For the last two weeks I have been in a pretty upbeat mood. I had finally got my rehab project at 3969 Humphrey under contract and a smooth closing looked to be all but a sure thing.

Now, the contract has fallen through and the property is back on the market (a steal at $127,750 if you are looking for a house ) . So what happened? The appraisal came in last night. It came in at $101,000! For my gut-rehabbed house! All I can say is that the appraiser in question doesn’t know the area. Every single comp pulled was from south of Utah. Streets like McDonald and Fairview. Anyone that knows Tower Grove South knows that the area south of Utah is almost a different neighborhood. More appropriate comps on streets like Utah, Humphrey and Wyoming were ignored in favor of the lower values streets to the south.

If that wasn’t bad enough, the appraiser adjusted the comp prices downward because I only have a parking pad instead of a garage. That is all well and good, except adjustments are a two-way street. I replaced all the electric, plumbing, HVAC, windows and flooring my rehab. Was that the case for the comps? No. But the appraiser did not make positive adjustments on my behalf. It was clear that the man did not know the area and is totally unfamiliar with the concept that rehabbed properties are worth more than properties with 50 year old systems. According to this appraisers logic, the $20,000+ put in to update the systems was a financial waste.

I am frustrated, but I am not worried. There are quite  a few other interested parties coming forward that can see the realities of the property. That can appreciate it’s REAL value. But take my lesson to heart. Don’t just assume the appraisal on your transaction will go smoothly. Common sense does not always rule. Assume that the appraiser doesn’t know the area and make sure you do a little homework and prep some comps of your own prior to the appraisal. Send these over to the appraiser to help point them in the right direction. Some of the more headstrong in the appraisal trade might take offense to this, but with ludicrous appraisals popping up from time to time, it is clear that some are in need this kind of direction.

The grass is always greener, right? When you hear so many stories about people making a killing on real estate, it can be hard not to feel a little envious.  There is no doubt that real estate can be very profitable,  just don’t fool yourself into to thinking that it is easy money. It isn’t.  When it comes to real estate investing, it takes a lot of work to be successful, and not everybody is cut out for it.

The so-caller “real estate experts,” publishing books and producing television shows about real estate investing, tend to show you the rosy side of things. They are trying to sell their books or get you to watch their show, so why shouldn’t they? They probably wouldn’t  do too well if they scared you off with doomsday scenarios. But if you are considering taking the plunge from watching others invest in real estate for entertainment, and actually doing it yourself, you need to wake up to a harsh reality: Investing in real estate is not easy.

Buying, selling, and leasing properties can be a stressful and time consuming enterprise. It takes a certain type of person to be a successful real estate investor. It doesn’t take any exceptional ability, but it does take determination. It takes someone who really wants to make something of their situation and isn’t afraid to get their hands dirty when necessary. If you want to sit back, collect rents and never have to get personally involved, perhaps investing in a real estate investment trust (REIT) or partnering with a more hands-on investor might be a better idea.

If you want to succeed in this business, you’ll need to be willing to do whatever it takes to make things work. Whether you are fixing and flipping single-families or fixing and renting multi-families, its a lot more than buying a property and collecting checks each month. Even if you are going to be paying others to do any rehab at a property you’ll still have to consider things like arranging loans for acquisition and repairs, meeting with inspectors, hiring contractors, locate tenants or buyers, pay bills, manage occupied units, perform annual tax returns… These things and more will always be hanging over you.

Things rarely go according to plan, so you’ll need to be able to find the time and motivation to occasionally deal with problems as they arise. Over time, as you begin to build relationships and equity as an investor, you might be able to step back from some of the day-to-day stuff. Maybe even all of it at some point, but when you are getting started, you’re going to have to wear various different hats and do what needs to be done. If that is a lifestyle you don’t think you can handle, you should think long and hard before buying any property. However, if you relish in the thought of taking charge of your financial situation, and don’t mind a little hard work to get things going, you might have what it takes to be a successful investor.

If you’re not daunted by the workload, your next consideration needs to be how you are going to pay for your new dream. With the age of 100% financing gone (probably for good), you’re going to need to have access to cash to get anything done. In the next article in this series, we will ask:  How much money do I need to invest in real estate?

Over the past few years, the St. Louis Board of Alderman have debated the prospected of a vacant property registration system numerous times. One bill almost passed about a year ago. Not taking no for an answer, Alderwoman Kacie Starr Triplett brought the issue back up recently. The new bill corrected many of the issues with the previous versions, but many in the real estate industry felt the bill still had unfair aspects.

