All Forum Posts by: Chris Blackburn

    I have entered into a number of leases, fighting the RE Agents on a method to protect me in the case of accelerated inflation.   Getting a 3% increase is hard and CPI has been manipulated to the point that it does not represent real inflation.  Anyone have suggestions on how to protect my assets from inflation.  I believe real inflation is closer to 10%-20% (call me crazy)  On a 10-year term for our class A tenants- this means that we are receiving less than 50% purchasing power even with a 3% increase.   The best way is to put in a "fair market value" renewal clause even if they want multiple renewals.  At least you can present new data as opposed to being locked in.  Anyone using anything different?  I think we are seeing inflation suggest by Gov, at 4.2%  (if we use the same method they used for CPI in 2009? you get a much higher number.  (www.shadowstats.com).

I am always on the hunt for properties. What are you looking for?  Primary markets? Dollar amounts?  We are building out some commercial warehouse projects that will be on the market- (Just in contract)  19 acres, 3 buildings total of 200,000 sq ft (will be new construction).  Do you want grit or glitz?  

Vacant commercial property is a sweet spot for purchasing- Essentially it is no longer an asset but a liability.  We see vacant spaces at %30-%50 of the price of fully rented.   Your team that does the leasing is a huge part of your success. One other option is breaking the space into very small units for retail.  It becomes less about what your charge for foot and more about the affordability.  A lot of people can pay $1000 a month for a $500 sq ft retail, not as many can spend $4000 a month for a 4000 sq ft space.

@Matt Millard You are nuts! This will never happen;)

For our current project, our lumber package went from $300,000 to $600,000+  Did not meet our 4% increase we have in our model. :(   The show must go on!  We are currently on the second floor of one of the buildings!  Ahead of the schedule with our contingency punched in the nose.  

95% of the risk is already built-in since they will be complete.  A GREAT property inspector would help you find EVERY issue that may be present in the new construction.  Since you are paying a premium cap rate- have them correct and repair all items on a 3rd party punch list.   

Take a look at the rents.  How strong is the demand?   Note- they purchased their lumber/materials before the cost 2x.   How hard was it to get full?  Are they asking top rents?   4.5% is at the low end BUT for new apartments, it may be the new norm.  Cap rates are fluid with interest rates.  Our ZIP rates will make cap rate compression a reality but it takes time.  My old real estate books say never buy below a 12% cap rate.  Well, that is easy- you just never buy:(.

As every builder will tell you this year that everything cost 20% more this year.   I would feel comfortable telling you that it will NOT be cheaper to build next year.  High costs are here to stay and not backing down.  Only a major downturn in the market will stop the increase.  With the huge housing demand on top of low-interest rates until 2023 expect more increases in the future.  

Sorry to pitch my new best friend, but cryptocurrency does not have the same issue.  Explore the option to invest in bitcoin/ethereum and just borrow against it. (Defi)  (I am so sorry to muddy the waters but I would love all the hard-working, risk-taking, opportunity providing investors to be able to expand their ability to support a responsible capitalistic economy.   Bitcoin and Ethereum can provide a non-fiat solution that will prevent our politician's misguided attempts of a solution. (Print more money- sorry daughter, granddaughter, and great-granddaughter) 

No one will help you when the governor tells all the renters they do not need to pay rent- just means I have to work a little harder to make sure I can take up the slack. Nothing 70 hours a week can't solve.    Work hard, treat people well and teach the same.  Happy to be here and I am excited to see what the next challenge my team needs to solve is presented.  If it were easy, everyone would get a trophy:)   Wow- sorry I have to get off this soap box..  You are buying a hard asset, in 10 years your 4.5% cap rate will not matter, costs are not going down and people will still need a place to live.  Even if Amazon came up with a instant house on Prime, SDC's, ground work, new fees, zoning and any new costs put on the developer would make it HIGHLY unlikely that rents will come down.  Add the potential for accelerated inflation (my calculation 30% this year) you should be fine.  

I think there is so little on the market- everyone is hoping for a 1031 exchange that can afford to pay too much.  I will tell you that the cost of replacement is amazingly expensive.  With the SDCs, increase in labor costs, increase in material costs, energy code changes, land-use changes, existing buildings are a BARGIN.  Everything is getting more expensive:(

Energy Star.  Good Supplier? New construction Apartment Windows/Appliances?

We are in Oregon, want good quality...Energy Star... Anybody have some good or great suppliers?   Chris Blackburn Clutch Industries

We just built these and are building a few more currently. We have the plans, but ultimately we want to produce "the perfect" 1 plan we use over and over- The MEPS approve and like it, have assisted in value engineering, corrected the mistakes, covers HUD review, is cheap and easy to build. No longer hand-building 1 of a kind Ferrari's in the field, but building production-style Fords in a factory. A clean repeatable process that, luckily does not use Lumber for framing! Coming soon to Salem Oregon! (Next Month!)