All Forum Posts by: Henry Clark

Personally for 90% of the people their personal residence is their best real estate investment.  

1.  Most people live pay check to paycheck.  They “live” and need a place to stay thus that cost is better to pay down principal in a house than rent.  So they are ahead of professional investors.

2.  Your house is normally protected during bankruptcy versus commercial investors.

3.  Downpayment say 10% for personal residence versus 25% for commercial.  More leverage is better.  Plus takes less time to save the downpayment.  Longer time in market.

4.  Better Longterm tenant (you) and no rehabs every two years.  

5.  No collection issues.  (You)

6.  Inflation is your friend.  Your home will increase in value while your debt will decrease in adjusted value.  

7.  No property management needed.  Lower cost to operate.  

8.  Although you can 1031 a commercial property.  $250k per spouse tax avoidance if you sell your primary.  Then buy another and do it all over again.  

9.  You might sell our rental property but less chance you sell your house.  Especially if your pay check to paycheck.  

10.  Join the military. They give you tax free money you can invest and never have to payback.

I might not be as smart as those higher level investors but the majority of citizens aren’t either.  Which makes owning a personal residence the greatest investment out there for the majority of first time investors.  

Quote from @Devin James:

Quote from @Dennis Bragg:

Quote from @Devin James:

Quote from @Dennis Bragg:

Quote from @Devin James:

Quote from @Dennis Bragg:

Hey @Devin James

Your thoughts on affordability and density resonate with me. I’ve seen developers in Phoenix transform underused lots into thriving micro-communitie. One developer I worked with built smaller homes around a central courtyard, and buyers appreciated the balance of affordability and community.

In San Diego, where I’m based, density has taken a different shape...like ADUs (Accessory Dwelling Units) that maximize land value. I read something recently in The Economist about how smaller units increase land efficiency.

Have you explored micro-communities or shared amenity setups in Orlando? I’m curious how those resonate with buyers there.

My first home here in Orlando had an ADU. Great use of space and provides additional income to offset the monthly payment.

Orlando, and many other cities, have a "missing middle" problem in regards to housing. 

Municipalities either want Class A multifamily, or 2000+ sqft homes on .25 acre lots. 

There's a huge demand for Townhomes, Duplexes, Triplexes, Quads, and smaller multi's.

I love cities who can implement those micro communities. I can see the vision but they are not yet put to use here in Orlando.

It's great to hear your first home had an ADU...those are game-changrs for both space efficiency and offsetting costs. You're spot-on about the "missing middle." I've seen this issue in San Diego, where a friend of mine worked with a city planner to rezone a lot for duplexes and triplexes. They framed it as a way to provide workforce housing, and the project not only sold out but became a model for similar developments.

I read a piece in Forbes recently about how smaller multi-units are reshaping urban housing. In Omaha, smaller multi-unit builds with shared amenities like co-working spaces are cacthing on. People appreciate the balance of affordability and livability.

What’s been the biggest hurdle for Orlando in pushing these types of projects forward? Zoning issues? Or are developrs hesitant to take the leap?

Love to hear it!

Mostly zoning issues. 

Specifically for us, we focus on the outskirts of Orlando. Many of our developments are turning unprofitable citrus groves into SFH's.

I do think there's a trend towards BTR (Horizontal Apartments). Here's a project we sold to Taylor Morrison that will have this new type of housing. Super cool apartment style living, but all one story.

Repurposing citrus groves into SFHs is a smart move...turning underused land into vibrannt communities. I’m also a big fan BTR developments, especially horizontal apartments. They offer renters a unique option that feels like home but without the long-term commitment.

A developer friend of mine in San Diego recently completed a BTR project on a former industrial site. I saw a report in Forbes about how BTR developments are shaping suburban rental markets. The concept of single-story units with private patios caught on quickly, especially among young families and empty nesters.

Do you think these horizontal apartments in Orlando could help bridge the gap for middle-income renters? Or are they more likely to appeal to renters in the higher-income bracket?

100%!!

Im a huge fan of them

I think both - they will bridge the gap with middle-income renters and also appeal to the higher-income bracket. As you said, younger crowd & empty nesters

So you’re talking apartment units and condos.  There is nothing new there.  

Plus building in the middle of an old orange grove isn’t the way I would go if I was wanting to address that economic group.  I would knock down an old building structure in or off downtown.  Closer to entertainment district, services and mass transit.  

Someone mentioned Omaha above.  They knocked down the warehouse district near downtown and built condos.  Big entertainment area.  Just north of town 10 blocks they built about 100 mini houses about 300 square feet.  Waving normal setbacks.   Target low income and transient groups.  

 About 30 blocks west of downtown they did the Blackstone district.  Basically gentrified an old neighborhood.  

I would look at your target and identify what they want besides just the living unit.  

There have been a lot of posts about failing syndications.  Most of the ones failing have been due to lack of appropriate financing or inappropriate product mix.  I would check your market analysis.  

Quote from @Devin James:

Quote from @Henry Clark:

OP why?

Forget the politics.  If we bring in 20mm people with no money they take up all of the low priced housing.  This in turns hikes the price on mid size housing.      Plus it drives down wages so existing population can’t move up in housing.

Add in Airbnb and you drive up housing.

Add in tariffs for Canadian lumber 3 years ago and potential future China and Mexico tariffs.  

