Blessed by the Potato

I wanted to wait until we actually had a place lined up before starting to rant about our Toronto housing search, but I’m so angry right now I just can’t help it. As an appetizer to start, the more level-headed part of the post drafted months ago:

In past posts I mentioned that a landlord couldn’t buy a house at current prices and make a profit. I just thought I’d provide a few specific examples (without direct links to the ads or addresses since I don’t want to tip off a potential landlord just yet!) from our housing search.

First off, a quick bit of background: Wayfare and I are looking for a place to move to in Toronto. We’re being exceptionally picky in the places we’re looking for: ideally less than 1 km to a subway station (since she works downtown and doesn’t like to walk, drive, or take the bus), preferably close to a major highway too (since I don’t have a job yet and don’t know if I’ll have to be commuting by car or where I’ll be commuting to). A host of other things, like two washrooms, ~1200 sqft, 3 bedrooms, air conditioning, etc., but right up there is the fact that we hate to move. So we want to find a place that we’ll stay in for at least a few years, and a landlord willing to continue renting to us for that time. Part of ensuring that means that we’ve been doing quick searches on potential rentals to see if they sold or were listed recently, and at what price. Our reasoning for this is that a landlord that tried to sell but couldn’t might try again, and then we might have to move out 60 days after a sale. A landlord that just recently bought a place might only be renting for a year or two before moving in themselves, or may decide to bail (or just as bad, neglect repairs) if rates go up and they find themselves losing money. While the market may be crazy and I wouldn’t want to be a landlord when you can take the quick money right now, many landlords have owned their properties for years, and don’t consider the current yield, but rather their yield-on-cost, so those sorts of issues probably won’t apply to landlords who haven’t recently listed/bought their houses.

Finding past sale data is quite difficult to do reliably without an agent, but Google’s cache has been surprisingly useful in this regard. For brand-new buildings it doesn’t take a leap of logic to know that the landlord must have just bought it, in which case similar recent sales is all you need to get an idea.

Anyhow, one example is a house between Finch and Steeles that sold for $560k just a few months ago, and was up for rent for $2400 a month after the sale. Neither the sale price nor the asking rent are unusual for the area and size of the house, so this is pretty representative for the area. But if you do the math you see that that’s a rental yield of just about 5% (234X rent multiplier). If you assume that the costs (property tax, insurance, maintenance) run about 2%, that leaves them making only 3% on their money. If they have a large mortgage and rates go above 3%, they’d probably end up losing money renting the house out. Of course, I’m not about to go and offer them more rent, but I am going to have to consider the possibility that despite all the protections Ontario offers tenants, I might be having to look for a new place to live in a year’s time. [Plus this one was above our price range]

Mr. Cheap had a post recently on “discount purchases” and mentioned that co-ops can sell for less than comparable real estate. Indeed, our one counter-example from our rental search was a townhouse that was up for rent. The asking price on the one next to it was just $200k or so, giving the rental a 8.5% yield (127X multiplier). The trick there was that the co-op required, in addition to other restrictions, a 25% downpayment. That perhaps gives you some idea of how far prices have risen on the back of negligible down payments.

Realestate agents: The biggest thing I’d say I have grown to hate in the search for a rental home are realtors. I don’t know why landlords want to use them, they’ve been nothing but obstructions so far.

Many of the listings by agents don’t bother putting any pictures up, which is just ridiculous since that’s basically their whole job. Oh, no, their job is to also act as intermediaries between the landlord and the potential tenant, which would involve a few very simple tasks such as answering the phone, and maybe setting up viewings. However, they can’t manage that either: most agents we had to call an average of 3 times before they’d call us back, usually a week or more later. Only one has responded to email. Then they’d know nothing about the listing except for the 2 lines of text already in the ad, and would either just continue to be unhelpful, or have to ask the landlord to then get back to us. It’s an unnecessary obstruction — and an expensive one for the landlord, since the agent’s fee is usually a month’s rent.