Apparently, the Board of Alderman did not agree. I have been unable to officially verify this, or who specifically voted for it, but the bill passed this morning. From now on, whenever a property is vacant in the City of St. Louis for at least six months, and has recorded code violations, it must be registered with the City. The owner must provide their contact info and pay an annual $200 fee.  The provided information will then be placed on a  publicly available database. There will be some exceptions to this, but I still don’t know at this point if there were any last minute alterations to the bill before it was passed. Check back for more details and implications soon.

For more, check out the official Bill #322 website.

Real estate investing can be a lucrative and rewarding enterprise. It can also be a frustrating and profitless exercise. You could write a 1,000 instructional book on all the dos and don’ts of investing, but perhaps the first and most important question to as is simply “Why?” “Why should I invest in real estate and not put my money in savings or stocks?”

The most important benefits of real estate investing are related to the generous return on investment and the ability to control your own destiny. Real estate offers a great way to make significant profits quickly for the self-starters out there. Here is a detailed breakdown of some of these benefits:

• Cash flow – After paying the mortgage and operating expenses, most rental properties will provide cash flow. The amount varies significantly depending on your equity in the building, actual expenses and rent amount. Cash flows of nearly $1,000 a month on a $100,000 building are not unheard of in this current buyers market. I’ll cover this topic in more detail on a future addition of this article series, but in the meantime, you can play around with property numbers yourself with this investment calculator.
• Appreciation – Although the trend has been reversed in the last couple of years, real estate has historically appreciated in value consistently. In step with inflation or better. Unless you refinance your properties, the amount paid in mortgage each year will remain the same, while the value of the property should continually increase over the long-term. In the current buyers market, many of the foreclosures now available are actually priced well below their actual value. In these cases, appreciation can be extremely rapid. Whether its overnight or over-years, this trend will likely continue.
• Loan paydown – Barring a refinance, over time your mortgage will continually be paid down. On 30-year loans it will take many years before you make any significant impact on your loan balance, but on shorter loans such as a 15-year note, the benefits can be noticed more quickly. For example, with a $100,000 loan on a 30-year note at 6%, your monthly payment would be about $600. After fifteen years, you would have paid down $28,951 of the loan balance. You would still have 15 years to go on your loan repayment. On a 15-year note for $100,000 at 5.5% (rates are usually at least .5% lower on 15 year notes that on 30), the monthly payment would be about $817. A decent amount more, but the loan would be totally paid off after fifteen years. And with no mortgage, your cash flow is going to go through the roof. Either way, you’re making money over the long-term.
• Deprecation – With non-owner occupied properties, there are tax benefits not available on your home. Every year, you can claim this deduction for each of your investment properties. The actual amount is determined by subtracting the value of the land the property sits on (generally considered to be 10% of the purchase price for simplicity sake) from the purchase price of the property. Then you divide the number by 27.5 for residential properties or 39 for commercial properties. This amount can be claimed annually as a tax deduction. This deduction does technically have to be repaid when you sell your properties, but there are various sheltering methods such as a 1031 Exchange, which can indefinitely defer repayment.
• Rate of return – Unless you really play your cards right, the rate of return for your investment dollar in real estate is almost impossible to match. When you get $550 in rent per unit at your new 4-family bought for $140,000, there is no doubt that the cash flow is going to be pretty solid. When you compare how much money you are making compared to how much you actually invested, the numbers can be staggering. Using realistic expenses for this fictional example, with 25% down on this property ($35,000), you would have a monthly cash flow around $890. That’s $10,680 a year. Comparing the two, that is a 31% annual return on your investment. What stock can match that?
• Control your own fate – If you make wise purchases, properly insure your properties, and screen your tenants well, things should go smoothly in your investing career. In most forms of investment, you simply control when you put money in and when you take money out. With real estate, you not only control these aspects, but you control the actual fate of the investment as well. Rather than being beholden to some faceless board of directors, you control your money. Whether you handle all aspects of leasing, management and maintenance yourself, or sub those tasks out, you always call the shots.

Obviously, this breakdown has been very simplified. There are other expenses and considerations to take into account while investing in real estate, to be certain. Regardless, considering all the ways in which you can profit from real estate investing, there is no doubt that there is money to be made. If you are convinced that real estate investing is a winning situation then you must consider the next issue. Potential profits aside, investing isn’t for everyone. It takes a certain type of person. In the next article in this series, we will ask: Who should invest in real estate?

