Author Archives: Patrick StCin

Downtown by the River

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If you watch much of the show “Buying Alaska,” you will be very familiar with the phrase, “It has a view.” In Alaska, it is all about mountains, glaciers, and sometimes a lake, but in many cities the desired view involves an urban river. According to an article in the Wall Street Journal, “The Latest Housing Hotspot Is Downtown and by the River.” I think that San Antonio already knows this.

“Urban Energy and Natural Beauty”

Ceclie Rohwedder, (WSJ, December 6, 2018) writes about couples in Minneapolis, Washington DC, and Omaha trading in their country homes for homes in remodeled power plants and other industrial buildings in downtown areas along urban rivers, buildings that have been turned into modern condos. What does their new home offer, she asks? “Urban energy and natural beauty” one couple says.

I must agree. Watching a river is like watching a fire, its mesmerizing. But it is interesting and beautiful too with boats, birds, and fishermen. And those old buildings left over after industry has moved on, I have often looked at them, the old brick warehouses and mills that sit along the elevated freeways of our cities, the ones with the fading billboards high up on one corner, and vacant windows. What is the architecture like, I’d wonder? They look so sturdy. They are not going to come down soon, but who is going to use them.

Americans Just want to Live Downtown

Well the city planners, developers, and investors are way ahead of me. They are turning these behemoths into housing with a view, housing near culture and sports arenas, and water. Young professionals and retirees alike, it seems, crave community and walkability along with a touch of nature. And Americans overall (this year anyway) want to live downtown. An urban riverfront close to downtown offers work, culture, and play.

These are the areas that are drawing people to look at the old and want to make something new out of it. It is the buying and the fixing up of the building that is the investment. But investors are doing this all over the country and people are buying.

So, even if you are not up for buying and remodeling the old paper mill down by the river, when you are looking for a house to buy as a fix-n-flip investment, do not forget to scout around in these riverfront areas of your town. There, in the shadows of the big buildings, might be some smaller projects, homes or shops, more to your liking.

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

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Merry Christmas Eve

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Today is Christmas Eve. Have a wonderful time with your family and friends. Be at peace and be thankful. Make Christmas cookies if you haven’t already.  If you have, eat them and share them with the neighbors. Drink hot chocolate and wine. Work a jig saw puzzle. Make a paper maché ornament for next year. Think about Christ, God who came as a delicate baby to redeem us. Be a wise man today or a wise woman. Take a gift to someone today. And I wish you many blessings in this holiday season.

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Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

 

 

Cold Storage 101 or −101°

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Looking into the future, where should you put your money or your efforts if you are looking for a commercial real estate project that can offer decent returns. Perhaps you should think about one of the things we Americans, and people and animals everywhere, really need, food.  According to Esther Fung, WSJ, the best performing real estate investment trusts this year are in the area of food storage —cold food storage.

Right now, according to Rick Romano, head of PGIM’s global real estate securities, “cold storage is about as defensive an investment strategy as it gets.” American Realty Trust, the only publicly traded cold storage real estate investment trust, has risen 50% since the start of the year.

He also says that only 2% of groceries are bought online, but as people work longer hours and avoid long commutes and extra trips to the grocery store, that number could rise.  If it goes up to 5% or 10%, he suggests, there will be a continued demand for cold storage facilities in densely populated urban areas.

Cost of Building or Remodeling for Cold Storage

Cold storage might be a very good investment for an investor interested in commercial real estate construction or a commercial fix-and-flip project.

I know there are cold storage facilities operating near me, near the train warehouse area, because I have a friend who went to work there and in a cold storage facility, even the office space is a cool 40°.