Some in particular have driven me crazy. Let’s call one “Toad”. He has dozens of listings up on craigslist, and they’re all basically carbon copies of each other: no real meaningful information, no pictures of the unit itself, just a cut & paste description and photos taken from the sales literature for the condo building. While some of those units may have been of interest to us, after seeing how useless some other agents (who did take photos!) were, I can’t bring myself to waste my time with Toad, especially since a highrise apartment is a second-choice for us. Who knows, maybe he’s (she’s?) a really nice, capable froody dude, but the inability to even grab some photos with a blackberry and upload them to the web turns me right off.

But the worst has been “Mr. Superlative”. We paged him through the office (the number on the listing) 2 or 3 times over the span of a week or two, and he never once called us back. Finally, we got ahold of another agent in that ReMax office to show us another listing, and she gave us his “direct” cell number (half the time it just ends up forwarding back to the office, where we page him, and get nothing). We set up an appointment to view the house (his house, as it turns out), confirmed it the day before… and then we show up, and the person who lives there now tells us it’s cancelled, then closes the door on us (not that he opened it more than an inch in the first place)! We walked away super pissed, since he never called us to say it was cancelled… Now, this looks like it may be an issue of the soon-to-be-former tenant being a crazy asshole, since about a half hour later we did get a message from him saying that the appointment wasn’t cancelled and wondering if we were still interested in the house. Nonetheless, it’s been days of phone tag here — we still haven’t managed to get this guy on the phone to find out what exactly happened when we were supposed to view the house…

Probably a good thing though, since if he’s this hard to get a hold of when something isn’t leaking/on fire, we probably wouldn’t want to have him as a landlord, either. Or maybe it’s a cautionary tale, that if your tenant is batshit loco, it may be best to just eat the loss of having the place sit empty for a month so you don’t have to deal with him (or his stuff) while you show the place to the next tenants. On the other hand, we don’t know the full situation: maybe he forgot that the landlord has to give the tenant 24 hours notice before a showing, and didn’t, and that’s why the tenant decided to go nuts.

Maybe it’s just a co-incidence because it’s such a big company, and so prominent in the areas we’re looking in, but almost all of our “stupid realtor” anecdotes are about ReMax agents (the Willowdale office specifially — “Team Oulahan” did return calls and even answer email!). Maybe the whole place is full of tools (though “right-at-home/homelife realty” was not much better), I don’t know. But here’s the big thing that bugs me: they’re getting paid a lot more than I am to do a job that is basically all about dealing with people. It’s a sales job — you don’t need to know much about architecture, or structural engineering, or finances to muddle through as a realtor, as long as you can answer the phone, and show up at the door with some forms, a key, and a camera (and refer people to a lawyer, engineer, inspector, broker, or accountant for the heavy lifting in those areas). It’s also a job that depends a lot on word-of-mouth referrals: there are thousands of real estate agents in the GTA, and people are generally going to go with one recommended by a friend. Right now we’re looking to rent a house, but in 5 years or so, we’ll probably be looking to buy one, so why treat us like shit now, and jeopardize that future business?

A few agents have actually been somewhat helpful. Jenny Wu at ReMax actually returned our calls, and did set up an appointment (and called us when the landlord changed her mind and cancelled); Julia Warren at Royal LePage was nice and competent and even tried the expected realtor move of chatting me up and trying to become our agent; it was a shame that we felt the unit she was representing was over-priced by ~10%. David Fleming writes a blog, and while I think his views on leverage are borderline insane, he offered to help us out sight-unseen, and — crazy concept, I know — values business. Even when they’re competent though, I can’t really justify using an agent in my head: while MLS has a near-monopoly on listings for sales, it’s probably second (or third) fiddle to craigslist, viewit, or hometrader for leases. A landlord doesn’t really need access to it to find a tenant. Sure, an agent can do some of the advertising, screening, and showing legwork, but being a landlord is not exactly a completely hands-off job: you’ve got to be prepared to deal with your tenants at some point, so you might as well start from the time you first offer your house for lease. Plus we’ve had much better luck when dealing with potential landlords directly in terms of getting information, actually getting appointments to see places, and of course, giving us a feel for whether the landlord would be a good fit for us.

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Well, I just had one of the best curling games of my career today. Man, if I could curl that good all the time I could go competitive… unfortunately, I’m usually just the wrong side of average, so I have no idea where today’s awesomeness came from. Anyway, a nice start to the weekend.

