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Example of a New Trend in Real Estate

Three Squared Inc is developing a luxury multifamily residential property in Detroit using refurbished shipping containers in construction. This is the first such development in the United States and the hope is that this design can be easily replicated for future projects. Construction is slated to begin later this year. I chose this project because constructing residential properties using shipping containers is a very intriguing niche to me. It presents an excellent example of reusing materials in an unique and potentially profitable way. In addition, this project provides an opportunity for families to live in dwellings constructed with shipping containers for a lower price than they would pay for single family homes constructed with the same materials. It will be interesting to see if this new project results in a more widespread trend in U.S. real estate.

http://www.jetsongreen.com/2012/12/shipping-containers-used-in-multi-family-home-build.html

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Summer 2013 Real Estate Investment in Argyle, TX

If I were investing in real estate in Argyle, TX this summer I would invest in retail space. Argyle is currently under-saturated in terms of retail property. The population of Argyle has increased by 39.7% since 2000 and retail development has not kept up with this explosive population growth. Argyle is in Denton County, which has lower amounts of retail property per 10,000 population than the Texas average in every major category (grocery stores, supercenters, specialty stores, convenience stores, and restaurants). That number is also skewed upward by the relatively high concentration of retail properties within Denton’s city limits. In addition, Argyle’s average household income is nearly 3 times the state average, and the average daily commute to work for Argyle residents is over 30 minutes.

There is significant profit potential in providing Argyle residents with retail options closer to home. The large majority of Argyle residents travel to Denton or Roanoke to do their shopping, both of which are approximately 15 minutes away from Argyle’s town limits. Currently, there are no grocery stores in Argyle, only two gas stations, and only one small strip mall development that has been notoriously poorly managed. I-35 W, TX 377, and TX 407 all go through Argyle. Only one of 3 Argyle exits off of I-35 W is developed in any way, and multiple hard corner properties in Argyle are completely undeveloped. In short, there exists considerable opportunity for the right investor to enter into the Argyle retail real estate profit and earn a very nice return.

Sources:

city-data.com

U.S. Census Bureau

 

Foreclosure

The following link goes to an article in the Huffington Post concerning an interesting non-judicial foreclosure case in which the homeowner challenged the legitimacy of the foreclosure by asserting that he had been misled by a representative at Wells Fargo. The homeowner applied for a loan modification in order to lower his payments after his business slowed down as a result of the economic downturn. He then received a notification that the modification had been denied, but the Wells Fargo representative assured him that it was sent by mistake and instructed him to continue making the lower payments. The homeowner then began to receive foreclosure notices. Concerned, he checked his credit report and saw that Wells Fargo had reported him delinquent on his payments. Wells Fargo had been putting his reduced payments into a separate trust and not towards his mortgage. He later challenged the foreclosure in court but lost his case. This Huffington Post article might be somewhat biased in favor of the homeowner, but nevertheless the facts in the case are disconcerting.

http://www.huffingtonpost.com/home-defenders-league/foreclosure-horror-story_b_2718840.html

My Hometown

My family has lived in Argyle, TX since 2004. I was not born in Argyle, but I consider it my hometown because I lived there longer than anywhere else and spent all 4 years of high school there.

Although Argyle was originally founded in 1881, significant growth did not begin to occur until the end of the 20th century. Since 1990, the town’s population has almost tripled in size. The vast majority of this growth comes from families moving to Argyle in order to escape the congestion and environment found in metropolitan DFW.  As a result of this rapid growth, property values in Argyle have risen rapidly since 2009, which in turn  has drawn wealthier families to move to the town. This has resulted in an increasingly affluent population.

Traditionally, Argyle’s economy and culture was built around agriculture. The recent explosion in growth has significantly changed this. The incoming suburban and urban families have begun to change the culture of this rural area. Despite the growth, Argyle’s population is still under 4,000 and much of the land is still owned by native Argyle families. This is much to the dismay of developers because there is huge profit potential if these large tracts of land were opened to development. Many town hall meetings have centered around this debate: should the citizens work to maintain Argyle’s rural environment, or work to open up more land to development?

The town is deeply split on this issue, but the majority of the population and local government seems to be committed to protecting Argyle’s rural feel. The only commercial establishments in Argyle are three local restaurants, a Subway, a gas station, a veterinarian’s office, a real estate brokerage, a doctor’s office, and a couple small stores. There are only two traffic lights and no grocery store. A developer recently abandoned his attempt to develop a parcel of land into a small grocery store upon facing significant opposition from the community. It remains to be seen whether or not Argyle will open up to more development, but many think that the town’s growth will taper out in the short run.

Argyle is not what one would call a diverse community. As of the 2010 census, 95.9% of the town’s population is white. The town is relatively homogeneous in terms of beliefs and culture as well. Much of town life revolves around the school. Friday night football games routinely draw 5,000 spectators and Argyle’s “rush hour” occurs at the beginning and end of the school day. In short, Argyle was a typical small town before it began significantly changing as a result of DFW’s urban sprawl.

Argyle%20High%20School

imagesCA70WMCC

The second photo is of Pilot Knob, a heavily wooded hill on the outskirts of town. It is rumored that infamous outlaw Sam Bass stowed a small fortune of gold coins there after robbing a Ft Worth bank. My friends and I spent many many hours on that hill searching and never found a thing.

Guest Lecture Synopsis

The guest lecture on January 28 focused on a local development project and all the hurdles involved in making the project a reality. The aspects of the lecture that will stick with me the most is the difficulties that can arise in a seemingly simple project and the importance of details to the profitability of a project. For example, the lecturers discussed how they managed to classify the parcel’s use as agricultural until they are able to sell the propery. If they had been forced to classify the land as commercial, the resulting tax bill would have eaten tremendously into the overall profit of the project. Another potential dealbreaking issue that arose involved a relatively small oil leak. This issue could have been much worse and completely ruined the profitability of the development. The investor was realtively lucky given the circumstances, although I doubt it seemed that way at the time. If I had to take just one lesson away from this lecture, it would be to make sure I have an excellent real estate lawyer if I were ever to attempt to develop a parcel of land. In some cases, the quality of legal advice may be almost as important as the quality of the real estate itself.

Public Restrictions on Real Estate

A public restriction on real estate is a limitation on a real estate owner’s title by a governing body or public authority.

For example, under the power of eminent domain, a government can acquire property for a public use even if the owner doesn’t want to sell, as long as the owner receives just compensation. An interesting news event involving eminent domain recently unfolded in San Bernardino County, California. The county and two of its cities had considered using the power of eminent domain to seize troubled mortgages from banks and write down debt for homeowners. The idea was extremely controversial and was recently dropped. However, county authorities say that they will continue to look into this option, so this story may not be over just yet.

LA Times: San Bernardino County abandons mortgage plan

Private Restrictions on Real Estate

A private restriction on real estate is a restriction or limitation placed on a real estate owner’s title by a private entity (an individual, a business, etc).

One example of a private restriction on real estate is adverse selection, which allows individuals to acquire title to real estate they do not own because they have openly possessed it for a statutory period of time. A bizarre dispute involving adverse selection is currently unfolding in Boca Raton, FL, which just so happens to be where I was born. A man has been “squatting” in a $2.5 million mansion, attempting to gain title to the property through Florida’s adverse selection law. The property is owned by Bank of America, which recently foreclosed on the property in July 2012. Shortly after the foreclosure, the man moved into the house and lived there until he was evicted by Palm Beach County last week.

Fox News: Squatter Lives in $2.5M Mansion Citing ‘Adverse Possession’ Law