Even in the best of economic times, real estate developments fall through all the time. In a recession, this trend can become an epidemic. One seeming victim to this trend is the proposed Pelican Place project at 2232 and 2256 South Grand in the Compton Heights neighborhood.

The Planning & Urban Design Agency of the City of St. Louis published development details back in August of 2006. The former YMCA building at the site was to be torn down and replaced by a mixed-use development. The historic Pelican building at the corner of Shenandoah and Grand was to be restored to historic alignment, which would have seen the removal of the the ghastly 1-story addition to the north. The plans looked pretty great.

In 2007, demo began on the Pelican building and leasing signs for the finished project went up. Things looked like they were on the fast track. Unfortunately, over the following two years, nothing seemed to happen. Other than the grass at the site becoming overgrown.

In May 2009, the St. Louis Post Dispatch was reporting that the project was still moving forward with Snap Fitness as the anchoring tenant in the 37,000 Sq Ft project. Nearly one year later, the site remains untouched. The poor economy, as well as the sluggish sales at the nearby Compton Gate Condos seem to be the likely holdups.

Thankfully, the surrounding area has continued to improve in terms of residential development. Once things start top loosen up economically, this project seems to stand a good chance of actually coming together. In some form or another. South Grand between Arsenal and I-44 has become a pretty nice stretch, but a project like this could really push things over the edge. Hopefully something gels sooner rather than later. Here is a look at the current site.

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To follow up on a the story about Fremont Park from a few weeks back, it looks like the work is now complete. It turns out that crews were merely replacing the sidewalks in the Benton Park neighborhood recreational area. Still, the new aggregate sidewalks look good. It seems like crews were busy replacing sidewalks all around Benton park this winter, as similar replacements were made in front Pointers Market and the former location of McClozzi’s among other places.

I have tested the new slideshows on a variety of different browsers without issue, but everyone’s setup is a bit different. If you have any problems with this feature not working properly, please let me know. I hope you enjoy the changes.

Buying foreclosure properties can be a frustrating, cutthroat enterprise. The best properties usually have investors circling like vultures. You’re never going to be able to win all your bids, but there are things you can do to increase your chances of being the winning bidder. And get the best price in the process.

The following guide will help arm you with information that can help you along your road to becoming a power buyer:

• Financial Viability – Keeping funds available at all times; ready to pounce on that next great deal.
• Earnest Money – How much should you put down, and other negotiating tactics involving earnest money.
• Limiting Contingencies -  Sometimes inspections are unavoidable, but keeping contracts as clean as possible can really help when making an offer.
• Offer Pricing – Offer price is unquestionably the biggest single difference between a dead deal and an accepted offer.  Avoid overpaying, while not letting the good ones slip through the cracks.
• Persistence – Whether it is not letting a lost contract get you down or keeping on real estate agents and banks when an offer is in play, sometimes the squeaky wheel really does get the grease.
• Dates & Timetables – Keeping closings short and sweet can really increase the desirability of an offer.

Link

A drive down the streets in the City of St. Louis after dark can be a telling thing. Some streets that seem great during the day show a different face at night. One of the most telling things about an area during the night is not the curb appeal of a house, but the quality of  lighting along the street.

As a property owner, you don’t really have much too say about the streetlights, but lighting your own property is totally within your control. Having a reasonable wattage light fixture on your porch and/or in other places in your front yard can do wonders for not only your property, but the entire block. The more houses on a street with good lighting, the safer the street feels.

Better lighting also makes it harder for would-be burglars and robbers to hide in the shadows. I encourage you to leave these lights on all times after dark, whether anyone is home or not. Perhaps install a light sensing fixture that turns itself on. If you use something like that it conjunction with a florescent light bulb, the costs will be low too.

I tried to take some example pictures of this affect for comparison, but nighttime pictures are a little tricky to get perfect exposure-wise. If you won’t take my word for it, drive through a few neighborhoods after dark for yourself sometime. I think you’ll agree, a few lights make all the difference.

When renting apartments and selling multi-families, I have never really been able to figure out which people prefer: a first or second floor apartment. On one hand, the first floor apartment is usually easier to move furniture into and doesn’t require you to climb a flight of steps every time you come home. On the other hand, second floor units are usually safer because the windows are not reachable from the ground. They also tend to be quieter since you don’t have anyone above you.

My assumption has always been that the preference is slightly in favor of upper level units, but I am curious what you think. Which do you think is better? Please feel free to share explanations in the comment section.

If you’re new to landlording or could use a refresher, the University of Missouri St. Louis will be holding a 6-hour Landlord Training class this March.

