The St. Louis media

Apparently Post Dispatch writer Paul Hampel really likes his parking spaces. At least that’s what his article in today’s paper leads me to believe. One would think that Montgomery Bank building a 120,000 sq ft mixed-use development in downtown Clayton would be a positive thing. But all Mr. Hampel seems to care about is that the project will displace his favorite parking lot. That’s all his 596 word, joke of an article, focuses on. Am I the only one that find such short-sighted blabber ridiculous? I wish we had a true alternative newspaper in this town. Its thinking like this that’s going to keep our area from ever making real progress.

Backup heating and cooling

Nobody likes handling maintenance calls. Not only are they a pain, but they tend to cost money to fix. And no one likes to pay for unexpected expenses. One of the most frustrating issues a landlord can encounter is trouble with a property’s HVAC system. A downed heater or air conditioner at the wrong time can really put your tenants on edge. If its a holiday or weekend its going to be a pretty expensive fix too. That’s why keeping a backup around is a good idea. The goal is to placate the tenants long enough to get a repair man to the property during normal business hours.

For heating, buy a couple of space heaters at the hardware store and keep them around for emergencies. If you trust your tenants, you might even want to leave these backups in the basement. That way, if a furnace breakdown comes in the middle of the night you won’t have to jump out of bed and drive to the property to offer a temporary solution.

For air conditioning, its good to keep an old window unit somewhere around. Whether you find one on sale at the hardware store at the end of the summer, have an old unit from another apartment or buy a used one, it’s always good to have a backup. If you can offer your tenant some sort of temporary solution while you try to arrange for a repair man to come by it will make the situation much easier. It saves money, it makes the tenants happy and it makes the landlord happy. Gotta love the win-win-win scenario.

New Mississippi River Bridge design unveiled

Just when you think St. Louis lacks imagination, they come up with a really amazing plan like this. Check out this new Mississippi River bridge proposal to link Missouri and Illinois at St. Louis. The arch design would complement our “Gateway to the West” arch quite well. Projections only have this puppy costing an amazingly $817 million. With no tolls.

Oh wait. Sorry. I thought the plans said St. Louis. They really say Dubai. As in Dubai in the United Arab Emirates. I guess we will have to continue bickering over how we are going to finance our $910 million, far less attractive, bridge proposal for now. Its a shame that building this bridge here would cost $5 billion and take 20 years to contract. Sigh.

For more info on the Mississippi River Bridge project check out their website. You can find more on the Dubai Bridge at Gizmodo.

*NOTE - It should be noted that the labor force in UAE is not very well compensated. So its not quite a 1 to 1 comparison here.

Art House development has it right

A while back I posted details on a local project, which I thought had a somewhat inspired design. While I still like what they are doing over there, I must say that another developer, Sage, has managed to wholly capture my intention. They’ve done some good things in the past, but the plans for their next project are out of this world.

Details are scarce at this point, but current plans call for 7 contemporary townhomes to be built at 3732 Grandel Square, in Grand Center just to the north of St. Louis University. The project is being labeled Art House. You can see the elevation mockup above, but more details are available on their website.

This is the kind of development we need to be seeing more of. I’m also thrilled to see an infill project in the often overlooked location of near-North City. I think there is a lot of potnential for these kinds of projects in areas like these and its nice to see a developer with the vision to be a trend-setter rather than follow the “safe” road.

The good thing is that these guys aren’t new to the development world, so this project has a real chance of seeing the light of day. Among others, I’ve been really impressed with Sage’s green townhome project in Tower Grove South and I hope this project follows in that development’s path in terms of quality. For those unfamiliar with that project, the company is a little over half way done with 4 green townhomes at the intersection of Gustine & McDonald just south of Tower Grove Park. This is another on of those infill projects that really have their own look and style rather than trying to unfaithfully mimic existing housing. It looks like Sage is taking that concept to the next level with Art House. Let’s hope this one’s not just another architects pipe dream.

Ugly roadside trashcans

There are just so many little things that I come across in the City that bug me. Individually these things aren’t major issues, but when they start adding up, their impact can really be felt.

One of those “little things” that always gets on my nerves is the trashcans found at the on and off ramps of the interstates in the City. Every time I am sitting at a stoplight getting on or off the highways I see these monstrosities and can’t help but be disgusted. Many times they are overflowing with trash laying all over the ground, but thats not my biggest problem with them.

My issue with these trashcans is their design. Just look at this thing. I don’t think you could build a more unsightly, utilitarian refuse container if you tried. What ever happened to beautification? I’m not asking for a $10,000 trashcan; just something that doesn’t look like it was put together by a local boyscout troop from donated materials.

When County residents or out-of-towners pay a visit to St. Louis, this is the welcome mat they see. It leaves a bad first impression. If we want to bring residents back to the City to fill our apartments or buy our rehabs, things like this have to be addressed. City officials are always looking for big high-dollar projects to transform the landscape. If only they would put as much emphasis on the small, affordable touches. We might might get more bang for our buck.

If anyone knows who to contact to comlain about this issue I would love to hear from you.

Owning for the long term

“There Ain’t No Such Thing As A Free Lunch.” I read Robert Heinlein’s The Moon Is a Harsh Mistress a few years back and this line has really stuck with me. You’ve probably heard this phrase, or its acronym form (TANSTAAFL), uttered before. It seems to mean different things to different people, but for me its become a personal mantra of sorts.

Nothing in this world comes without a price, and the world of real state is no exception. But for some reason, many people fail to realize this. There seems to be a mistaken idea that you can mismanage your investment properties, own them for a short period of time and still make out like a bandit. Well I have news for you kids: that ain’t the case.

Sure you can stumble upon an under-priced property and flip it immediately or in the short term. You can make a lot of money that way too. But those opportunities are few and far between. Not to mention the fact that they take work to find. The reality is that most deals have the ability to provide respectable returns, but you’re going to have to work for it.

The days of quick appreciation are gone. With all the overinflated appraisals and shoddy lending in the recent past, I sometimes wonder if it ever existed in the first place. However, there is no doubt that it’s currently nowhere to be found. We all need to sit back and learn something that the late-night gurus never mention: patience.

The fact of the matter is that buying property is not going to make you rich overnight. If you bought a property two years ago in the height of the market, don’t expect to sell it this summer for a profit. It’s just not going to happen. Over the long-term, however, you should be just fine if you bought into the right properties. The real profit is ownership.

For an example of what I’m talking about, download and look at the PDF financial breakdown for a property I just listed at 4215 Shreve. From the get-go, the property offers a very respectable $274.50 a month cashflow with 20% down. Thats a 23.53% annual return on the initial cash investment of $14,000.

Not bad at all, but the real key to this and any other property is to look at the longterm. Assuming you don’t refinance the property, your mortgage payment will remain the same throughout your years of ownership. The rents on the other hand will continue to go up and up. That just pushes your cashflow higher and higher over the life of the investment. You should also consider the amount of loan principal being paid down over the life of the loan. In the first few years of a loan you’re are paying mostly interest. As the years go by, a greater percentage of your mortgage payment goes towards paying down your principal, increasing your equity in the property.

Looking at the Shreve example lets see the difference a mere five years can make in increasing profitability. Making various assumptions, I have projected that by the fifth year of ownership the monthly cashflow for the property would have risen from $275 a month to $435 a month. The “Year 5″ annual cash-on-cash return shoots up all the way to 37.28%. Over a five-year period that every increasing cashflow adds up to whopping $21,046. Add the amount of principal paid off during that time ($3,286) and you’re ahead $24,332 after only five years. That’s not even considering any appreciation or tax benefits.

What I’m really trying to say with this overly detailed financial breakdown is that there are tons of profits to be made from your properties. The key is that the money doesn’t come from the purchase or the sale, but from your ownership. Improve your properties, push rents, put in at least a few years of your time.

These aren’t lottery tickets to be used as a pathway to easy riches. They are piggy banks that take time to fill up. Your real payoff comes from hard work and time. If you ever start to get impatient, remember that “There Ain’t No Such Thing As A Free Lunch.”

More on the Lemp Brewery redevelopment

The South Side Journal is reporting that this project is “a go.” Despite continued doubts from local observers, Garrison Development reps are saying that they are moving ahead. For a more detailed update, check out the full article.

Regular updates back next week

This is single flu virus magnified to see with the naked eye. Not too intimidating on its own, but when millions of these things attack your body at once it doesn’t feel too good. That’s why I haven’t updated all week: I came down with the flu.

To those who have already been through this this year; I feel your pain. For those who will be afflicted in the coming weeks; Make sure you drink your fluids and get lots and lots of rest. I’m finally on the uphill side of this and should have regular updates again next week. Have a great weekend.

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