You Have To See This


#1

I’ve got to show this to someone – its crazy. You guys are real estate guys so you might find this interesting.

I am toying with the idea of upgrading a little. I am happy where I am and just the thought of packing up all my stuff moving saps me of all my energy. But the wife keeps complaining about our current digs and my miserly ways and it is getting pretty annoying.

So I have been playing around with Zillow, setting it to my price range and flying over the country and swooping down when I see a cluster of red dots and taking a look.

Man! What a difference there is in what a dollar will buy in different parts of the country. I live in Fresno, CA – Gateway To Bakersfield. Take a look at what $950,000 in Fresno (not the coast mind you, just ol’ Fresno.) Pay special attention to the fine finished carpentry we enjoy out here.

Now let’s take a look see at what you can get for just $20k less in Louisville.

Can you detect a difference?

Let’s try that again:

Fresno at $319/sq ft

My Old Kentucky Home – at $125/sq ft you just know it’s gotta be a dump.

I am being called to dinner. I wanted to tie this in to MHP investing. Maybe I will later.


#2

I started my RE investment carrier here in Fresno many years ago by buying failed apartment buildings and making them economically viable. Over the years prices went up and up and cap rates went down and down. With what turned out to be perfect timing I sold my buildings and got my investment capital the hell out of California after reviewing at literately thousands of deals (easy to do with Loopnet and a couple of weeks of 12 hour days.)

I am of the opinion the California is a bit of dog when it come to RE investing opportunity tho I am sure some guys out there are making a go of it.

Like I said above, I’ve been looking at houses in the $1M and below range and Zillow seemed to decide I should be living in Charleston, SC or Kentucky. Don’t know why. But the difference between what I see here in Fresno and Kentucky is staggering:

Fresno, new home, 3,000 sq ft, $963K

Or for a $30,000 savings you can have this in Louisville with its all 7,000 sq ft,

What a joke. I’ve never been to Kentucky but I can tell you Fresno is nothing to write home about. We have 10% unemployment, and the medium household income is $41k.

I see similar gaps between California and other places in the South such as Northern Atlanta and Charleston.

When it comes to buying residential RE you certainly see better deals in the South then in California. But does that also translate to better deals in income properties? My parks are on the Great Planes and a part of IL where the housing looks kind of crappy. But what about areas where they are throwing up ridiculously large homes with all the best refinements in the $750K to $1.2M range. Something has got to be going on in those markets. There has to be a lot of people making a lot of money and the business and building climate can’t be as restrictive as in California. It seems clear to me that California’s better days have past. And I get the feeling that things are kind of booming in places like Charleston – set Zillow to $750K to $2M and see all the newer and new housing available and how tasteful most of them are.

So what do you guys think? Does any of this mean anything for the kind of investing we do?


#3

Don’t have any specific comments on California relative to other areas, thats more speculative. I personally don’t get it… but that doesn’t really carry value. I tried to buy in Chicago when trying to start in multifamily but the numbers wouldn’t crunch and looked at such places as OK and TX. As it so happened, TX ended up being favorable since i started here in 2008 and got into parks 2013 here.

I also almost tried to buy an apartment building in Detroit. It was cheap there but probably in hindsight, wouldn’t have turned out well…

I think the key is to recognize value. Ie, pricing relative to what you can generate on that, take into account current economic conditions , future out look, and blend it all. Like TX for example…I think a lot of areas are relatively affordable, have run left to them, and the numbers crunch out. ( TX is a ton of markets but i think there are several good metros here).

Then Frank and Dave model, looking for solid deals in solid markets… So you don’t have to catch a boom, might be in small town IA in a good metro. To me the model makes sense.

I tried not to invest on the future dictating the investment , but i do like to have what I think will happen, and if it does, it will be that much better. Instead of win lose. More like win , or win a bit more…

I don’t really want to live in KY. I did an internship in Visalia about a decade ago. Thought it was decent weather was always perfect ( which actually made me miss a little rain , or cold or something ) . CA is not my market, have no desire to invest there, probably would never invest there.

I think what you are saying is smart though about switching markets or even asset classes when they just don’t pencil out anymore and the opportunity is somewhere else. Thats how i got out of multifamily to mobile home parks. At this point in time, parks for me make complete sense and I’ve fallen in love with the business but really have select parameters but I’m small and boring on what I do :slight_smile:


#4

I agree that the best days of California are over. The state likely won’t increase in value 4-5 times over the next 20-30 years like it has in many metro areas. I still see California staying very high though for a few reasons: the weather foremost of course, liberal NIMBY building policy (while politicians claim to want affordable housing) and the low percent of flat to mountain terrain compared to the east and central US. I have my eye on leaving California eventually too.


#5

Bryan,

Where have you thought about moving to?


#6

I’d like somewhere warm or even hot, with low cost of housing (under 200-300k a home), ideally where I can live outside of town on acreage near a metro with services like Costco and Best Buy. Bonus points to somewhere racially and culturally diverse. Somewhere like Tampa may fit that. Maybe somewhere from there to the Carolinas or Virginia. Charleston sounds like it may be really nice too. I’d even be open to somewhere in the great plains. I’ve heard Idaho and Montana are beautiful. It depends on how close I need to be to work as well.


#7

I am a native Idahoan and live in Boise. Recently the Census Bureau listed Idaho as the fastest growing state in the entire 50 state union in the population category. We have low crime, great outdoor recreation, very low unemployment, and very high quality of life. The state has a balanced budget constitution and we are trying to figure out how to return $400 million state surplus. We have high tech employment in Boise as well as an extremely more diversified population than when I was a child in the 70’s. We have so many Californians cashing in their high home equity and building $1+ million dollar estates that we cannot build high schools and roads fast enough!!

If I had a dime for every person I have talked to in the last 10 years that said they came for a visit and fell in love with the place, I would be rich enough to not be on this forum, LOL!! The winter season here in Boise is very mild and short. Just enough to kill all of the bugs that warmer climates are infested with! The local legend here in Boise is that once in a very long time, you can go snow skiing at Boise Basin just 45 min. drive from the city and then come down and float the Boise River on the same day afternoon where the temperature is 70+ !!

Questions? Ask me and I will respond.

Roger


#8

Don’t you guys have hard winters in Boise?