According to Joshua Everage at A-N-C- cold storage, investment management firm JLL says the “cost of building a new cold storage facility is $150 to $170 per square foot, compared to $50 to $60 dollars a square foot for regular warehouse construction.  Most cold storage facilities are new builds, but you can expand or upgrade existing warehouse space at a cost of $60.00 to $70.00 a square foot. That is about 40% of the cost of building a new facility from the ground up. ”

−Everage also says that when you are looking at costs, consider the usual items, like location, but also the unique requirements of a cold storage facility, the freezing equipment.  Do you need a unit that can flash freeze product like fish, or a chiller? There is a difference in cost.  Also consider the height of the docks, the height of the building itself, exterior and interior wall finishes, and plumbing requirements. For a free cold storage construction guide, visit http://www.anccold.com/blog/cold-storage-construction-cost and download a guide.

For help coming up with a lender or someone willing to tackle the project, call me. I’m based in Austin, but I can meet you where you are at, in Dallas, Houston, or San Antonio.

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

References:

Everage, J. 2017. Cold Storage Construction Cost Per Square Foot. Blog, at http://www.anccold.com/blog

Fung, E. WSJ, December 2018, Real-Estate Stocks Beating S&P 500 for First Time Since 2015. https://www.wsj.com/articles/real-estate-stocks-beating-s-p-500-for-first-time-since-2015-11545134402

 

Smile: It’s Winter

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In case you thought Winter started the week before Thanksgiving when we had our first snow storm, or at the lowest point the stock market hit this month,  I’m here to set you right.  Winter starts today. Today, December 21st, is the Winter Solstice and it is the shortest day and longest night of the year.

At the North Pole, the sun never rises on this day.

This is not the coldest day of the year.  The northern hemisphere will continue to get colder until the days get long enough again to have a warming effect.

So get ready to celebrate the days getting longer from now on until that longest day, the summer solstice, arrives in June.  See http://www.holidayinsights.com

Happy Winter Solstice.

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

ball ball shaped blur bubble

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What is $358.00?

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Answer: Price per square foot for a luxury home in TX.

It is true that you can put a price tag on anything, well maybe not everything, but you certainly can put one on a luxury home. According to the 2018 Texas Luxury Home Sales Report by the Texas Association of Realtors (TAR), the median price for a Texas luxury home  remains unchanged at $1.35 million.

Houses priced over $1 million dollars are considered “luxury” and 5,123 of them sold across the state of Texas from October 2017 to November 2018, up 11.5% from the previous year. The average price per square foot for a luxury home was $358.00. This is up 2.5% from the first ten months of 2017. A median house in Texas carried an average price tag of $128.00 per square foot.

From January to October 2018 the average time a luxury home spent on the market in Texas was 94 days, a decrease of four days from the same timeframe in 2017. It makes sense that the bigger price would lead to a longer time on the market because there are few buyers who can afford the higher price and it takes longer to get a big loan.

For comparison, here are some statistics courtesy of Realtor.com.

Austin-Round Rock, TX, Median Price $350,000. Days on the Market, 65.

Dallas-Fort Worth – Arlignton, TX Median price $335,000. Days on the Market, 58

Houston-The Woodlands-Sugar Land, TZ – Median Price $350,000. Days on the Market, 65.

Killeen-Temple, TX, Median Price $200,000. Days on the Market, 68

San Antonio-New Braunfels, TX – Median Price $285,000. Days on the Market, 66.

For more on luxury houses, read “Livin’ Large: Texas’ Robust Luxury Home Market,” a Tierra Grande article by Real Estate Center Senior Data Analyst Joshua Roberson. https://www.recenter.tamu.edu/news/newstalk-texas/?Item=21652.Read more at Texas Association of REALTORS

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

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Photo by Pixabay on Pexels.com

 

A Boost for the Credit Score

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News from Wall Street Journal reporter Anna Maria Andriotis this week tells us that the major credit reporting companies will soon be adding data from consumers’ utility and phone bill paying history to their credit reports. This is a move that she says will likely boost the credit scores of millions of people and increase traditional loan approvals. According to Andriotis, Experian will start factoring in this payment information early next year.

Consumers who have low or no scores because they have no history of borrowing and subprime borrowers whose scores are currently lower than what some lenders require will likely see their credit scores go up.

