Geraldyne Tyler, a 94-year-old woman from Minnesota, had her home taken from her by Hennepin County to pay back property taxes. The property was sold at auction for $40K.
Mrs. Tyler only owed $15K in taxes, and the county kept the additional $25K. This issue was taken to the Supreme Court.that concluded unanimously that she had been wronged.
Chief Justice John Roberts quoted the bible in his decision saying, “The taxpayer must render unto Caesar what is Caesar’s, but no more.” Many call this process “equity theft”.
Six states, including Illinois, allow private investors to retain properties once the delinquent taxes are paid. Other states simply pocket the difference.
This recent decision affirms that property rights are a fundamental right of citizenship, not dependent on state law. The Supreme Court’s ruling means that equity theft is now unconstitutional.
This may fundamentally change how unpaid property taxes are handled in Illinois. I’ll continue to write about this developing story.
Let me leave you with this.
The central banks of the world’s three largest economies moved in different directions last week. Europe raised interest rates, America held steady, and China cut theirs.
So what’s happening? Are things good, bad, or indifferent? The answer is that the three economies are simply doing what’s best for them on a local level.
Europe is in a technical recession with their central bank thinking that inflation will continue. As such, they raised their rates.
Conversely, China has no inflationary problems. They’re suffering from the extended lockdowns of C-19 and a major real estate bubble. As such they cut their rates.
The US is sort of in the middle. Inflation has decreased but the labor markets remain stubbornly strong. This is why they did nothing.
The question becomes, what’s next?
In putting interest rate increases on hold, The Fed gestured that they were expecting to do another couple of quarter point rate hikes before the end of the year. This would put most corporate borrowing in the 9.5% to 11.5% range.
While you may think this ridiculous in light of recent history, please realize that to an entrepreneur such as myself, these rates aren’t high at all. In difficult times, I’ve paid a lot more than that for what was necessary in my businesses.
What I’m trying to say is that the interest rate shouldn’t stop you from doing a deal as long as the cash flow from it still works.
We can’t evaluate all projects the same. When purchasing depreciating assets, we look at cash flows in one manner. But when purchasing assets that appreciate in value, we do the math differently.
Just because interest rates have gone up doesn’t mean that your individual worlds need to stop turning. As interest rates go up, many assets will go down in value providing an opportunity. Don’t run from that opportunity over an interest rate. You can always refi out of it, when the rates again come down.
We’re all going to get through this. Let’s get through it together.
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