The Chasing Dirt Blog

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Hello dear reader!

I know I’ve been a bit remiss in posting lately, but it’s not because I’ve dropped off of the face of the Earth… quite the contrary! I have a new development project to tell you about, and my crack team of websperts have been working feverishly to implement changes to the Chasing Dirt website to make it even better. In fact, you may notice things looking a bit out of whack for the next couple of weeks, but fret not! In no time at all, we’ll have transformed Chasing Dirt into a one of a kind investing resource that I know you’ll get a lot out of. We have some pretty cool stuff planned for our little corner of the internets, and I’m pretty sure you’ll enjoy it!

So stay tuned, and pardon our dust around here for just a little longer.  Good things are not far away.

I’ll talk to you again very soon,

-Josh

Those inquisitive folks over at Gallup came out with an interesting survey today asking people about their perceptions of various investment strategies…

The question they asked was, “Which of the following four common investments is best for the long term?” The four investment types were:

1. Stocks/Mutual Funds
2. Bonds
3. Real Estate
4. Savings Accounts

The poll found that people’s perception of real estate as a solid investment vehicle are improving. Back in September 2008, just 26% of Americans felt that real estate was the best long-term investment; today that number is 33%, and tied with savings for the highest rank of the four investment types.

The general perception of stocks as a solid investment vehicle has taken a hit since the financial crisis worsened last September. Back then, 27% of respondents ranked it #1 out of the four; today just 15% rank it that high.

So what does all this mean? It means that people may be beginning to view real estate as a safe investment again. In fact, in a separate Gallup poll 71% of respondents said that now is a good time to buy a house. That’s up 18% since last year, and the highest since 2005. This could portend a slow increase in the number of home sales nationwide in the coming year. Time will tell.

You can read the entire article here.

-Josh

It’s alive!!!!!!!!!!!

After 10 long months of work, the website is finally up and running! So without further ado, let me welcome to you to the new and improved ChasingDirt.com!

If you go to chasingdirt.com, you’ll find an entirely new interface. No longer just a blog, the site is now a robust resource for real estate investors the world over.

If you know anything about me, you know that I believe strongly that people should have easy access to quality real estate investing education. And it shouldn’t cost a fortune. So I’ve decided to create a resource where we can all learn from each other. Call it social media, call it crowdsourcing for real estate investing, or just call it a really cool website; either way, it’s about to become the most credible, entertaining and useful real estate investing site on the web.

Take a look around and you’ll find a wiki where you’ll find an answer to anything. You’ll find a discussion board where you can interact with other investors. You’ll find case studies where you can learn about specific deals done by your fellow investor friends. You’ll also find a real estate interview series, a free e-book written by yours truly, and college courses on real estate finance and investing.  And there are more great features to come in the near future!

Part of the point of Chasing Dirt is for us all to learn from each other. So some of the pages on the wiki and in the case studies aren’t complete yet. That’s where you come in- I want submissions from you to help build these resources up to be something special. So if you’ve got some expertise to share, please do- you’ll  be admired by all of your peers!

So with that, I encourage you to jump in and check out the site. I couldn’t be more excited to bring it to you!

-Josh

P.S. A portion of all the revenues from Chasing Dirt will go to a nonprofit that works to provide affordable housing or to end homelessness. Be sure to check out the Giving Program page for more information.

NOTE: The site is down temporarily while we make some necessary modifications. We’ll let you know when it’s back up! Thanks for understanding!

So the website overhaul is getting closer to being done. By the end of this month, chasingdirt.com won’t just be a blog… it’ll be a complete real estate resource!

As I mentioned in a previous post, my goal has always been to create a place where students of my online courses can interact and continue to learn from one another even after the course session ends. So with that in mind, I’ve created a full-featured website complete with a discussion forum, a real estate wiki, a case study archive of real estate investing war stories for you to review and learn from, a free e-book, and a bunch of other interactive features that will allow you to share with and learn from other investors. This blog won’t cease to exist though- it’ll be an important part of the larger chasingdirt.com website. There will also be links to my college courses, and because I’m a big believer in giving back, 10% of the revenues from the site will go to Habitat for Humanity’s Gulf Coast Recovery Program.

It’s gonna be a really cool resource, and I’m very excited about it. Watch this space- it’ll be live in about 10 days!

-Josh

For those of you reading this from Portland, I’m sure by now you’ve seen and heard about the plan to demolish the Memorial Coliseum and replace it with a minor league baseball stadium. This is a monumentally bad idea, being ramrodded through by Mayor Adams on a mind-blowingly short two week timeline.

I agree with the Portland Trailblazers that the Rose Quarter area needs to be redeveloped in a way that activates the area on days and at times when there are no events held at the Rose Garden. But tearing down the MC and building a baseball stadium is NOT the way to do it. Add to that the lack of thoughtful consideration and public debate in the process driving the Mayor’s plans, and you have a project that fails to get off the launchpad.