Some of these changes are coming about because of pressure the banks themselves have placed on the credit reporting industry and its regulators because they want to make more loans.

To make this work, people will have to opt into the new program and link the bank accounts they use to pay their phone and utility bills to Experian, allowing the company to track their monthly payments.

The credit score shows a borrower’s ability to responsibly use and pay off credit cards and loans, and in the future other types of bills.

The five factors that are most important in determining a credit score according to Thad Merrill are

an individual’s payment history,

the amount of outstanding balances,

length of credit history,

the types of accounts, and

the number of recent credit inquiries.

Factoring in utility and phone bill payment histories will help with at least the length of credit history.

If you are interested in borrowing for real estate investment, hard money lenders offer alternatives to those who have bad credit. They can also offer faster access to financing with less stringent eligibility requirements. However, investors may pay a higher interest rate over a shorter period. Hard money lenders are semi-institutional lenders who are not required to adhere to the policies and regulations that are required of banks. These requirements really tightened up after the 2008 financial crisis. If  traditional lenders are looking to lend more money, it might be because they think the good economy “still has room to run.”

Good economy or bad economy,  it is always a good idea to improve your credit score, particularly if you want to invest in real estate.  A good credit score opens up more financing options and will speed up the loan approval process, and you won’t miss out on that great deal.

Patrick@InvestorsLendingSource.com

512-213-2271

access adult blur business

Photo by Pixabay on Pexels.com

Reference: Andriotis, AnnaMaria, WSJ December 18th, Want a Better Credit Score? Soon, Your Cellphone Bill Could Help.

 

 

A Job: Still A Good Investment

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The U. S. Bureau of Labor Statistics offers projections that can help you choose where to focus your education and experience if you are looking for a job during the decade 2016 to 2026. Although fast growing, the two top growing careers on the list (Solar photovoltaic installers &

Wind turbine service technicians) are pretty specialized, so there are not a lot of people in these jobs. However, according to the Bureau of Labor, the number of jobs in the areas of solar and wind power will double by 2016 demonstrating the increased interest in alternative energy.

Five of the top ten fastest growing careers are in health care. This make sense because our population in the US is growing older. As the baby boomer generation (those born between 1946 and 1964) grows older, they will not only leave the work force, but require more health-related services. Some of the careers that projected to grow by 2016 include

Home health aides

Personal care aides

Physicians assistants

Nurse practitioners

Physical Therapist assistants

The other two careers that are fast growing are related to the needs of the science, technology, engineering, and math community are include

Statisticians

Software developers, applications

Mathematicians.

What does all this data mean to you? Well if you are looking for a job, Houston is a good place to look and if you are looking for a particular type of job your outlook for finding a job is good if you are looking in the top ten fastest growing occupations.

I read once in a book on money, that the best investment is “a good job.”

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

medic treating patient

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New metropolitan area employment data for November 2018 are scheduled to be released on Friday, December 21, 2018 at 10:00 am (ET)

U.S. Department of Labor, 2018

Doing the Math: Purchase, Rehab, Refinance, Cash Out

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The markets have been extremely volatile lately and they say the anxiety meter has shot up to screaming level.  However, according to Caleb Silver, Editor-in-Chief, Investopedia is not predicting a major market decline.  And, whether the market is up or down, I am here to help you find ways to put your money into other types of ventures, like fix-n-flip real estate projects big or small. It works like this:

  • You Purchase
  • You Rehab
  • You Refinance
  • You Cash Out

Silver also says in his daily e-mail that “Seasoned investors have learned to moderate their expectations and build their portfolios to endure all kinds of markets.  It takes discipline and a lot of learning to do that well, and even the best of them still get their faces ripped off now and again (a technical expression for suffering massive losses). Still, having unreasonable expectations is the first step to setting yourself up for disappointment.”