A thought worth repeating:

In the comments to his weekly wrap-up post, Michael James says “Actually, the ultimate barometer of the correctness of a decision is whether it would be right to make the same decision if the same situation comes up again.”

Enjoy what may be the last snow-free weekend in Southern Ontario!

Exactly zero people have helped out with my “Very Quick Experiment” post. For that reason I shouldn’t tell you why I was asking.

But, I have a weakness for ranting, so I can’t help myself.

Please let me know what your head size is. You can measure your head size with a tape measure, going around the circumference of your head, just above the ears.

Those (what I hope were) very simple, very straightfoward instructions are sent to potential research subjects for my study. The issue is this: we have two EEG caps — one small, one medium — they are very expensive, and after cleaning them in the disinfectant, they take a while to dry. So we can’t afford to buy more, and we can’t really use them more than once a day. However, we want need to scan approx 10 subjects per week, which means we need to try to get in one person with a medium-sized head, and one with a small sized head on the same day at least a few times a week. So when scheduling people, we need to know their head size. Since we schedule by phone or email, we need people to (at least somewhat accurately) measure their own heads.

Wayfare said that would never work as soon as she found out about it. No way were people going to be able to follow simple instructions and measure their head size. I figured that it can’t be that hard, especially since most of our volunteers are university students; science undergrads for that matter.

Well, either Wayfare was right, or we’ve got some extras from Beetlejuice coming in to volunteer.

One of the first great breakthroughs of evidence-based medicine was Semmelweis (and again Lister) discovering the vast improvement in patient outcomes when doctors wash their hands. “Hand hygene” is one of the cheapest, best ways to prevent disease transmission, whether from doctor to patient, or from the environment to your mouth during flu season. Yet it’s very difficult to get people to actually do it every time.

How often do you see people leave the public washroom without washing their hands? Yes, Penn & Teller demonstrated that your hands were probably dirtier before touching your junk that’s been safely & cleanly ensconced in your undies, but nonetheless, it’s important to wash your hands regularly, and that’s the socially accepted time to do it.

I understand that it is difficult for healthcare workers — after washing my hands 20 times per day I’m definitely reaching for the hand cream when I get home, so up to a hundred times a day has got to be killer. But hey, hazards of the workplace and all. Deal.

Outside of the hospital, soap and water aren’t always readily available or convenient, so alcohol-based hand sanitizers have been installed, which I think can only be good, especially in schools and malls. When these things first came out (around SARS), I had serious doubts as to how effective they could possibly be — after all, even if they killed germs, they’d still leave everything on your hands. Of course, at the time, I was working in a wet lab and was more concerned with chemical contamination than bacterial. For preventing the spread of disease though, they look to work just fine (but I am too lazy to review the literature at this time).

Freakonomics had a blog entry about handwashing compliance and in the comments, one person was concerned about the possibility that all this hand sanitizer use would lead to bacteria developing resistance to it. As one reply so elegantly put it, that would be like humans developing resistance to being doused in gasoline and set on fire. That’s not to say that some bacteria won’t escape, especially if you miss a spot, or don’t use enough to get into the fissures of your skin… that’s just not likely to be an inheritable trait.

Speaking of fire: Yes, alcohol is flammable. Incredulously, I heard that some schools were banning, or considering banning, hand sanitizer for this reason (and also for the “martini dispenser” issue). I wondered though if gelled alcohol was flammable. Sticking my head in the kitchen and uttering those words that always make Wayfare cringe in fear — “Wanna do Science?” — I set out to test it experimentally. With a lighter, I could set some hand sanitizer on fire. That’s still not a particularly good reason to keep it out of schools (I’m not a fire expert, but it didn’t really seem all that much more flammable than paper, and paper doesn’t evaporate in seconds). Vigorously rubbing my hands together (the intended method), did not start a friction fire.

Dear readers, please indulge me. Follow these instructions, and post your results (anonymously if you wish) in the comments or by email:

“You can measure your head size with a tape measure, going around the circumference of your head, just above the ears. ”

It shouldn’t take you very long.

TD has recently opened up a “store” for TD Visa customers called ShopMyAXS. The name makes no sense to me, I don’t know if the capitalized letters are supposed to be meaningful or not. Apparently it’s a discount club type store that only sells to the clients of certain businesses (such as TD).