Here is the basics on the course:

The University of Missouri–St. Louis Division of Continuing Education and its Center for Entrepreneurship & Economic Education announces the Landlord Training Program, a two-day, six-hour program leading to success in the rental housing business.

The program is from 6:00–9:00 p.m., Thursdays, March 4 and March 11. The seminar will be located in Clayton, MO, at the World Trade Center Building, Room 1009, 121 South Meramec (at Bonhomme). The registration fee is $70, which also includes a 500-page landlord resource book. Registration deadline is March 2.

Whether you’re a first-time investor or an experienced landlord, this course will teach useful, practical information that will help improve the bottom line. Participants will learn how to determine if a property is a good investment, find and select quality tenants, write proper leases, avoid housing court, and protect the investment. A Q&A session at each seminar will further aid the learning process.

Instructors include Don Benski and Tim Kanke of the St. Louis Real Estate Investors Association and Joseph O’Connell of the St. Louis County Neighborhood Preservation.

For more information, or to register, please visit the Landlord Training Program Web site or call (314) 516-5974.

After years of waiting, the formal groundbreaking is now set for the new Mississippi River Bridge in downtown St. Louis. Meant to create a direct route from Missouri to Illinois along Interstate-70, this $670 million project will be breaking ground Friday, February 26th at 12:30pm.

Come 2014, this project could really bring some major changes to transportation through downtown St. Louis. It’s just too bad we have to wait so long.

If you have ever rehabbed a house, rented out an apartment, or even simply lived in the City of St. Louis for any period of time, you are well aware of the ridiculous amount of red tape that the City throws up around just about every issue. A lot of it is necessary, but the implementation has always been wanting.

The Post Dispatch featured a very interesting article on this topic in this morning’s paper. It involves a property at 3500 Missouri in Marine Villa that the City took from an owner. If you haven’t checked it out, its worth the five minute read.

St. Louis City takes 3500 Missouri away from owner

Tucked away, in the heart of the historic Shaw neighborhood of St. Louis, Missouri is a vacant lot. An, unfortunately, common site in this city of ours. But if group of developers has there way, by the end of the year there might something a little different at 4136 Flad: a high efficiently, green home.

This project would be developed by a partnership between The Fit House developers and St. Margaret Housing Corporation in Shaw. The thing that really makes this project stand out, is it’s contemporary design and creative use of natural elements. In this age of technology we live in, people see to dismiss natural ways to control temperature and lighting in homes. This design doesn’t do that. It is laid out in such a way that it will use natural sunlight and thermals to increase the flow of air throughout the house. Not a groundbreaking concept, but a lost art. They also incorporated a green roof into the design to control temperatures.

They will also be incorporating other elements such as solar panels, a hydronic water handler, and lots of insulation to keep energy consumption to a minimum. The design looks pretty exciting too. Very open and modern. And very different from most of the other properties in Shaw. Of course, these differences could be a hurdle in and of themselves.

Approval of the design by the Cultural Resources Office is still a work in progress so changes could still be made. At the very least, the developer seems resigned to the fact that the facade is going to have to be brick to meet the historic standards of the area. Assuming that can be worked out quickly, construction would be started this summer.  When complete, the home would priced somewhere between $250,000 and $300,000.

As history has shown us, a conceptual design doesn’t always mean the finished product will ever see the light of day, but considering the quality of the plan and the private-public partnership, the chances of this coming together seem pretty good. I am told a few more bids and part of the financing for the project are still being worked out, but it looks like this are coming together. Hopefully we’ll be hearing more as summer draws near.

For more info and pics of this project, please visit thefithouse.com.

One of the most important things every investor needs to do before purchasing a property is a profitability analysis. At first glance, many deals seem great, but upon further review turn out to be less than ideal. You just can’t tell for sure until you do the numbers. That’s where this spreadsheet might come in handy.

If you have Microsoft Excel (or OpenOffice), this financial spreadsheet will do the analysis for you.  I find particularly useful when scrutinizing deals as you can quickly determine if a property is worth further research by simply plugging in a  few numbers. Simply enter the rents, expenses and financing and it figures out how profitable the investment will be. Of course, this is a very simplified spreadsheet. It does not account for major repairs, appreciation or tax benefits. However, it should give you a realistic snapshot of an investments potential.

I like to pay particular attention to both cash-on-cash return, which consider real-world financing scenarios, and the always popular cap rate.  The percentage cash-on-cash return tells you how much money you will get back in a given year for the money you put it, while the cap rate is the yearly return assuming the property was purchased with cash.

