

Our 45th Year

214 503-8563

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WIKIPEDIA

Often I wonder about the genesis of specific parts of my childhood.  Perhaps many of them were based on my parents living and raising their family on one salary, choosing for my mom to always be at home and available for my brother and me.  My daddy was an executive with a major life insurance company, but insurance companies and banks were not generous employers back then.

For sure, though, our clothes and shoes were always the best available; the best brands and from the best stores.

Luxuries, on the other hand, were not plentiful.  A good deal of that could be blamed on the rationing imposed by World War II.

My daddy had a business associate in Los Angeles named Howard Reeves.  Since he and Mrs. Reeves never had children, the way they budgeted their income didn't have to be as conservative as that of my mom and dad.

After all, Mr. and Mrs. Reeves had no daily expense of feeding, clothing and raising children, and they didn't have to prepare for their future educations.  Mine dad and mom did.

Mr. and Mrs. Reeves lived in a beautiful home in the Hollywood Hills, and about one-half of that home was cantilevered out over a hill.  The view, especially in the evenings, was spectacular.  I remember the first time I saw it, which was in the early 1950s, Daddy said it was worth over a million dollars, and that Mr. Reeves had paid for it with profits from his regular investments in a stock called Pure Oil.

At Christmas time each year, Mr. and Mrs. Reeves would send my brother and me a five pound box of See's Candy.  There really was a Mrs. Sees and her family, and that candy was made and sold fresh in Los Angeles and San Francisco, and only in See's Candy Shops.

From the 1940s through today, my taste and opinion have never changed.  See's candy is the best there is, and the best of the best are their Krispys.  There were about twenty in every mixed box.

The last time I saw Mr. and Mrs. Reeves was in the early 1960s when I played a few-weeks' gig as the pianist in the restaurant of the Beverly Wilshire Hotel.  They honored me by coming there to eat with me and to hear me play.

Mr. and Mrs. Reeves and my mom and dad are no longer with us.  The memories of them are all that remain with me.

This year, though, Patty found a whole box of just See's Krispys and bought them for me as one of my Christmas presents.  When I opened the box, I was so surprised that I couldn't resist letting her have the first one.  "You've got to experience this for yourself," I told her.  Now she knows.

I'm hopeful that beginning with Christmas 2009, Patty has resumed that tradition of having a box of See's Candies for me under our Christmas tree each year.  To me it's tangible evidence that growing up in that time and as my mom and dad's son was so special, and that Patty is the perfect one to have honored the Cherrys by becoming my wife.

If you haven't tried Mrs. See's candies, you need to.

In Dallas, See's Candies are now available in their company-owned candy shop.  Second floor of NorthPark near Neiman-Marcus.

BILL CHERRY, REALTORS

DALLAS - HIGHLAND PARK

Our 45th Christmas Selling Homes

214 503-8563

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MERRY DALLAS WHITE CHRISTMAS

FROM THE CHERRYS

Snow began falling Christmas Eve about noon, and the flurries continued through the remainder of the day and into the night.

We went to a 5 o'clock service to celebrate the birth of Jesus and the message He left behind.  Then to the family dinner hosted at their home by Patty's son and daughter-in-law, Randy and Susan Norman.  There were six adults along with three of the children. 

Randy and Susan are both accomplished chefs, so you can imagine the spread.  My famous "Hit 'em Up, Knock Their Socks Off Eggnog" had been requested as it is every year, so Patty and I brought that along.

By 10 it was time for the three mile trip home.  Icy roads, especially overpasses.  But slow, cautious driving and careful walking up the sidewalk to our front porch prevailed -- no slips, no falls, no errors.

This morning -- Christmas 2009 -- I saw an image in my mind of my mom and dad holding hands and looking down from heaven.  It made me smile because I miss them so, especially at this time of the year.

Patty and I opened our presents to each other.

And then I took this photo of our house to share with you. 

Merry Christmas to All!

BILL CHERRY, REALTORS

DALLAS - HIGHLAND PARK

Our 45th Christmas Sellling Happy Homes

214 503-8563

In the late 1950s while I was a student at Tulane in New Orleans, I hosted the iconic evening radio program on WWL-AM called, "American Airlines Music 'til Dawn." My studio was in a furniture store's show window on Royal Street.

About four blocks away, a young talent named Al Hirt was entertaining nightly with his group at Dan's Pier 600, on the corner of Bourbon and St. Louis.

I loved Al's group's music, so I frequently wandered in there after my radio show for a drink. Sometimes I would be invited to sit in on the piano for a couple of tunes. I loved doing that. But the group's pianist, Ronnie Dupont was much better than I.

There was a very attractive and sweet young blond lady who worked there. She was my age. Her name was Evelyn Hughey, and it didn't take me long to develop a major crush on her.  When I played the piano, I was secretly showing off for her.  After all, I thought, my rendition of "Little Rock Get Away" was star quality.

Our acquaintance never developed into anything more than as good friends. I moved on, Evelyn stayed in New Orleans.

Some years later, I asked about Evelyn and was told that they thought she had married either a policeman or fireman.