Don’t see cheap housing in the future.  Unless as stated above there is cheaper housing out in the country side.  But most ethnic groups always start in large cities.  

My family with 3 young kids on an E8 wages started in a trailer and apartments.  Later the American dream 40 acres and a large house.  Opened a trailer park next to our house for military.  

Who is your market for lower cost housing.  As a developer what plans and developments do you have in progress?  

 Hey Henry,

We've built and sold 70 homes since 2021. 

When we were first selling homes in 2021, Buyers were upgrading to larger homes since interest rates were 3ish% and they could afford the extra 300+ sqft.

Today, we see smaller homes selling significantly faster than larger homes. People can't afford the extra sqft now due to the rates. 

I understand that historically, rates are pretty average, so i dont see them coming down much.

America is significantly undersupplied in housing. So we need to build more, and if people can only afford smaller units, then we need to build smaller. BUT Building smaller doesn't work well as builders because we cant spread our costs out across larger sqft, so we need to build with a higher density. 

We have 3 active projects currently in Central FL. 1) 253 townhomes on 38 acres. 2) 135 SFH's on 48 acres 3) 153 attached SFH's on 21 net acres.

 OP it’s a Relative question for me.  

Do we need more housing.  I’m betting on it.  Doing our second subdivision.  18 lots on 75 acres.  Obviously in the other end of the spectrum than your developments.  

Who is your market?  What wage scale?  Single or family?  Section 8?  Square footage?  What market, Orlando or Glenwood, Iowa?  

20mm people in the last 3 to 5 years with no cash or social programs found a place to live.  Made that up, no data source.  Is this the market?  Or the market just above them?  

There are 76 mm baby boomers about to leave say 30mm homes in the next 10 to 20 years.

In Orlando do your employees or sub contractor employees lowest wage get paid $40 per hour or around $90k for a single person?  
.    
A sawmill is closing down in Montana because its workers can’t live anywhere near.  All $1mm units being built.  Town won’t allow smaller lower cost zoning.  

My point is define Relatively what circumstances are you inferring?  

We are building a house for one of our workers.  $5,000 to hook up water and electric.  About 100 yard pull from street.  Septic system about $1,000 we will build.

House is 30x40 with 10x30 of that as an open porch.  Concrete pad and cinder block walls. Metal trusses and roof.  Budgeted for $25,000.  

No closets.  Open floor.  Another $5,000 for electrical and plumbing.  

No architect drawings, no permit fees.  Add another $5,000 for labor.  $3.00 per hour.

So you can build low cost housing even if you use higher labor rate.

Kids on Xmas break working to build the house for their grandfather. Also helps them to pay for their school uniforms, books, lunches and school fees.  

OP why?

Forget the politics.  If we bring in 20mm people with no money they take up all of the low priced housing.  This in turns hikes the price on mid size housing.      Plus it drives down wages so existing population can’t move up in housing.

Add in Airbnb and you drive up housing.

Add in tariffs for Canadian lumber 3 years ago and potential future China and Mexico tariffs.  

Don’t see cheap housing in the future.  Unless as stated above there is cheaper housing out in the country side.  But most ethnic groups always start in large cities.  

My family with 3 young kids on an E8 wages started in a trailer and apartments.  Later the American dream 40 acres and a large house.  Opened a trailer park next to our house for military.  

Who is your market for lower cost housing.  As a developer what plans and developments do you have in progress?  

Hello Malta BPers. Visiting over Xmas with family. Let me know if you're up for some seafood. You drive and I'll buy. Would love to talk REI mainly commercial an industrial.

OP do you do the bookkeeping or the accountant?  Do you turn in clean PLs on each property?  Same for fixed assets.  

Does your CPA want to get rid of you?  Most service or trades people us included increase the rates for customers we don’t want.  

Hopefully you’re a great client.  

Sounds like you have a good structural engineer.  

Anyone else reading this post.  If you have cracks in the wall there is foundation settling.  Negotiate and Discount the property. 

Check your roof.  I have seen 2 inch gaps in the ridge of a building. Covered over by the tar paper and shingles. There was also extra bracing to keep the roof from moving further apart.  

Not enough info.  His recommendation is a good temporary solution to see if more settling occurs then take measures.

1.  How old is the house?  What year was it built?  If built recently footings should have been inspected by city.  They failed to compact the footings.  If older home then settling should have been done years ago unless you have a new drainage issue.  See comments below. If this is an old issue.  Check the cracks in the wall and see if there is filler or toothpaste.  If this is a new build ask the contractor to look at. 

2.  If this is in KC it should have frost free footings. 

3.  See if there are water issues outside.  There should be an 8 to 10 foot down slope grade from the house outward.  To keep water away from foundation. 

4.  Has there been landscaping next to the house that flattened next to the house. 

5.  Rain downspouts do they lead away from the hose several feet. 

6.  Are the gutters clogged and water is spilling out next to house?  

Would check all of those before jacking the house.  Or putting in a French tile drain.  

I think the above are the type of items your engineer wants you to look at.  If he didn’t inspect. 

OP your byline references Lakeway, Texas. Close to Austin.

Looked at loopnet.   Most of the land going there is $1mm per acre.  That would be $250k per acre downpayment.  If you have that kind of money keep looking at land development.   If you don’t, narrow down to MFH.  
As you narrow down your REI type, try to do the broad review approach to see if you have the resources to do that type or scale.