You can download this spreadsheet for yourself by clicking on this link: Rental Property Analysis. Hope it comes in handy.  If you have any questions or comments of the spreadsheet, please contact me.

After years of dormancy, this project just popped up out of nowhere. In an message to students and faculty of Saint Louis University, the university’s President Lawrence Biondi revealed that a bridge over the railways between Chouteau Avenue and Interstate-64 on July 1, 2010.

Details are very sparse at this point, but it sounds like the bridge will be closed for a year in order to demolish the old bridge, and build the new bridge and Metrolink station. The last renderings for this bridge came out in 2006 so there is no telling what it will look like. But with the construction date to start so soon, you can expect we will be seeing much about this very soon.

I will post any new information that pops up in the next few days, but in the meantime, here is the direct copy of the message from Biondi. A big thanks to urbanstl.com user bk18 for posting this on the forums:

I want to update you on the latest news regarding the reconstruction of the Grand Boulevard Bridge planned by the City of St. Louis. City officials have notified us that the tentative start date is July 1st, 2010. We were also told that the bridge will be closed for about one year.

This $27 million project will completely replace the bridge as well as the Grand Boulevard MetroLink station. Although the closure will be inconvenient, it’s critical to remember that this important project will improve our Midtown neighborhood. Traveling across the bridge — either by foot or in a car — will be safer. The beautification of the bridge will compliment enhancements we are planning along Grand through our Medical Center. We applied for and received a federal grant, administered through the state, which will help fund new lighting, sidewalks, bike lanes and a landscaped, irrigated median along Grand between Chouteau and Park Avenues. A right-hand turn lane from Grand onto eastbound Chouteau also will be added.

The City, Saint Louis University Hospital and SSM Cardinal Glennon Children’s Medical Center are assisting us with this project. Look for more details about these improvements in future messages.

In anticipation of the closure of the bridge, we have been working on plans to minimize the impact on our operations. I will share those plans with you as we draw closer to construction.

With the area having just finished up with the I-64 project and the similar Jefferson Avenue Bridge project, I would image people would be used to the reroutes. Should be interesting.

Although they have been leasing units since November, I just now got a chance to take a look at the recently completed Courtyard Lofts at Polar Wave project. Located at 2222 Gravois Ave in the St. Louis, neighborhood of Benton Park, the 14-townhome project is located in the same building as Shock City Studios and Bittersweet Bakery among other businesses.

When driving by the complex along Gravois, you might miss the residential component to the project entirely. That’s because the vehicle access to the courtyard is in the rear, via Sidney Street. There is a gate-entry along Gravois, but any tenant coming to the complex in a car would come around back. From that angle, they can access the underground garage for the project, which provides 2 parking spots per tenant as well as a bike rack.

Most of the units are 2 bed, 2 bath, but there are a few that are 1 bed due to handicap access and site restrictions. Finish levels seen to be of a very nice quality with concrete floors on the first level and carpeting upstairs. The picture gallery below does more just than I can put to words. Overall, I would say the the project is very impressive. I really didn’t notice anything that I didn’t like during my visit. It looks like the commercial and residential additions provided by the Polar Wave project are going to be a great long-term addition to the fabric of Benton Park.

Prices run from $850 for a 1 bed, 1 bath unit to $1495 for the oversized 2 bed, 2 bath. The units are currently be leased by Julia Mittelstadt of Prudential Alliance Realtors. For more on the units currently available, please click here: available townhomes.

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This might seem a bit off-topic for this blog, but if you are in real estate or any other business, you have likely run into this issue. Clients, agents, and tenants send me documents all the time that are for software I don’t have. Openoffice is a good (and free option) to handle that problem, but there is also a free file converter online that I have been using a lot lately: Zamzar.

The good thing about this method is that there is no need to download any software. This is a webware program that handles all the conversion through a website. The free version can convert just about any file you might have, into a format that you support. I have found this particularity helpful in working with Microsoft Publisher files, which are notoriously tough to work with. It also works with just about any other product from Microsoft, Adobe, Corel, etc.

To use the service, simply go to zamzar.com. Once there, simply select the files on your computer that you wish to convert, what format to convert them to, and what email address to send the files to. It might take a few minutes to process, but when the procedure is complete, a link to the new file will be sent directly to you.

So the next time some sends you a Wordperfect resume that you have no way of opening, consider Zamzar as an option. It just might come in handy.  And its the best price anyone could hope for: FREE.

