Is the Starbucks Effect Real? No. Not Really.

In the past few weeks, there has been a story floating around the internet regarding the “Starbucks Effect” which was made famous in Spencer Rascoff's new book Zillow Talk. While it’s fun to consider, it is not entirely accurate when you look at the entire context around the concept.

When was the last time you were driving in the country and stopped at a Starbucks? My guess is never because Starbucks only puts their stores in urban locations.

The majority of Starbucks are in urban or suburban areas.  Appreciation and home values are higher in these areas than in rural areas.  This has little to do with Starbucks or any coffee maker and more to do with urban and suburban vs. rural.

Homes appreciate more in areas near Starbucks than Dunkin' but let’s simply take a Look at market demographics.  Dunkin' has a strong hold in small communities and also in more economically depressed areas such as parts of the Rust Belt that have not recovered in home prices yet due to major economic factors less than Dunkin' or Starbucks.  Also Starbucks has a higher profit per store and their ideal customer is a business executive or housewife buying a latte.  Dunkin' serves more of a blue collar crowd buying their entire lunch or breakfast.

This isn’t a matter of which franchise coffee store is best for real estate. It’s a matter of urban areas obviously having higher value than rural areas and a case of simple market demographics.

So can a Starbucks location be a good indicator of future real estate prices? Yes, it can. But you certainly shouldn't base a real estate investment on that alone. 

10 Facts to Know about San Diego Real Estate in 2015

San Diego is amongst the most playful cities in the United States. It is a warm, feel-good place that will make you fall in love with its beaches, food and people. In fact, almost everybody wants to live there. No wonder San Diego is every realtor’s dream destination.

2015 is set to bring in happy days for the real estate market here. The San Diego real estate market had become very conservative during the previous years and as a result of that, the number of homes sales in the city decreased by over 15% in year 2013. However, things have started looking up from 2014 onwards, as house prices have seen much appreciation.

Median housing prices are expected to be higher in 2015 than the current levels, as San Diego would always remain a desirable real estate destination. The reviving economic conditions have helped create new jobs, and thus demand for new properties is increasing.

It is difficult to predict actual rise in prices. However, home prices will definitely continue to rise. Government policy may put additional burden on buyers purchasing power, as announcements like  easing policy of purchasing mortgage securities and changing qualified mortgage rules will increase interest rates. Buyers are definitely not going to get many “Bargain homes” this year.

Researchers estimate that it could take almost four more years until the real estate market in San Diego reaches its pre-recession rates.

10 things I learned from flipping 1000 homes

Recently we announced our most important milestone yet, surpassing 1,000 properties acquired, renovated and sold. It took five years to reach this milestone and now we have reframed our focus with a new goal: 2,000 properties in the upcoming 24 months.

In the process of completing our first 1,000 properties, we gained a tremendous amount of knowledge. We’ve realized that many things can go wrong when completing a renovation and while it’s not possible to eliminate these issues, with proper planning, the effects can be greatly reduced.

The following  are our top ten things we’ve learned from flipping 1,000 properties.

1. Resale value of the property can change by the time the property is ready.

Don’t get married to a value that could change by the time the rehab is completed months down the line. Comps can give you a great idea of where you should be but don’t take it as gospel. The market can move faster than you think.

2. You don’t always have to rehab the house, sometimes it only needs some paperwork and negotiations.

Sometimes you can get a property at a hefty discount because of a title or lien issue that might require a little homework to resolve. Some of these issues can take months (or even years!) to resolve so choose carefully and work with a title company you trust.

3. Don’t wait on Title and Escrow companies to finish their work, you need to consistently follow up.

Especially during the holiday season!

4. Add the second bathroom.

This always makes a big difference in the after repaired value.

5. Keep track of your progress.

Making meticulous notes of what went right and wrong will serve you well in the long run. It’s a good habit to start early so you can save time and money with future jobs.

6. Do the math, and make sure you have enough cash.

Running out of capital mid-rehab can add significant delays to your construction and into escrow. Make sure you have enough when you get started and give yourself a cushion in case there are unexpected hiccups.

7. Always look at worst case scenario.

This will ensure that even if you don’t hit your ideal numbers, you are making a profit if you prepare for any contingency. Make sure the deal is worth it even if you hit some delays and surprise repairs.

8. Credit terms and performances are more important than the price.

Making sure you can buy and sell the property with reliable financing will be more important in the long than going with a slightly higher offer that may not close on time, or ever.

9. Minimum whole dollar profit.

Set a limit for minimum profit that is acceptable to you. It’s probably not worth the deal if the percent returns look good but you’re only making a couple thousand when all is said and done.

10. Turn time.

Set rehab timeframes up front that are reasonable but keep a tight schedule. Turn times that run too long can kill a deal.

 

 

 

 

West Realty Advisors: 1,000 Homes in 5 Years

 

I am excited to announce that last week we hit a milestone that five years ago would have seemed impossible: our 1,000th piece of real estate.

Since 2009 we’ve bought residential housing in 26 different states with a strong focus recently on the midwest and northeast markets. We've created hundreds of jobs across the country and through this process we've established a name for ourselves in the industry for quality, integrity and value. 

The real estate industry can be volatile but with the help of our dedicated and passionate staff we’ve always prevailed. Now that we’ve reached the first 1,000, we are ready to raise the bar and have set a goal to acquire, renovate and sell 1,000 new properties in the next 24 months.

I would like to personally say thank you to our incredibly talented staff, contractors, service providers and most importantly our investors who’ve been there for us from the start. We are excited for what 2015 will bring and look forward to providing the same exceptional results to our investors that they’ve grown to expect in the past five years.  

 

West Realty Advisors Participated in Habitat For Humanity

West Realty Advisors is proud to have been able to participate in helping build a home for Habitat for Humanity two years in a row. Habitat for Humanity brings people together to build homes, communities, and hope for lots of families. They offer a hand-up, not a hand-out. Hard working families will pay for their home through sweat equity and a zero-percent interest mortgage. When these families can call a home their own, they help build better communities.