SharingInterestingConceptWithCREONLINERs - Posted by Harold Whiteley

import · April 21, 2002, 11:56am

Posted by Ronald * Starr(in no CA) on April 22, 2002 at 01:01:31:

Harold Whiteley-----------

As you say, you might not want your neighborhood diminished by unfortunate new building.

So, you need to check with the city planning and building agencies to see what is feasable and what is not. And, should some person with lots of time on his/her hands decide to “upgrade” the local regulations, you might find yourself with a property which you can not change as you intended. So be alert to what the local neighborhood folk are thinking, doing, organizing.

Otherwise, what you suggest is sensible. This is called buying “a teardown.” Done all the time in places like Hollywood.

Good Investing***********Ron Starr*************

import · April 21, 2002, 11:56am

SharingInterestingConceptWithCREONLINERs - Posted by Harold Whiteley

Posted by Harold Whiteley on April 21, 2002 at 11:56:31:

Good Morning CRE Posters!!
I wanted to share with you what 3 young professional guys are attempting to do in the upper-class area of the Fort Worth, TX residential areas, i.e., Colonial Golf/TCU areas.

The concept:
They look for the oldest and most run-down of older houses (non-histroically connected) but “PERIOD” homes, that were built in the early 1900s through to the 1960s, depending…

Once they find the “right” price-profit-margin older home, in a very nice up scale neighborhood, they buy it…(by whatever means that I don’t have prevy to);

Then they either sell the home to a home-mover company; or tear down the home on the site, saving whatever things they need to use rebuild a new structure.

Next they design and build a new Modern-“PERIOD” home that excellently fits into the targetted neighborhood, utilizing the established neighborhood’s character, landscaped beauty; historical significance and curb appeal, with their newly constructed home-- having all the moderen interior amenities that were missing in the early 1900 homes of that period.

Their first project is now on-going with their home being built and priced in the $450K range.

I love the concept…which can be MODELED in any size town and/or price range, where the newer homes are being built out of town in the suburbs via medium to large developers/builders putting up hundreds of homes within their new developments.

But the older inter-city areas are PRIME for acquiring the run-down older houses, which can be bull-dozed or sold to house movers; or donated to area home crisis organizations to move and set up for families needing temporary housing through their social programs—moving the older houses for relocation to other areas of the city.

Bottom-line…The lots are what one is after anyway, in constructing new Modern-“PERIOD” model homes, within prestine, beautifully landscaped neighborhoods having mature trees and associated landscaping amenities.

The model concept sure seems to beat the on-going massive standard plans for going outside the city, to purchase large tracts of land to build thousands of houses built on land that has been scraped bare of any mature trees, etc. only to start all over once again with having to wait for trees and lanscaping green belts to mature for esthetic beauty and increased property value.

What do you think about this new-twist Modern-“Period” lot acquisition/home building concept??

Thanks,
Harold Whiteley
Lewisville, TX
(DFW Metro Area)

import · April 21, 2002, 3:20pm

Re: SharingInterestingConceptWithCREONLINERs - Posted by Michael in Phoenix

Posted by Michael in Phoenix on April 21, 2002 at 15:20:52:

Here in Phoenix we have experienced unprecedented growth, in the league of any boom-town you could imagine. Huge developments are still going up in the outskirts of the suburbs, and much of what you describe is going on closer to the inner city. In-fill developments are very popular with buyers, and the developers/investors doing these builds are supported whole-heartedly by the City of Phoenix. They view it as a chance to get rid of any number of vacant lots that become fire hazards when the weeds die, and magnets for blight otherwise.

The prices of these vacant lots have risen a great deal in the last few years, in response to demand by investors. The newest trend is to do exactly as you describe. Take a lot in an upscale neighborhood that has a home on it… raze the home and build a new home that fits relatively well with the others.

The key is this: make sure you don’t over-build for the neighborhood, and make darn sure you are professional about planning your new construction! Be as sure as you can about the cost/square foot, so you don’t end up upside down! Leave yourself as much room as possible on the profit, so if you have the inevitable cost over-runs, you can cover them at sale.

Michael

import · April 21, 2002, 12:26pm

Re: SharingInterestingConceptWithCREONLINERs - Posted by Brent_IL

Posted by Brent_IL on April 21, 2002 at 12:26:32:

One thing that has changed in urban homebuilding in the last few decades is that the highest component of cost is now the land. In many areas it is more profitable to raze a run-down home, and replace it with new construction than it is to do an extensive re-hab.

import · April 21, 2002, 12:17pm

Re: SharingInterestingConceptWithCREONLINERs - Posted by Tim Fierro (Tacoma, WA)

Posted by Tim Fierro (Tacoma, WA) on April 21, 2002 at 12:17:18:

Maybe it will work for them, but I don’t see it happening here. Usually a run-down home is still sitting next to other run-down homes.