Ah yes, setting yourself up for disappointment: I remember Christmas mornings when I was a child as a time of too much expectation.  By the time Christmas morning came around, my expectations were sky high and no matter what great present my parents or Santa Claus brought me, I was going to be disappointed because nothing could live up to the fantasy in my head.  So, the day was never as much fun as it should have been.

I’d say that Silver (good name for an investment geek) is trying to warn us . He says that Vanguard (a massive money manager) recently surveyed its customers and found that their expectations were way off from its own market predictions. Vanguard found that the average retail investor expects stock to return more than 10% a year on average and people with their money in pension funds expect 7.5% average annual returns.  Unfortunately, Vanguard expects a 4.6% return on stocks.

So put in your time studying so that you can put your money to good use making more money for you.  Think about your options and don’t freak out. As Silver says, “When the Anxiety Index picks up, volatility tends to follow.”  But as Friday’s Investopedia headline read  “REMAIN RATIONAL.” (see investopedia.com)

Here is a rational option to study:

Purchase, Rehab, Refinance, and Cash Out of a Multi-Family Building

Loan Requirements

  • Min 5 units
  • Loan Amounts – $250,000 – $5,000,000
  • Interest Only – 2yr Term
  • 1st Lien Position Only
  • No Prepayment Penalties
  • Up to 80% for Purchase and Rehab
  • Up to 70% for Refinance and Rehab
  • 55% for Cash Out

Borrower

  • Min FICO 670
  • Full Recourse
  • DSCR / Occupancy – No requirements while being rehabbed
  • Min Liquidity of 9mo of debt service + 20% of rehab budget

Appraisal Requirements

All loans require a full appraisal with internal property pictures and dated within 120 days of loan origination.

Lending Areas

All major metro areas and small market areas nationwide.  Non-lending areas include rural and high-risk areas.

Patrick@InvestorsLendingSource.com

512-213-2271Mathematics_concept_collage

 

 

 

 

 

 

Museums and Investment

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The Guggenheim Effect

When you are buying a house to fix up or lending money for that fix-n-flip project you hope to profit from, the value the property has now and will have after the renovation is complete is what you are focusing on. You will be thinking about neighborhood and what makes a neighborhood a good place to live. These days, according to Alina Dizik of the WSJ, you should look around for a nearby museum.

Museums are revitalizing neighborhoods all over the world. The neighborhood revitalizing phenomenon of a museum is called the Guggenheim Effect. According to the Economist and the WSJ the Guggenheim Effect is the phenomenal revitalization of an industrial town that was dying, Bilbao in Spain in this instance, into a “sleek tourist destination” by the construction of a museum (Economist).

Walkability, and Safety, Interesting Things to Do

According to research done by Stephen Sheppard, an economics professor at Williams College in Massachusetts, “property values of homes near museums rise between 20% and 50% over the course of five years (WSJ ). ” Homebuyers, according to Dizik, are drawn to a museum building’s bold architecture, its rotating exhibits, “its guest lectures, and attractive indoor and outdoor common areas.” Some are looking for safety and amenities in one place. Entertainment and restaurants that you can walk to are also big draws.

There are museum districts in several towns in Texas. Look around your town and see if a museum is raising property values near you. This may be where you want to invest next.

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

Mercedes-Benz_Museum_201312_08_blue_hour.jpg

Mercedes-Benz Museum in Stuttgart, Germany, during blue hour.  Julian Herzog [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC BY 4.0

Austin Museums

In Austin, the museum district is more of a museum partnership and there are many museums in the downtown. There is a plan here to connect the walking and biking trails into a big loop of urban trails that will extend 30 miles, traversing the city from Lady Bird lake to Walnut Creek Metropolitan Park, creating a safe walkable and bikeable commute route through downtown. So living near or on that route may be attractive. http://www.austinmuseums.org/

Mexic Arte Museum, 419 Congress Ave

The Blanton Museum of Art, University of Texas Campus

The Harry Ransom Center, 300 W. 21st street, University of Texas Campus

Mondo Gallery, 4115 Guadalupe St

Bob Bullock Texas State History Museum

Yard Dog Art Gallery, 1510 S. Congress Ave.