The following is an email I sent to each Portland City Commissioner and select members of their staffs regarding my strong opposition to the proposal to demolish the Memorial Coliseum to make way for a new baseball stadium. I encourage you to read the attached article and share with your friends. I attended the City’s open house this past Tuesday at 6pm, and was encouraged to see roughly 500 people turn out. The mood of the crowd was nearly unanimous in their opposition to this poorly thought-out plan. If you live in Portland, I encourage you to write an email to our city leaders yourself (copy and paste my email if you want) before their vote on April 22 to demolish the MC. Please share this blog post with your friends as well.

Here’s my email:

Dear Commissioner,

I am writing to express my strong disapproval of the plan to demolish the Memorial Coliseum to make way for a baseball stadium. I urge you and your fellow commissioners to give the process the time necessary to fully investigate the issue, rather than bowing to Merritt Paulson’s accelerated time table that ignores the need for public input and thoughtful consideration.

I disapprove of the plan to tear down the Coliseum for the following reasons: Continue reading

Some of you who know me know that for the past five years, I’ve taught two real estate finance and investment courses online through a network of over 1,200 colleges and universities across the country.

During that time, I’ve had a lot of students ask for more material and a place to carry on the discussion after the course ends. Some have set up Yahoo or Google Groups to connect with, but they always fizzle out after awhile. So for a long time it has been my goal to build a website of my own to fill that need. 

So last July I began working on a website, and after a ton of work, it’s nearly done! In the coming days, I’ll reveal some of the really cool features of it that I think you’ll find quite useful, whether you’ve taken either of the courses or not.

Stay tuned!

-Josh

Damn you, Kai Ryssdal!

Maybe you heard this story from last week. Kai Ryssdal from NPR’s “Marketplace” reported that some crafty and clever developers in Southern California were taking home staging to a whole new level…

For those unaware, home staging involves bringing in furniture, baked goods, coffee, flowers, candles, bath towels, and so on to make a home look warm and livable to prospective buyers. Many sellers and their agents “stage” a home to varying degrees to make it more appealing, with the minimum effort consisting of some throw rugs, candles, music, and flowers. Some hire staging companies that charge upwards of $10k to bring in a full house-worth of furniture and associated accoutrements.

But these California developers have taken it a step further. A great big giant leap further. They hired actors to play neighbors in an otherwise ghost town of a subdivision! When the prospective home buyer pulls up, the “neighbors” are barbeque-ing on their patio, offering baked goods to the prospective buyer, sharing stories over the back fence about power tools that don’t actually exist, and basically riffing stories off of a well-developed “character backstory.”

You can read the entire article here.

The article even mentions how some savvy Realtors staged an entire neighborhood, with kids playing ball in the street, neighbors mowing lawns, dog walkers strolling down the street…

I was completely dumbfounded by this idea. How dishonest! How is this not fraud? This is simply taking an innocent idea waaay too far. When prospective homebuyers tour a home for sale, they know that the overly-perfect staging isn’t the homeowner’s actual stuff the same way you know the displays in a furniture store aren’t places where people actually live.

But this… this is a grand staged lie! Right? Right?!

Right. It was. But I didn’t realize it until I scrolled down to the bottom of the page. There it was, right there in black and white:

Thanks to the following for helping to stage our April 1 feature:
John Ezelle
Adrienne Flagg
Bill Barry
Michael Clapp
Interstate Firehouse Cultural Center

Okay, hold the phones- I know these people! I scrolled up- the article says it was recorded at a development called “Fox Run Estates,” about 90 miles north of Los Angeles…

But that’s weird… why would Adrienne Flagg (who is a very talented Portland actress I’ve met several times) and her cohorts from the IFCC in Portland (a theatre I have performed in as an actor myself) be doing a gig for a developer in Southern California? That didn’t make sense…

Then it hit me. Like a ton of bricks. Faux bricks. The kind made of styrofoam that bounce off your head without leaving a mark. “Josh, you dolt… look at the date on the article!”

April 1, 2009.

Damn you, Kai Ryssdal! You got me good! Happy April Fools’ Day to you, too!

[cue the foreboding music]

…but what if…

The market is in the tank… sellers have to get more creative to sell a property these days… it’s not such a stretch to think that something like this might be possible… a David Lynch-ian white picket fence type of perfect small town hiding a deep, dark secret- namely that it’s all an illusion…

Is it really so far off an idea? It makes one wonder if things continue to worsen, if we might see the next generation of staging include staged characters as an extention of the falsified furniture…

Now here’s an even crazier thought- what if a developer were to do this with commercial property?

An empty office building populated with entire suites of actors playing accountants, human resource managers, executive assistants? Like a staged version of NBC’s “The Office,” designed to make a building look more attractive and less like a ghost town?