The guys you mention are finding run-down homes in an upscale neighborhood. Kind of an oxymoron in my area.

I was driving around yesterday with a fellow investor and I was pointing out the new construction houses. Things like, that is a nice house, but would you want your brand new house next to that $60k house with 9 cars out front? Or look at that those 2 houses, there used to only be one run-down house there with a yard. Now there is 2 new houses with no yard and the $60k house next door with 9 cars. You get the idea.

If the neighborhood was truly upscale, I would think there would be no run-down houses there.

import · April 21, 2002, 1:05pm

Re: SharingInterestingConceptWithCREONLINERs - Posted by Harold Whiteley

Posted by Harold Whiteley on April 21, 2002 at 13:05:42:

Brent:
Thanks for your feedback.
Exactly!!! the point about your comments re: land/lot value versus the value of the older houses which occupy those lots within older inner cities, regardless the value of the neighborhoods.

For example: My wife and I did a little bird-dogging yesterday afternoon in a neighboring city of the same size as the one we live in. (we use to live in the neighboring town of approx. 70K-75K). So we wanted to cruise the older neighborhood town. We lived in the area in the 1970s and we wanted to see our old home we use to live in --and then we toured the general area.

What we found was amazing “FINDS”. In the older section of the city, there were homes that was probably built in the era of the 1920s, 30s, 40s, 50s and 60s.

These homes have been kept up nicely and retain a nice value on today’s market, i.e., a 4000 sq. ft. home is selling for $299K, which is about the right price of the package, but the kicker is that in this section of the city, --most of the homes are sitting on lots that are about 125+ wide and 300+ feet deep (about 3/4 to 1 acre) allowing plenty of room to cut the lot half in size and build another home on the remaining property.

But, I would have to say that if I were living in one of these properties, I would not want to see a CRE-guy/gal come into my neighborhood and increase the number of homes in this area, then cut down the amount of land being maintained throughout this neighborhood, which produces a very nice greenbelt between the homes.

But as a CRE-focused “WHAT-IF” strategical thinking/planner, I see that these homes have HIDDEN VALUE in the EXTRA lot sizes that can be turned into new homes within the area.

What you think? Sound feasible to you?
With Warm Regards,
Harold Whiteley
Lewisville, TX
(DFW Metro Area)

import · April 21, 2002, 12:43pm

Re: SharingInterestingConceptWithCREONLINERs - Posted by Harold Whiteley

Posted by Harold Whiteley on April 21, 2002 at 12:43:12:

Thanks Tim for your feedback. It is very much appreciated!!..

I guess I need to clarify what I meant by “run-down” houses within very nice and up scale neighborhoods.

These are houses that, regarless the “PERIOD” that they were built, they are of the “less desired” design and houses which lack the overall “curb appeal” that the majority of other neighborhood homes have within a defined area.

They do exist in any neighborhood, regardless of the price range.

I scoped out what these Fort Worth guys were doing, by driving one afternoon all around the connecting neighborhoods and there were prime examples of those certain type of homes that just seem to stick out as being out of line with the overall master plan of the various neighborhoods, but remembering that there wasn’t any MASTER-PLAN back when these homes were being built in the early 1900s and through to the 1960s. These are not track-homes, as the builders of this PERIOD timeline built distinct homes of various styles, in which, the majority of homes blended nicely into the character of the neighborhood.

Therefore, regardless of the price level of a neighborhood development, there are those certain houses which have fallen out of sink with what is really the essence and purpose of the neighborhood’s character.

I live in the older part of my town of 70K (Lewisville) and these houses were built in the early 1900s (mostly a farming community back then) with the town’s professionals building the really nicer type houses (i.e., Victorian style and colonial-tpye homes). But the majority of older houses that are the run of the mill houses built in small farming communities back then, it seems NOW these homes are sitting on lots that are almost equal to the value of the older houses that sit on them.

And in my area, particularly, a high population of Hispanic laborers are continually moving in with accumulated cash --to buy these older houses, but instead of doing any major remodeling and such, they are moving in several families, then helping these families to buy these old houses once they come on the market. These old houses don’t stay on the market for very long --at all --until they are sold and then you notice the families moving their accumulated belongings and family stuff into their newly acquired houses.

Now once they move in, they do try to keep a nice looking yard --as eventually there will only be ONE family living in the residence after a certain timeline and by then, the other families have also purchased their new “older” house --to move it to.

So, it isn’t like the neighborhood is going to the dogs, for that is NOT the case, but mean while the price of the older houses are being “re-established” with the on-going new purchase transactions, therefore, increasing the value of the homes in the general neighborhood.

Anyway, thanks for the feedback and best wishes to you and everyone in their future CREI deal making activities.

With warm regards,
Harold Whiteley
Lewisville, TX
(Dallas-Ft.Worth Metro Area)