Monday, August 26, 2013

MIrror, mirror on the wall, is my paint peeling?

Mirror, mirror on the wall, is my paint peeling?

When living in a master planned community, I find it interesting to note the attention often paid to community reserves.  I understand that this attention is more than warranted.  The last thing a community wants is to have underfunded reserves.  I just find this situation to be a perfect example of “Do as I say, not as I do”. 
Let me ask a question.  How often do you take a critical eye to assess the reserve needs of your own home?  Your home is no different than your community in terms of its replacement needs.  Your roof, paint job, air conditioner and appliances, to name a few, will all most likely fail at some point during your home ownership.  Let’s take a look at what this means financially:

Item                      Replacement Cost           Longevity            Recommended Yearly Reserve

Roof                      $15,000                                20 years               $750

Exterior Paint      $2,000                                   7 years                  $285

Air Conditioner   $2,000                                   15 years               $133

Appliances          $4,000                                   20 years               $200

Miscellaneous                                                                                  $200

Total Yearly Estimated Reserve                                                  $1,568

I understand that purchasers of new construction may be thinking that these timeframes are too far out in the future to be concerned about.  However, let me put it in perspective.  If you buy a new home with young children in the house, you may find it interesting to note that these timeframes correspond fairly closely with the same timeframes that your children may be entering college.  So, while you are also putting money away for that college fund, you may also want to set aside dollars for home reserves.

For those buying re-sale homes, the need for reserves becomes even more dramatic.  After taking a good deal of your savings to put down towards the equity in your new home, you may find yourselves hard pressed to find required replacement dollars in a much shorter period of time.  Setting aside reserves early will greatly help lessen that burden.

So, next time you are badgering your HOA board about whether or not your community has sufficient reserves for common elements, try to remember the saying that people who live in glass houses do not throw stones.  Look to your own reserve needs as well.

Until next time…

Keep kicking the dirt!

Wednesday, August 21, 2013

Otis (the elevator), my man!

Otis (the elevator), my man!

Before today’s current information age, what would you say is the most important invention/creation of mankind?  Fire?  The wheel?  The printing press?  Electricity?  The car?  All good choices.  I am not sure there is a correct answer.  However, I offer up for your consideration a lesser thought of invention that I believe is equally important to the world as we know it today.  The elevator.  You may be asking yourself why the elevator, and how does it tie to the general real estate development blogs that I am known for internationally.  (Really.  My Google stats show I am read internationally.  Go figure.) 

Let’s take a step back and review development patterns.  More than anything else, people need to live within proximity of work.  That used to mean that population centers needed to be clustered within easy access to central business districts.  Then, with the growth of the automobile, suburban sprawl occurred, allowing for office parks and corresponding housing developments to be spread out in previously more desolate area.

However, the ability to densely pack commercial and office real estate is what drives the need and desire for more people to live in concentrated areas.  Now, real estate is a fairly finite commodity.  However, air rights are a bit more flexible and elastic in their usability.  Hence, the elevator.  Without the elevator, you would never have major metropolises with millions of square feet of office and commercial space, and the corresponding millions, and in some cases tens of millions, of residents.  Instead, you would be limited to a landscape of three and four story walkup buildings at best.

OK.  Now that I have made my point, so what?  Well, let’s agree that commercial development is a major driving factor in residential housing patterns.  You can even prove it by looking back to the middle ages.  Everyone lived around the castle.  The castle offered protection and all farming was done to serve the king in the castle.  Hence, you lived around the castle.  At that time, the castle was the macdaddy commercial building of the area.  Now, the skyscraper, courtesy of the elevator, is the driving force behind how we live.  We need to live close to work and the elevator allows for an awful lot of office space in one location. 

Let’s fast forward a bit now.  With the advent of social media, do we truly need office buildings?  We can conduct face to face conferences by video, even by using our cell phones.  We can send large documents through e-mail, as opposed to either snail mail or overnight delivery.  We can even scan and download documents instead of needing storage files for hard copy documents.  So, how long will it be before we render the elevator unnecessary by no longer having the need for commercial office space?