Or let’s take it to an absolutely insane extreme- the market for retail properties is struggling mightily right now- what if you were to show a strip mall to a prospective buyer, staged to the hilt with actors playing shoppers, browsing the racks at stores that don’t really exist, rented cars in the parking lot making the property look well-trafficked…

Is that really far fetched? Crazy, yes, but implausible? Hmmm…

You could stage an entire neighborhood- houses, offices, retail centers… like a live-and-in-the-flesh version of Second Life… just to sell a property.

Mr. Lynch, I think I have your next film script outlined…

-Josh

The longer the Great Recession drags on, the more I hear people asking “where’s the bottom?”

So where is the bottom?

Well, that depends. Are we talking about the economy in general? Unemployment? Housing? Commercial property? The stock market? Each of these will likely bottom out at different times.

In this article over at Calculated Risk, they contemplate the bottom of the housing market, and bring up an interesting point:

Your definition of the bottom will determine when we’ve hit it. For example, economists are primarily concerned with single family housing starts, new home sales, and residential investment as a percentage of GDP. They’re concerned with these stats because they relate directly to employment levels and GDP. But when most of us mortals think about “the bottom,” we think of home prices.

The thing is, these two groups of indicators have historically bottomed out at very different times! For instance, when residential investment as a percentage of GDP bottomed out in 1991, home prices didn’t bottom out for another five years (see the Calculated Risk link above for a graph of this).

So as an investor, how should you define “the bottom?” Well, for my money, it’s all about maximizing your investment. That means buying low and selling high, and that means we’re looking for a bottom in home prices. The other group of factors are only useful to us as market indicators of what’s to come.

Let’s get back to our original question: “where’s the bottom?” I think a better question is “when’s the bottom?” Really, it doesn’t matter much to you as an investor where prices are when they hit bottom- you’re going to want to invest regardless of price, no matter where the bottom is. But what is important is recognizing when the market actually hits bottom. Like any market crash, you don’t see the bottom until after you’ve passed it and the market begins to rebound. So when is the bottom? Continue reading

ABC News’ Nightline had an interesting story last night in the “Realty Check” series about reverse offers. If you didn’t get a chance to catch it, check it out here.

Never heard of a reverse offer? Neither had I. But then I’m not a Realtor trying to sell houses in the worst housing market since, well, ever… and I was in elementary school in the early 1980’s when reverse offers were last used with any regularity.

So what is a reverse offer? Well, in a traditional transaction, the seller offers a property for sale, and prospective buyers write up an offer and submit it to the seller to accept, reject, or counteroffer.

In a reverse offer, the seller writes up an offer and submits it to a buyer.

The idea is to set your property apart from the bazillions of others flooding the market right now. If you want to stand out in the mind of a buyer, you have to do something different.

Many times, a reverse offer will be presented with better price and terms than the seller is currently advertising. For example, the couple in the Nightline story reduced their home several thousand dollars, and offered to throw in the washer, dryer, kitchen appliances, and pay for most of the closing costs. In some ways, it kinda sounds like a woman asking a man to marry her, and offering him a dowry. Seems backwards, but if you can’t find a good man (so to speak), then maybe it’s a smart strategy…

It sounds like a novel approach, but I can’t help but wonder how effective it really is. In practical terms, the only real difference is who writes up the offer- the buyer or the seller. That alone doesn’t seem like enough to make a significant difference in the amount of time it takes to get a property sold. But at the same time, the squeaky wheel gets the grease.

So I’ll throw this out to you- have any of you used a reverse offer before, and was it effective? Did it make a difference in getting the property sold, and would you use the tactic again?

Leave a comment. Thanks in advance for chiming in.

-Josh

P.S. Yes, I know the image is backwards… that’s me being clever.

For those of you following along, I thought I’d post a quick update on the Classic Foods warehouse renovation project…

This is a 50,000 square foot warehouse that I’m renovating for a manufacturer of gourmet pastas, herbs & spices, and artisanal meats & cheeses. We’ve hired Vallaster & Corl Architects to do the architectural work, and SD Deacon to be our general contractor. I worked with Deacon on a project last year, and look forward to working with them again on this one!

The project will house Classic Foods’ offices, warehouse space, a 6,000 SF production kitchen, an outlet store for the general public to buy their tasty goodies, and incubator space for food-related start ups. We’re going to build it to a LEED Silver level of energy efficiency, and recycle & reuse much of the wood and concrete currently in the building.

Here are a couple of architectural elevations of the building after it’s done:

The buyer closes on the purchase of the building at the end of this month. Once the sale is complete, the seller will lease back part of the building for a few months until they move their business to a new location. During that period, we’ll get our construction drawings done, file for land use approvals, get our building permits, and bid the project out to the subcontractors. Classic Foods will move some of their cold storage units into the building before we start the renovation, just to give them more room in their current space, and we’ll put on a new roof and do some minor pre-renovation work on the building.

Then come January, it’s pedal to the metal on the real construction work. I hope to have Classic Foods moving into the finished building by July of 2010. Can’t wait for that grand opening party… the food WILL be amazing!

-Josh