It looks like they have a fairly decent selection of random items from TVs to movie passes, board games to sports equipment, with some very nice discounts on some things, along with larger deals of the day. Unfortunately, the only shipping method is Purolator, and that sucks a lot of life out of the bargains. For instance, they have Cineplex Night Out passes (2 admissions, 1 popcorn, 2 drinks) for $20, which is a great deal for those passes. However, the shipping charges are $7 to Toronto (and $12 to London) and there’s a limit of 2, so that makes it barely worth getting ($7 to ship a piece of paper!). An iPod was on sale (and according to Wayfare, iPods never go on sale — I wouldn’t know, they’re not an item I keep my eye on), and there was a fantastic promotion on an LG 42″ TV for $700 + shipping of ~$65. We read some mixed reviews: good picture, but apparently has an audio sync issue with HDMI. That had us on the fence, but it was hard to ignore the fact that it was $100 cheaper than the best price (even last Boxing Day) we had seen on the Samsung we were thinking of getting… so we’ll take the chance on it (especially since we don’t have any HDMI devices yet, unless the Xbox counts). Plus Wayfare’s mom got a 37″ LG TV recently and it’s beautiful — and we got some money from her parents specifically to buy a new TV as a gift (they left it up to us to pick one). I’ll do a review of the TV when it comes in.

The bargain hunters at red flag deals have discovered MyAXS, so if you’re after one of those crazy deals of the day this month, be prepared to log in early!

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I don’t usually get too crazy about growth stories and tech stocks — despite being a scientist and fairly technologically-minded myself, I get turned off by the hype and the projections to the moon. I also first started learning about stocks in the midst of the tech boom, and was wisely steered clear of that trainwreck by my dad, who doesn’t believe in negative/imaginary P/Es (negative for a few quarters is one thing, but massive valuations for a company that’s never turned a profit is another).

However, I’ve had my eye on First Solar (NASDAQ:FSLR) for some time. I never bought any before now because the valuations frightened me, but it’s starting to look a little more attractive now.

First Solar is a manufacturer of thin-film solar panels. Solar, green, alternative energy — all buzz words for a hot sector, something I like as an environmentalist, but which actually turns me off a bit as an investor. First Solar is not a pie-in-the-sky startup though: they actually have several plants up and running, some long-term contracts, and are actually turning a profit whilst still in that early “parabolic” growth phase.

On the positive side, they have had a phenomenal growth track record, and have managed to reduce their cost of production while expanding. According to their annual report, they have 2 more production lines that are coming online over the next year or so, to bring them to a total of 24 — so from a volume standpoint they should have at least another ~10% growth in them. They also have very modest debt levels, and a US government that believes in climate change might help subsidize solar plants there. They are the low-cost producer of solar panels, and have focused on improving their margins through the years.

Piling up on the negative side are a number of worrying factors: FSLR depends on a very small number of power companies, all(?) in the EU for the vast majority of their business. Any issues with even one of their customers could trickle down badly for them. Indeed, government subsidies for solar power (esp. in Germany) may be critical to them making sales, and those policies may be on track to be phased out sooner than expected. While there is some advantage in thin-film solar for many applications, large-scale power plants really isn’t one of them — it’s largely just a cost issue. So their main customers have really only been buying due to the low price relative to crystalline solar cells. Recently, those have come down in price as the cost of high-grade silicon crashed (used, as I understand it, in both solar cells and microchips).

So FSLR could be facing some increased competition, squeezing their margins going forward, and depending on how long silicon prices stay low, that pressure could stay on for a long time.

I played around with my spreadsheets for a little while on this one, there are a lot of places to guesstimate how future earnings will play out. I figure the stock is worth anywhere from $60-$160 depending on what assumptions I make, but it does definitely have some value. I figured the most realistic assumption was that their earnings could continue to grow at 10-25% per year for another few years as their production volumes ramped up (even if cost pressures prevent them from significantly improving their margins any further), and after that would settle into a long-term growth rate of 5-7%. I also believe (hope, really) that demand for solar energy will pick up in the US to more than offset any declines from the EU as their subsidies are phased out. From that I get a value of (from memory, since like a genius I closed my spreadsheet without saving) ~$110/share. It was at $116 today, which I figured was close enough to get my fingers into the alternative energy sector, so I bought a few shares. It’s not enough of a value that I can recommend it to anyone (not that I ever make recommendations!), but with the recent pullback it seems to have shed that “hot thing in the news” over-hyped smell.

