All Forum Posts by: Chris Falk

I've listened to some of Clayton's podcasts and also the BP podcast interview with him. I have not looked at investing w/him other than I signed up to get a weekly email. Out of curiosity, has Clayton, his wife or any other member of his team tried to rebut or defend any of the criticisms of Morris Invest in BP? 

I live in Yakima and there may be other views but what I see or know is that Yakima has very low inventory of properties for sale lately which has resulted in a 9-10 % gain in avg prices (SFR) here the past year. We usually don't experience those kinds of swings in market (Yakima area typically doesn't see the BIG gains and dramatic drops in RE market historically). So for investors, cap rates are pretty compressed. Also, since we're only a few hours from the crazy Seattle RE market, some investors have migrated over to this side of the mtns to try and buy SFR/duplex/MF etc that are or may appear to be better deals than what they can find in their 'hood. As a result there are more buyers chasing relatively little inventory. In Sea the avg home price is like $550k or thereabouts and in Yak I think it's around $200k (I'm using real general #'s) so on the surface Yakima looks like a steal. Duplexes, MF etc are also a lot less $ on a relative basis. The vacancy rate in Yak a few months back was around 2-3% I think so demand is basically outpacing supply right now and only so much land and zoning is avail or zoned for new MF development. Enrique Jevons is a BP member. He owns properties in Yakima in addition to a PM company so if he sees this thread he may have more input based on his day to day dealings with the market, trends etc. 

Hi Lisa. I'm in Yakima but would be interested in the group. Thanks!

Study the revpar (revenue per avail room; I believe that's 1 of the main metrics hotels use) compared to similar properties in the area (whoever selling the hotel should provide comp info). Also look at NOI end of day regardless of revpar to see how efficient or not mngmt is operating the hotel. What is avg occupancy over 1, 3 5 years etc? For example, if hotel is avg 50% occupancy the past year and it's not a result of rooms out of inventory due to remodel etc, then something isn't right. Is the hotel due for a refresh or full blown renovation? Sometimes a hotel may show kinda marginal #'s but a big renovation is planned and the operator hopes that will increase occupancy and revpar, etc. (in which case you take a leap of faith to an extent). Is the hotel part of a big chain w/rewards program? Obviously the Marriotts, Hiltons etc of the world have very powerful marketing machines and brand recognition which adds intrinsic value to the property (and they hold manager/franchise to high standards). I have only invested in a chain hotel and above is some of the info I studied but is really only a snapshot. The market the hotel is in, the seasonality of the market, is it geared towards biz or leisure travelers, does it have conference facilities, etc are also relevant. If I were looking at a non branded hotel (i.e. not a hilton, marriott, etc brand) I'd have to think and research deeper to make sure the property has some kind of attraction or reputational value that draws guests. It seems like SO much of the traveling population is geared to specific loyalty programs these days (unless you're talking a real high end property like a 4 Seasons) and I understand that as well as a past business traveler.

Thank you for outlining some +/- of each investing method. I'd also say under the pros of crowdfunding is the chance for regular cash distr as well on equity deals. 3 of the 4 properties I've invested in to date pay around 8% (annualized) on a qtrly basis coupled w/the waterfall on liquidity events. None of the properties have gone full cycle yet so I can't speak to the appreciation comment but I originally invested with a goal (hope) for decent capital gain as well. Time will tell. Among people I comm w/who have a lot more invested in crowdfunded properties than I do (equity and debt) the feeling is that there are fewer quality opportunities avail the past 6 months or so, regardless of the platform. A few crowdfunded debt and equity deals have gone sideways as well recently, so regardless of the crowdfunding platform's due diligence, potential for capital loss is a risk we all have to bear in mind of course. Also, presumably some crowd funders will cease to exist at some point as the industry matures and markets cycle etc etc. That said I am happy w/my crowd investments so far (knock on wood) while also keeping an open mind about direct investments as well.  

Until this last June I was in the apple/pear/cherry biz the past 20+ years. The seasonal migrants who worked for our org could not generally afford to rent multi-family properties that I perceive most people in BP are owners of. I know Enrique that you own and/or manage properties at various price points, but the actual seasonal migrants I've been around are often the ones we built H2A housing for (rent free to the worker). We had to become a multi-family developer, in effect, so that we could get the labor force we req'd at harvest or the alternative was to literally let unpicked apples rot on the tree. Seasonal migrants also cannot commit to a lease of any length obviously, let alone some of them come to the valley with just the clothes on their backs. The Hispanics who remain in the Yakima area all year (i.e. ones who work at warehouse level in jobs that aren't as seasonal and are citizens of the community just like the rest of us) are a diff group in my view since they do in fact need year-round housing, have their kids in local schools etc.  Richard, the seasonal peaks are basically Sept-Nov for apple, pear and hop harvest and then there's a mini peak again in June/July for cherry harvest and apple tree thinning (but apple acreage and volume of picker labor needed in the Fall dwarfs that of the cherry crop and wine grapes are mostly machine harvested these days around here). The inventory of homes for sale was also relatively low this last summer based on comments I heard from friends in real estate sales, lending etc and as that newspaper article mentioned, there is a scarcity of land zoned for multi-family in the area right now....

oh and as to your question about growth, I am not sure of our pop growth statistics but I get the impression Yakima growth is just steady (inside city limits). There are a decent # of people who live outside the city limits in this area. The economy is very very heavy ag dependent (apples, hops, grapes, etc) w/a smattering of some smaller industries represented in the valley. When ag is firing on all cylinders, it's kind of a rising tide lifts all boats scenario. It seems to me the residential market here never really peaks or drops dramatically but from what I hear, home sales are well ahead of last year in total dollars and the median price is up whatever % at this point. My understanding is that inventory is pretty low. 

I live in Yakima and while I keep eyes and ears open regarding investment real estate in general I am not personally invested in town. From talking to friends etc I'd concur w/what Timothy says above. It definitely depends on what part of town which might be some of the pockets that Timothy is referring to above. I know of a few developers who've built ground up apartments and town home style rentals in the past year and they leased up really fast it seemed....and not with discounts or concessions to speak of that I'm aware of. 

Since the last post by the managing member of NRIA, has anyone reached any conclusions, good, bad or neither? I took the time to read through every single post in this thread after hearing an NRIA ad on Bloomberg radio today and it's interesting to see how polarizing the company's biz plan is in this forum. Shills, accusations, "old" vs "new" Bronx peeps....drama! :-) I've only been a passive investor in misc partnerships to date and do not have any opinion formed about NRIA or the concept, Philly market, etc. I'm here to learn and I appreciate the input from experienced investors on this site.