Filling vacancies in your apartment units quickly can be the difference between success and failure with real estate investments. Looking for tenants anywhere you can find them increases your odds of success, but never forget that not all situations are equal. One area to be especially careful of is when working with renting to family members. I am not talking about renting a unit to a member of your own family, although that can be an issue as well. I am referring to the situation where you have a vacancy in your upstairs unit and the downstairs tenant refers their cousin Billy as a potential renter.  Should you run across this situation I just have one simple thing to tell you: “Be careful.”

The first thing to ask yourself is whether the tenant doing the referring has been a good tenant. If they haven’t, a referral from them should be avoided. If they have been exemplary, it might be worth giving the person a shot, but make sure you run your normal background checks and that the person truly qualifies.

Even if they do, just use good judgment on how you handle things. I have been witness to a few horror stories where two or more units in a building were rented by family members, who seemed to think that since they knew each other that they could do anything they wanted. Keeping discipline in an apartment building can be a challenge in an situation, but things like these can make things even more murky.

You also can face problems if the referrer or referee family member defaults on their lease and you have to evict them. Some tenants might not blame you at all if you evict their relative and they deserve it, but others might walk out on their lease along with their departing kin.

The morale of the story is simply to be aware that things can be too to be true in the world of property management. Should you encounter a situation such as this, just make sure you consider the baggage that comes along with taking on related tenants.

There is no doubt that Grand Boulevard has been on the upswing in recent years. To the north, Grand Center continues to be  a focal point of activity for the arts and education. To the south, Grand South Grand has increasingly become a South City alternative to the Delmar Loop. Tower Grove Park and SLU have really added to the mix as well. However, one of the greatest failures along the street has been the area between Gravois and Chippewa.

To be more precise, the area south of Utah and north of Osage. Discounting North St. Louis (that is a whole other story), this section of the street is the farthest behind in tapping it’s potential. Populated by a variety of suburban-styled fast food establishments, the most rundown Schnuck’s in South City, a former grocery store turned office, cookie-cutter stripmalls, a recent yet uninspired retired-housing project, and a plethora of vacant and underused properties; it doesn’t take a urban renewal specialist to realize the area isn’t all it can be.

I began considering this issue when sitting at a stoplight on Grand at Chippewa. Following the buyout of  long-time flower-shop destination Nettie’s at 3801 S Grand, by Walter Knoll florists last year, the companies former home at Their former home, which is at the intersection of S Grand and Chippewa had been vacant for about a year. I’m not sure when they moved in, but I struck by the new use of this former mainstay: a cellphone selling, convenience store. A step in the wrong direction if I have ever seen one.

A few years ago, things were looking up in the area when the Lawrence Group was working on the South Side Tower and had put forth a development plan for the Melba and Farmers & Merchants buildings at Grand and Gravois. But with the recession, the project came to a halt with no signs of revival. And while Grand South Grand (Grand from Arsenal to Utah) gets street-art and an upcoming streetscape project, this section of the street moves in the opposite direction.

There is no doubt that it is going to take time, money and a lot of effort from a  lot of people to make a big change along this stretch, but that doesn’t mean we shouldn’t look towards the future. A good start would be to include this section of Grand in the 3-lane reconfiguration of the streetscape that is being put in place north of Utah. As it stands, Grand will be three lanes from Arsenal to Utah, five lanes from Utah to Chippewa, the back to 3 lanes for the rest of the route southward.  This back and forth hurts the flow of traffic and prevents this struggling section of South Grands from receiving the benefits of a more pedestrian-friendly layout like the neighboring sections. Lets start there so when the next development boom hits, companies like the Lawrence Group will be able to offer a better product.

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Confusing headline huh? I guess it should really read “Fremont Park in the South St. Louis neighborhood of Benton Park in the midst of upgrades.” Because that is what it is getting. Over the last few days crews have removed most of the sidewalks at the 2.31 acres park, which is located on the south side of Lynch Street between McNair and Salena.

I have been unable to determine the exact nature and extend of the improvements, but it seems that the sidewalks will all be replaced at a minimum. The current layout of the park consists of a softball field, a playground, and a couple of open spaces with benches. There isn’t much too it, but its nice to see Fremont getting  some attention, considering the fact that there are two larger parks in the neighborhood (Benton Park and Cherokee Park).

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Looks like the Shaw neighborhood will be getting another addition to it’s restaurant lineup. Mama Josephine’s located at 4000 Shaw Boulevard, will be offering homestyle meals starting March 2010. Not many details on the place yet, but the sign says they will have dine-in, carryout and delivery.