What are your thoughts?

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In a recent post, I tried to explain that hysteria around vaccinations is uncalled for — they’re not perfect, complications do occur, but they’re generally much less risky and preferable to a pandemic. The idea that the government is out to get you with them is silly.

Ben raised the point about corporations being out to get you, and manufacture hysteria. Just so I don’t give corporations a free pass, let’s explore that idea. First off though, I’m going to say that I really doubt that the flu shot is the vehicle for a corporate takeover of the world. Even with big volume (trying to get 50%+ of the population vaccinated), vaccines aren’t a huge profit centre — governments place the orders and negotiate to shave profit margins, and vaccines by and large aren’t patent protected like many medications (i.e.: there is some competition, and they are not a product with retail markups).

Flu drugs taken after you get sick are a beast of a different nature. On the one hand, they seem like a miracle of modern science: long after we had a full spectrum of antibiotics to use, we still hadn’t developed terribly effective antivirals. On the other, this is where the corporate profits at the expense of the little guy story seems to take hold, if only a little. These drugs are of limited effectiveness (they won’t make your flu go away overnight), and the viruses can rapidly evolve resistance to them. They have a much worse risk profile than vaccines; though that’s not as important because you take them after you get sick. Cancelling that out is the fact that you have to take them so soon after you start displaying symptoms that there’s a high chance people who weren’t/wouldn’t be very sick (or who were running a fever for a non-pandemic flu reason) will be popping them anyway — or contrarily, people who are quite sick won’t get them because it’s silly to go to your doctor the first day after you get a cough.

They are very handy drugs to have stockpiled, especially to keep the front-line healthcare workers on their feet. But Canada purchased 55 million doses — or perhaps to keep the anti-corporate slant going, Canada was sold 55 million doses. A typical course is 10 doses, so that’s enough to treat 5.5 million people, 16% of our population, which IMHO is probably overkill. The figures I have say that in a typical flu season ~20% of the population gets sick; even if that’s more like 30% for H1N1 (even after the vaccination program), we’d have to have half those people see a doctor within a very short time after starting to have a fever, and be willing to take a fairly new-to-the-market medication (after all, these will likely be the people who didn’t want the vaccine). I just have a hard time seeing that happening. I think our government might have been too afraid to be seen doing too little to prepare, and was over-sold the antivirals (which is an easy pitch for the corporations to make in this environment), or was sold them for prophylactic use. Of course, some of those antiviral doses could ultimately be destined for 3rd-world countries as part of our foreign aid efforts, in which case over-stockpiling makes some sense.

The US government has about half as much per capita at the moment, but their stated goal is to have the reserves to treat up to 25% of their population.

Now, all this ranting about Tamiflu over-use is a little two-faced because unfortunately, Wayfare has come down with ILI (Influenza Like Illness — fever, coughing, body aches — they don’t bother to run the lab tests for H1N1 any more since according to the health unit, it’s the only strain of virus on the go at the moment). So, knowing the limitations of Tamiflu (having to start treatment early), we rushed off to the hospital even though she wasn’t that sick. She had a chest x-ray and was prescribed Tamiflu (as well as an over-the-counter sinus cleanser such as hydrasense — I thought those things were pure quackery at first, but apparently there is some belief that they help). Given how scary this strain of flu can be in young people, it seemed like a prudent thing to do. The government even gave us the Tamiflu for free!

As for me, I had my shot on Monday, but it takes 10-14 days to build up immunity, so I’ve got a small window here where she can infect me. I’ve just got to stay holed up in my office for another week…

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From Health Canada:

The H1N1 vaccine contains 2.5 micrograms organic mercury (Hg) per 0.5mL dose.

Tuna can contain over 0.5 ppm of mercury, so 5 g of tuna would give you as much mercury as the shot — about 1/30 of a can.

The vaccine in no way represents a medically significant dose of mercury.

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