Some years after that, I asked another person about Evelyn. This time the answer was that they had heard she had died in childbirth.

Every Christmas for almost 40 years, I've thought about Evelyn Hughey, and been unhappy that I don't have a definitive answer as to how her life turned out.

I even contacted Dan Levy, who had owned the club but by then lived in Baton Rouge. He said he didn't know; he wasn't even sure he remembered Evelyn.

"She was Rachel Cooper's sister. You remember Rachel. She was the clarinet player, Harold Cooper's wife," I said in utter exasperation.

"Vaguely," Dan said. And he didn't remember me either, although he had tutored me in calculus for an entire semester ... Dan was a West Point graduate.

Louisiana's death records are not public, so I've been unable to search them for my answer.

I found a photo of a New Orleans cemetery tombstone through an Internet search.  It said "Evelyn Hughey Conrad."  If that was she, she died before she was 24.  Oh, gee, I hope not. 

My dad had an attorney in New Orleans who took care of legal issues involving property he had in the state. Even the lawyer was unable to find out what became of Evelyn.

There are some things that ought not to be kept a secret. Whether a person is dead or alive is one of them.

I hope Evelyn is both alive and well, and that her life has been full of God's blessings.

BILL CHERRY, REALTORS

DALLAS - HIGHLAND PARK

Our 45th Year

214 503-8563

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There are three types of real estate transactions I've never been happy about:

• Builders being allowed to employ and use as their sales staff, persons who are not licensed real estate agents or brokers.
• Builders not being required to use state promulgated contract forms
• Attorneys and relocation firms being allowed to gut the promulgated earnest money contracts through long, verbose addenda

When I first received a Texas Real Estate Broker's License in 1964, we were allowed to draft our own contracts, without the assistance of legal counsel.  Realtors frequently used a contract format that had been drawn and suggested for use by the Board's legal counsel.  However, there was nothing that stopped the agent from lining though, and otherwise amending the contract.  And believe me, oft times we wrote and wrote and wrote.

But even worse, the public could get a one page earnest money contract form from a title company, complete it, put the deal in escrow, and close the transaction, with wording like, "the title policy premium will be paid as is customary in the county where the transaction will take place."  In Galveston County, it was customary for the buyer to pay the premium.  In Harris County, 50 miles away, it was customary for the seller to pay the premium.

Finally at the urging of lenders, underwriters, as well as agents and the public, contractual forms that attempt to treat all parties equally, were promulgated.  We're required to use them, unamended, unless the contract we use has been drawn by a state licensed attorney.

The craziness of all of this, though, is that builders are exempt.  Consequently, they usually demand that their own forms be used, and that the client negotiate through a sales person who has not proved they are qualified by becoming licensed.  The transactions more often than not, are horribly one-sided, favoring the builder.

And on top of that, relocation firms are allowed to append our promulgated forms with multi-page addenda which causes our state approved contract to be impotent.  Our contract says all plumbing, electrical and mechanical must be in good working order at the time of closing. 

An addendum to that contract that I saw today, that was attached at the insistence of the relocation firm, said anything found not functional after the execution of the earnest money contract was the problem of the buyer.  Further, it said that in cases of inconsistencies between the contract and the addendum, the addendum would be favored.

It's past time for the state to clear up these quagmires. It's past time for Realtor associations -- local, state and national -- to aggressively lobby for change.

In the meantime, no buyer should accept these homemade documents and amendments without their being reviewed by legal counsel.  And no buyer should ever deal with a new home salesperson without having a licensed buyer's agent there to represent him.

BILL CHERRY, REALTORS

DALLAS - HIGHLAND PARK

Our 45th Year

214 503-8563

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BIOGRAPHY

9935 Windlake Circle

Our Dallas neighbors across the street are Bill (William B, II) and Betty Vandivort.  Bill's a CPA who offices at home, and Betty's a retired public school teacher who has never stopped working.

Bill's also very active in city politics, the Republican Party, and as a fund raiser for his alma mater, Austin College in Sherman, Texas.  He and Betty are both Dallas natives. 

And I need to throw in that their daughter is a Presbyterian minister.

And one more thing, Bill has a fantastic tenor voice.  He was one of the founding voices of Dallas' famous huge barber shop chorus, The Vocal Majority.

What we enjoy the most about Bill is how much fun he gets out of celebrating the holidays.  You can be assured that at least a week before any national occasion -- whether it's the 4th of July, Easter, Christmas or Halloween -- he will begin dressing in his interpretation of the appropriate celebratory attire.  I swear the man's still a kid.

While he always single-handedly decorates their yard for Christmas, this year he went all out.  And maybe at first blush you wouldn't think much about that, but Bill has a bum knee that's been giving him a lot of trouble since summer.  He didn't let that stop him from making a hundred trips up and down his ladder.

So while the photo doesn't do justice to the magic of his interpretation of the impending Christmas celebration, if you saw it in real life, you'd agree that it really is the most perfect decoration for our neighborhood.

BILL CHERRY, REALTORS

DALLAS - HIGHLAND PARK

Our 45th Year

214 503-8563

WEB

WIKIPEDIA BIOGRAPHY