Located about a block east of Sasha’s on Shaw, the restaurant will be operating out of the commercial space of the former townhome development at Lawrence Street and Shaw.  Not only is this good news for the neighborhood, its also great for the street of Shaw itself. I have written about the development potential on the street before and it’s great to see places like Mama Josephine’s and Sasha’s tapping into that. Check out there website for more info: www.mamajosephines.com

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If you have ever purchased a market-rate or foreclosure property for a quick fix and flip, there is a good chance that you have run into problems with FHA financing. Until now, FHA would not insure any financing on a property that had already sold within the last 90 days.  And since so many buyers are using FHA to finance their homes these days, that is an issue. With a decent sized crew on a smaller property, this timetable required some owners to sit on vacant properties while they seasoned. But as of February 1, 2010 that will no longer be the case.

Due to the current glut of foreclosures on the market, FHA has released a waiver to their current seasoning guidelines for at least one calendar year. Restrictions will still apply to ensure that the program is not abused, but if you are doing legitimate work on a property these restrictions should not pose a problem.

For more on this rule change, check out the official waiver from HUD.

It’s been far too long since I have relayed my thoughts on the state of the investment real estate market, so in the spirit of the season, here is a quick rundown of my current investment market impressions in South St. Louis, Missouri:

• Single-Families – There is no doubt that the $8000 homebuyer credit had a positive impact on house sales in the fall. September and October were especially productive. With the deadline for the credit originally set for November 30th, buyers were in a frenzy to find and close on properties prior to that deadline. Of course, when the program was extended until April 30th, 2010, the sense of urgency wore off. Couple that with the typical slowdown during the winter holidays and the market for these properties has been particularity slow for the past month or so. The good news is that with the holidays now over and the new homebuyer credit deadline  approaching in a little over three months, the market should see a nice resurgence soon. After April 30th though, its anybodies guess what is going to happen. So if you are in the middle of am rehab or thinking of selling a house, I would hurry up.
• Condos – Not much to say here other than to avoid them. There have been some pretty good deals out there as of late, but the big issue is that buyers can’t get condo financing right now. Unless you can make sense of renting a condo or seller-financing it, I would stay away from them until something changes financing-wise.
  
• Multi-Families – Where last year seem to offer a steady mix of 2-family and 4-family foreclosures, the last few months have been very heavy on the duplexes. Since the fall, however, things have been very heavy on the duplexes. Some of the single bedroom properties don’t present the greatest deals, but there heavy been a  fair amount of 2+ bedroom properties that heavy been pretty solid. It seems that a great many of the 4-families out there have already been foreclosed and sold, so it is possible that this might be somewhat of a permanent trend.
• Apartment Rentals – November and early December were great for renting mid-level apartments. We moved a lot of inventory during that time. The properties that seemed to be getting less activity were the cheap units ($450 for single) and expensive ones ($650 for single). There hasn’t been much of a resurgence following the holidays as seems to happen some years. Lots of window-shoppers out there requesting showings, but not many pulling the trigger. Average would probably be the best way to describe the current amount of rental activity.
• Neighborhoods – When looking for investment properties, location and price are always big factors. But the one thing it is hard to control is where all the good inventory is coming from at any given time. Much of last year produced a glut of quality foreclosures and short sales in neighborhoods like Tower Grove South, Shaw and Tower Grove East. But since the fall, things seem to have shifted increasingly eastward, with the best deals coming up in Tower Grove East, Fox Park, McKinley Heights, and Benton Park. Areas further south such as Benton Park West, Gravois Park, Dutchtown and Bevo continue to have a solid flow of inventory coming through as well, obviously rentability and resale remain a concern.
• Best Investment Bets – So what’s the moral to this story? Obviously you should be on the lookout for all types of property in any quality area, but if I had to point you in one direction it would be Tower Grove East. Despite the sluggish economy of the past few years, or maybe even because of it, this neighborhood is really changing fast. There has always been a nice housing base, but the vast amount of foreclosures on derelict and substandard properties recently in the neighborhood has created a huge influx of development in the vicinity. Pricing hasn’t really caught up yet so there remain some pretty good deals. Look out for properties of all types there. Also pay attention to the increasing number of singles and duplexes in Benton Park and McKinley Heights. Benton Park West and Gravois Park within one block north or south of Cherokee is also a place to watch.

Things have been a little quite on the development front in the Forest Park Southeast neighborhood of St. Louis this year. With Amy & Amrit Gill’s Restoration St. Louis starting no high-profile projects in 2009, changes have been slow compared the previous two years. Things might be changing to 2010.