Arthouse at the Jones Center, 700 Congress Ave.

Houston Museums

There is one in Houston and it boasts 4 walkable zones, 19 museums, and over 2,300 residents according to http://houmuse.org/. Homes in the museum district sell faster than average compared to other neighborhoods in Houston. Realtor.com The neighborhoods and surrounding area are a mix of historic homes with character and charm, to modern townhomes, and high rises.

Museum of Fine Arts Houston Expansion

Moody Center for the Arts at Rice University

The Houston Center for Contemporary Craft

Czech Center Museum

Buffalo Soldiers National Museum

Lawndale Arts Center

Houston Museum of African American Culture

Children’s Museum of Houston

Houston Museum of Natural Science

Dallas Museums

In Dallas, the museum district is the Arts District downtown. It is a cultural hub of music, art, and theatre. The Dallas Arts District is bordered by St. Paul Street and Ross Avenue as well as major throughways Woodall Rodgers Freeway and Central Expressway. http://www.dallasartsdistrict.org/

Dallas Museum of Art

Modern Art Museum of Fort Worth

Nasher Sculpture Center,

Perot Museum of Nature and Science

Kimbrel Art Museum

Dallas Contemporary

Meadows Museum

San Antonio Museums

In San Antonio, a river walk extension completed in 2009 is called the Museum Reach. It extends past the zoo, the Japanese Tea Gardens, Brackenridge Park, the Pearl District, and three of San Antonio’s museums, all listed below. https://www.thesanantonioriverwalk.com/explore/museum-reach

The Do Seum, San Antonio’s Museum for Kids, 2800 Broadway

The Witte Museum, 3801 Broadway

San Antonio Museum of Art, 200 West Jones Avenue

 

What do all these neighborhoods have in common, interesting things to do, walkability, and safety.

References

Dizik, Alina, To Discover an up-and-Coming Neighborhood, Look for a Museum, The Wall Street Journal, November 25, 2018

The Economist, The Guggenheim Effect, Can other cities imitate Bilbao’s cultural-tourism success? August 18, 2018

 

 

 

 

Houston Adds 117,800 Jobs

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Good News for Houston  –—  Jobs Up 3.9%

According to the U. S. Bureau of Labor Statistics, Houston-The Woodlands-Sugar Land was one of the nation’s 12 largest metropolitan statistical areas showing an increase in the rate of job growth between October 2017 and October 2018.jobs report graphic

All 12 of the areas considered “largest metropolitan areas” had job growth during the last year with seven of the areas exceeding the national increase of 1.7%.

Good News for Dallas too  –—  Jobs Up 3.0%

Houston posted the largest gain of 3.9%, and along with Phoenix-Mesa-Scottsdale (+3.7%), and Dallas-Fort Worth-Arlington (+3.0%) had the fastest rates of job growth.

Other posting slower rates of job growth included Chicago-Naperville-Elgin (+0.9%), New York-Newark-Jersey City (+1.1%), and Los Angeles-Long Beach-Anaheim (+1.2%) had the slowest rates of job growth.

Houston added 117,800 jobs, followed by Dallas at 109,000. In the Houston area, professional and business services added the largest number of jobs, 30,600, between October 2017 and October 2018. Construction added 25,600 jobs over the last year, with 15,900 of those in the construction of buildings. Area employment in the construction sector climbed 11.6% compared to the 4.4% gain in the rest of the nation.

Manufacturing added 16,100 jobs in Houston over the last year, and trade, transportation, and utilities added 16,000 jobs during the same period.

New metropolitan area employment data for November 2018 are scheduled to be released on Friday, December 21, 2018 at 10:00 am (ET). Stay tuned for more good news from Texas.  U.S. Department of Labor, 2018

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas