Land Development Opportunity off Katy Trail

We find a piece of land in a perfect spot just waiting for development off of highly desirable Katy Trail - no remodel needed - a breath of fresh air. A cursory look at the numbers makes it look like this could be a viable option - and great for students too.

Property on Mc Commas

We went to look at a 22 unit property advertised as a "redevelopment opportunity." Boy, was it ever! A dump of a place needing renovations galore- a dream "slum lord" opportunity is what I'd call it. His asking price is way too high for what would even cover debt service, and DCAD lists it as about half of what the owner is asking. A cursory look at the numbers reveals that the property could be a viable option IF we could buy at about half the price and just hold it as it is, only doing necessary repairs as they come up. Fortunately, the tenants seem stable - only 1 vacancy because rents are so low, and of the three buildings, one of them is mostly made up of older people who have been living there for a long time. Once the market for construction loans back, it could be a good redevelopment opportunity. Directly across the street are some beautiful "French Riviera" type condos that have been built, increasing the likelihood of something positive happening with the units on the other side in the future. The land is worth about 3 times what the buildings themselves are worth on DCAD.

Looking for Multi-Family Project close to Students

Tonight I focused on looking for multi-family housing for sale in the SMU vicinity. The "Signature Pointe" property on Lovers and Matilda would be an incredible spot (very close to SMU and near Central Market, banks, Office Depot, bookstore etc.) that's been through the economic down turn - got taken back by a bank from an owner who had planned a new high density "multi-use" zoning, which the neighboring condo owners disapproved of. Compass Bank then sold the property to Jonathan Perlman, a senior housing developer. I can not see senior housing going over well there - seniors walking to the DART rail?? - nonethless, that's what's in the works. So, on to some other property options: Mc Commas and Henderson Ave. Two multi- unit apartment blocks are for sale on Mc Commas. It's perfect for students who love the lower Greenville and M Streets area, but don't want to pay the high rents of the houses in the area. (Rents going around $600-$800.) And - a 4% cap rate seems hard to beat. I'm going to get more info, and research the pro forma numbers some more and see which property comes out on top.

Meeting with a Developer - which Schools need more Housing?

Today we met with the developer of the prestigious Mockingbird Station. We wanted to get a feel for the student housing market, and pick his brain regarding contacts, and any advice he could give. It was encouraging to hear him say that student housing was definitely a great place to be in, along with senior housing. He said that in those two sectors the market was coming to developers as opposed to developers having to chase the markets. He gave us the name of the developer of the new TCU student housing on Barry St., which could be a great contact. He suggested that Waco's Baylor, Fort Worth, or University of Texas Denton would be good places to look for student housing opportunities. He gave us a brief run down of what it would take to launch a student housing development: 1. Obtain the land first. 2. Do a feasibility study and identify potential upside. 3. Get the drawings done. 4. Get financing 5. Construction!

Obviously, it would be ideal to have some sort of agreement in place with the university for the students.

Day 1 - Student Housing Research

Today I started with looking at Market Research for Student Housing in Dallas. The question is: Is student housing in Dallas a good place to be investing right now? The Sperry Van Ness Report shows increasing cap rates for student housing in the last quarter of 2009- statewide. However,for the Dallas specific are, CBRichard Ellis forecasted that multi-family housing cap rates would decrease by 50 basis points in the beginning of this year (2010). Considering the cap rates are slightly decreasing, we need to show investors that our numbers work, even in a "flat or slightly decreasing cap rate" environment.

The "Real Share"Student Housing conference quotes the National Center for Education Statistics: "More and more students are enrolling in colleges and universities away from home – as a result, student populations continue to surge at many colleges and universities. The National Center for Education Statistics expects college enrollment to continue setting new records throughout the fall 2009 through fall 2017 period. Despite the best efforts by academic officials to add new housing facilities, supply is simply not meeting demand."

Here's what the Wall Street Journal has to say about Student Housing REIT's (Sept. 15, 2010 http://finance.yahoo.com/news/Student-Housing-REITs-Are-Low-twst-231852081.html?x=0&.v=1):

" TWST: What are your favorite apartment REIT names right now and why?

Mr. Levy: Right now I really like the student housing REITs, Education Realty (EDR) and American Campus Communities (ACC). I think that the fundamentals have to some degree been left behind in the recovery because they didn't get hit as hard. Given an uncertain economic outlook, all the fears of double-dips and whatnot, you don't have to worry about that with student housing. They're relatively recession resistant, and they're trading at discounts to the group average. EDR in particular is a turnaround story; so they trade at the highest implied cap rate in the group and one of the lowest price-to-AFFO multiples."

Obviously, this is REIT's not the actual physical property. So, I guess I have a bit more research to do, and specifically in the Dallas, Fort Worth market, to see where the greatest needs are, and how viable this investment type is at this time...

The second question is: which schools need more housing? That is my next informational quest.