The Post Dispatch ran a full article yesterday on the Gill’s rumored green project along Manchester. Details are similar to those previously reported, with 24 new apartments and about 10,000 of street-level commercial proposed for th vacant lots at 4190 and 4556 Manchester.

The biggest news, however, is that they intend for this project to be no only green, but totally “off the grid.” That’s right, no connection with Ameren UE at all, by using things like geothermal heat, solar panels and wind turbines. Of course, at $3.6 million per 18,000 sq ft building, this project wouldn’t be cheap. And with as much as $250,000 of the projects funds potentially coming from federal stimulus money and $400,000 from federal tax credits, those costs will partially subsidized as well.

One has to wonder if a totally “off the grid” project is really a smart option with the current financial market and limited battery technologies, but one thing is for sure At least the Gill’s can’t be accused of lacking ambition.

Link

Being a landlord or rehabber can be a tough business. Juggling tenants and repairs are a struggle in their own right, but sometimes the most stressful things can less tangible. For instance: keeping up with occupancy codes. And as of late, the City of St. Louis has been rabid in their enforcement.

In the past couple months I have personally experienced incorrect condemnation warnings and heard similar stories from numerous clients. As any City-investor knows, just about any property in a Housing Conservation District needs to be inspected by the City of St. Louis before it can be occupied. These inspections need to occur whenever there is a change in property ownership or a new tenant moves in. Simple enough right?

The problem is that one of the ways the City polices these changes is utility bills. If the gas, electric or water bill user switches at a property it is often as evidence of one of these changes. A warning is typically sent to the property owner followed by eventual condemnation if the owner does not comply. And when accurate, I have no problem with this. The trouble is that the system is not always inaccurate.

Take my situation for example. I rehabbed a house during the fall and just finished with it a little over a month ago. Nobody lives in it and it is not under contract yet, but that doesn’t stop the City from sending me an ominous and threatening letter about getting an inspection. But since it is not occupied yet I am under no obligation to get the inspection. I know this and their language doesn’t frighten me, but it might be different for others.

A more drastic example is from one of my clients buildings. I represented him in the purchase of the property last summer and have been leasing apartments in the building for him. The property is a 12-family, and it currently about 50% occupied. All occupied units have had proper inspections, but the vacant units are being inspected after each is fixed up and occupied. As long as nobody lives in any of the uninspected units it should be no problem right? Tell that to the tenants that got a condemnation notice on their door the day before Thanksgiving. I don’t manage the place, but got a call from one of the tenants I placed in the building that night and he was anxious to say the least. I explained the situation to him and it all eventually worked out just fine, but neither I nor the property owner should have ever been placed in that situation.

Since there is no obvious fix for this situation, the best advice I can give is to understand your rights and responsibilities and keep up with them. In the event of an issue, if you are honest with your tenants any major issue can easily be avoided. Just make sure the communication are always open or you could find yourself in the middle of something that is a little more difficult to dig your way out of.

For the basics on these inspections check out the St. Louis Housing Conservation website.

With the success of the 3-lane configuration test on South Grand, the powers that be decided to leave the bollards and concrete dividers creating the effect in place. The idea was that it would help people get used to the new layout, which is looming. The only problem is that those chunks of concrete are ugly.Enter the Saint Louis art community.

Since those bollards will be around for awhile (who knows how long it will be until the streetscape is actually redone), it seems that some people couldn’t stand to leave things status-quo for the winter. Over the last week or so, nearly all the bollards have been painted. There seems to have been at least three different artists who contributed. Judging by the art styles at least. Its pretty obvious in the pics below.  One of them appears to be Peat “The Eye Guy” Wollinger (http://www.flickr.com/photos/stensoul/) The long concrete divider at the northwest corner of Grand and Arsenal has also been painted, but I couldn’t take a good picture with all the traffic.

Overall, it adds a nice flair to the neighborhood. Even if you don’t like them, its nice to see businesses and residents being proactive in the area. That’s more than can be said of others. Make sure you keep an eye out for them the next time you pass through. Sorry, I couldn’t resist.

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They are still interconnected, but as time goes by they might diverge somewhat. I will continue to refine the site over the next few weeks and have a similar makeover coming to the actual blog. These changes have been a long time coming and when the final product is ready it will be better for both you readers and myself alike. I hope you like what I have done so far.

*NOTE – I am still working out a few bugs in the display for Internet Explorer. Should have those worked out in the next day or so. Also, I need to work on fixing all the blog links on the site so bare with me for a few days.