Friday, January 19, 2007

Hilton Head - Golf and Investments

Sometimes you can have your cake and eat it too. A client of mine just bought a single tenant NNN investment in Hilton Head, GA. They live here, so why buy over there? Cap rates are just as good in the nearer states. The gentleman likes golf. Not a bad thing if you have to see your investment now and again to be in a place filled with golf courses. The IRS says there is nothing wrong with this. Lovers of chocolate - Hershey, PA?

Wednesday, January 17, 2007

Investments here and there

I just had a great conversation with a friend of mine who is active in development projects throughout the West as well as in China. She's looking at raising approximately $10M for a development in Shanghai. There's apparently a great need for senior housing in the ever changing Chinese market. Demographic trends are important to watch. Most young households in China are now dual income. No longer is there someone at home to care for the elderly parents. Also, with one child per family as the law, each child will have to support two elderly parents in the future. What will that do to real estate needs? A lot... Her senior housing project is wisely in the path of demographic development.

Sunday, January 14, 2007

Busy streets, corners, 2 bedrooms and other hard to sell homes

First, let me say, almost every house I've owned has been on a busy street. I made those purchase decisions fully aware of their pros and cons.

I had two poignant conversations with buyers yesterday at an open house on a busy street in the Rose Garden. This got me thinking (and little does:)) about issues with the "un-perfect" house.

Should you buy a house with only 2 bedrooms?, only 1 bath?, near a freeway overpass?, backing to Cal Train?, on a corner?, on Hedding? - and does this affect value? Do you get a "good deal"?

Some are opportunities - some are strict value plays.

What we love: quiet street, 3 bedrooms, 1 bath with room for expansion - add a bath and you have the perfect product - and you probably bought it at a discount.

Or add a master bedroom to the 2/1 cottage.

But - can you move the house off of Hedding (my Rosegarden house sided to that street). Can you reroute the freeway - not even The Governator has those powers.

How do those things affect value - is there a percentage rule of thumb? Actually for you engineers out there - its a sliding scale. From zero discount in a hot market to huge discount in a pathetic market. So timing is important.

And finally to my conversation yesterday - both couples wanted to buy a house for 5 years and then leave the valley - should they buy an odd bird house or should they buy a cookie cutter 3 bedroom, 2 bath, 2 car garage with 1.5 pets house? Waddya think?

Thursday, January 11, 2007

Austin Texas Popeye's Chicken NNN investment

My CCIM buddy Kevin Chin of Sperry Van Ness pitched this interesting listing today at the Income Property Marketing Group meeting this morning at the Presidio in San Francisco: Popeye's Chicken, 11 year lease remaining, absolute NNN, $1,568,511 price, 6.5% cap rate now, 6.74% cap in year two, built in 1997, 1 acre parcel in the Austin suburb of Pflugerville. Who wouldn't trade their break even fourplex or rental house for this solid deal near Dell headquarters?

Friday, January 5, 2007

Real estate investments = golf and enjoyment

Just ran in to a past client of mine. Last year I helped him sell his industrial building in San Jose with a slow and low paying tenant. He exchanged the property for a brand new Checkers Auto parts store in Utah. He and his wife just got back from 28 days golfing in Scotland at all of the best courses. Coincidence...?

Wednesday, January 3, 2007

Absolute NNN Sonic Burger

The food is not my style, but the investment definitely is. I just saw two absolute NNN (the tenant is responsible for all expenses including property taxes and maintenance) Sonic Burgers in Utah. 20 year initial lease terms! 7.0% cap rate. This is a great trade investment to boost cash flow from some under-performing, high valued apartment building. South Ogden for $1,148,000 and Clearfield for $1,028,000. Relatively low price points too. The trade analysis from a 3% cap apartment deal is very straight-forward. I would imagine...

Monday, January 1, 2007

86,000 square feet Whole Foods by the Tank

The Alameda is an area that people will make money at. We have finally turned the corner on mis-matched retail, residential and industrial spaces. Finally gone is Miracle Auto Painting and other toxic, ugly uses. What we have to look forward to are better restaurants, hipper retail and neat loft condos. But the best bets are the homes behind the Alameda. These smaller 1940s and 1950s homes have decent lots and a great walking location to downtown, the Sharks!!! and the revitalized The Alameda. Oops, forgot to mention a whopping new Whole Foods, expensive yes, but awesome. Look in to it.