All Forum Posts by: Nick Bruckner

@Landon Fillmore 100%. Sounds like they are considering caps.

Check this out! HUGE opportunity in the Municipality of Anchorage as the Assembly  voted last week to change several regulations on what homeowners can do with properties zoned as single family. The changes created more options for Additional Dwelling Units- which can be detached from the home (a back yard cabin). This will open lots of doors for folks in the BP community here. 

Highlights from the Anchorage Daily News article published February 3, 2023:
The rules take effect Feb. 7. In addition to removing the owner-occupancy requirement, other stipulations include:

• Allowing a single ADU to be built on any parcel with a dwelling unit, including near duplexes, triplexes or even apartment complexes. They were previously limited to lots with a single-family dwellings.

• Changing the maximum size cap to 1,200 square feet, although zoning limits retained by the Assembly will help ensure that many ADUs will still be capped at the old limit of 900 feet, city officials say.

• Keeping the maximum height at 25 feet for units in the Anchorage Bowl, except those above garages, which can now reach 30 feet.

However, there are no restrictions on whether the units can become short-term rentals. The Assembly plans to soon tackle short-term rentals as a separate issue, which could include the first limits on their numbers or other new requirements.

Here is a link to the article

I spend a lot of time as an agent looking at home with ADU/MIL/Air BNB potential for clients but now there are many more options especially for properties with larger lots. Exciting time to work and invest in Alaska!

Curious to hear people’s thoughts on this article and what doors it might open!

Thanks for the reply @Keenan Fitzpatrick  A lot of the buildings you mention - schools and malls, and large commercial buildings (Costco, etc) are a different animal than the properties I’m talking about in this forum. Larger commercial buildings have drains built into the roofing system and are engineered at a much higher level than a fourplex in Mt View. Some buildings, especially in rural Ak, are in areas with so much wind that they don’t carry a snow load. It just blows off. I’ve been to over 20 villages and almost all the schools have pitched roofs. My post is focusing on the context of small multi family investments in our area where top of the line materials aren’t always used compared to large commercial properties and most importantly- they aren’t regularly inspected and maintained. It’s a common headache for investors and property owners. I also own an investment property with a flat roof, but it requires maintenance and is less than ideal. When I’m evaluating a property it is one of many factors that I pay attention to, but it doesn’t make it a deal breaker.
 

Look at the MLS data on average residential sales prices in Girdwood , a community just south of Anchorage- it has increased 93% in five years, from $420,932 to $813,308. Prices haven't dropped here as they have in many other parts of the country.

South central Alaska is a good place for property appreciation - largely because the state's transportation and economy and a huge military community are locked in between mountains and ocean. Most investors focus on cash flow when analyzing properties, but a lot of money can also be made as properties appreciate. It is important to work with a local investment team that is knowledgable about how appreciation varies not just from one community to the next, but from one neighborhood to the next. Rent increases tend to mirror increases in home values.

The average rates of residential appreciation on the initial investment over five years: 21% in Anchorage (which will be higher in the better neighborhoods - appreciation in Mt. View is flatter). 20% in Chugiak. 25% in Eagle River. Above and beyond the financial benefits of cash flow, tax write offs, and building equity...investing in multifamily in Alaska is pretty awesome. For some folks in the game with some equity already in a property - might be time for a 1031! Great to work with the guys on our team at Vested Alaska- @Jamie Rose @Tyler Cobb 

 Travis, the meetup was moved to next Friday the 27th at 7pm.

Some landlords/multifamily investors don't think much about their tenants' best interests and might have pride of ownership in their own home, but not in their portfolio of properties. No one aspires to be a slumlord, nor does anybody aspire to have low profit margins as an investor. There is a spectrum between profitability (value to the investor) and the value provided to the tenant. Everybody wants a deal. A really good deal for a tenant (cheap rent in a nicely maintained and updated place) can be a bad deal for an investor and vice versa (high rent in a place that is poorly maintained and not updated).

 When interest rates were lower and updating properties wasn't so expensive, it was easier for investors to to afford improvements for their properties, or to not always press the gas on increasing rents. But now, the numbers can be tight.

As we help multifamily investors evaluating properties, we run numbers of rental income and expenses. Rent levels and expenses both have a huge impact on ROI, and properties with current market rents are more valuable and sell at higher prices points.

I was recently talking to an investor client just getting started in REI who wants all of his properties to have a threshold of quality he is proud of (while the numbers also make sense). He wants to be profitable, but not at the expense of providing legit value to the tenants. He doesn't want to be Walmart (low quality products, poor care of employees, profit is highest good). He wants to be Costco (higher quality products, takes care of employees, still profitable). It's harder to do this now than if he'd bought a building a few years ago.

I have another investor friend who made it into the newspapers because they gave all the renters in their 15 units one month free rent in December. Not every investor is in a place to do this, but I think that if more investors put themselves in the shoes of tenants who are often living paycheck to paycheck, and decided to be impractically generous them when they can afford to be, the world would be a better place.

Obviously flat roofs aren’t curved. Or sloped. That can be a problem in Alaska. Buildings in parts of the country have these cheap to build lids without issues. In Southcentral Alaska, where there are big snow loads and a freeze/thaw/freeze pattern throughout the winter, the ice can damage seams or imperfections in the roof surface and cause premature leaks, which lead to mold and other issues. They are a bad design for the Arctic and sub arctic. Many commercial and multi family buildings have them, and so it is super important to have documentation of roof maintenance or a qualified roofing inspector inspect in the summer (when there isn’t snow) in the due diligence process. They can be ok if we’ll maintained, but a sloped roof on a multi family investment is a huge plus! Working with local Alaskan RE professionals with building experience can save you from a deal that looks good on paper but has returns that end up being, well, flat…or worse.

I took a buyer (single mom) to a just listed home in late November that was listed $50 K below my comps in a good area of Anchorage. The low list price was a strategy the listing agent used to create a bidding war for her client. There were multiple offers. We wrote an offer for $40K above listing price with a fast close (as requested by the listing agent), limiting repairs requests to health and safety. We got the contract. During repair negotiations, the sellers gave us $3,500 in closing costs and did about $1,000 of repairs. Because the loan was FHA, the lender was a little nervous I did my homework with comps as it had to meet appraisal and we offered $40K above list price. The Christmas present for my client was that it appraised for $15K above the contract price. Thankful the market slowed down enough that we were able to create some instant equity in the home!

@ Kenny Smith. I have a long term renter. I set up an LLC and the lease for the renter is with the LLC. So I believe that is a firewall. Perhaps I need to set up landlord insurance through the LLC, but it gets confusing since the homeowners insurance already covers the whole property, and landlord's insurance likely wouldn't just cover the MIL. It's an overlap.

I see posts in the BP Community about a collapse of the values of MF properties (reduction of cash influx from COVID, rental assistance programs, increasing supply from builders, lagging impact of recession, etc). I also read market forecasts from other agents projecting 24% appreciation over the next 5 years in Seattle, and Alaska. No one has a crystal ball. People read different news sources, and factor different things into their projections and come to drastically different conclusions. I invest and live in Alaska. A good chunk of our state lives in small villages only accessible by road where the cost of living was astronomical before inflation. With fuel delivered once a year, many villages are locked into prices over $9/gallon for gas for the year.  The migration from these rural communities will only get stronger. We have a strong rental market here in Anchorage. MF Properties don't fluctuate as much some other parts of the country have in the past few years, but we have stable, steady growth. Where do you get your data for projections?