Everything evolves, and this evolution affects everything around us.  (What a great transition to housing.)  Think about what growth in social media will do to your housing of the future.  We traditionally think we will live in our homes forever and that our homes will service all of our needs.  However, indoor plumbing did away with the need for outhouses.  Garages became necessary with the popularity of the automobile.  Parlors have given way to living rooms which have, in turn, given way to great rooms.  Entertainment centers have morphed into wall mounted televisions and home phones are becoming irrelevant on a daily basis.  Think about how long it may be before a remote office space is unnecessary.  Will home office spaces or flex spaces become the norm in home design?  Or will the continued evolution of social media completely change office work habits to the point where housing needs change in ways that we cannot even begin to fathom today.  Will the housing of today be perceived in the same nostalgic way we view housing from centuries past?  Who knows?  The only thing we do know is that the world constantly evolves and that today’s world is changing faster than ever. 

In the future, as our grandchildren find themselves lounging in their new homes that have construction methods and functionalities that we cannot even begin to contemplate today, it may not be surprising to see them sharing old tales of their childhoods with their own grandchildren and explaining how fun it used to be to visit their parents at work by riding up to see them in an elevator from the turn of the millennia.  The children, though, may not be listening.  They may be playing with their new state of the art social media devices.

Until next time…

Keep kicking the dirt!

Friday, August 16, 2013



Power corrupts.  Absolute power corrupts absolutely.  And then there are ARBs (Architectural Review Boards).  Now, before I go too far, let me acknowledge that individuals that serve on these community committees are unpaid volunteers.  They should be applauded for both taking a part in the oversight of, as well as working to maintain, the integrity of their communities.  I recognize that.  However, service is a cruel mistress (or double-edged sword or two-way street – feel free to pick your own analogy).  If you are going to assume the obligation, you need to be answerable to the responsibilities.

With that as a set-up, let’s discuss the issue.  Even with good intentions, I have seen on too many occasions reasonable requests for improvements and modifications denied by ARBs under the auspices of non-conformance with Architectural Review Guidelines.  If it is not in or contemplated by the guidelines, it is disapproved.  OK.  Let’s stop right there and repeat the name of their governing document.  It is the Architectural Review GUIDELINES.  It is not called the rulebook or the hard and fast, unyielding cast in stone criteria.  In Wiktionary, on-line, the synonym for “guideline” is “rule of thumb”.  Maybe we should rename these documents as the Architectural Review Rules of Thumb.  Unfortunately, I have seen, more times that I can remember, ARBs making decisions based on the strict interpretation of the ARGs (Architectural Review Guidelines – appropriately shortened to the acronym ARG!).   What these committees often miss is that the ARGs were never meant to act as hard and fast rules.  They are always, and I truly mean always, meant to serve as a directional guide for the aesthetic integrity of the community.  As the community grows and matures, these ARGs (I really do like typing that) are supposed to grow and mature with the community, not to act as a detriment to good ideas.

If individuals understood how ARGs are put together, maybe they would be more understanding of the intent.  See, no one ever seems to ask how they were created.  Wait!  You want to know how the ARGs are typically created?  I thought you would never ask.  I will proceed with a scaled down explanation.  As a community is planned and as development begins, either the development or the property management team, in conjunction with exceptionally expensive consultants, will brainstorm as to the thematic nature of the community.  Once a community theme is developed, they will often, though not 100% always, create ARGs, also sometimes noted as a pattern book for the community, detailing all the elements necessary to maintain a degree of aesthetic integrity for the community.  There is also almost always a clause in these documents that states that anything the Developer does in the community will be in conformance with these ARGs.  Do you know why this clause in inserted?  It is because the Developer creates the ARGs before anything is done in the community.  That means that there is a good chance that either a) the Developer has not thought of everything, or b) the Developer may have made a mistake that they want to correct. 

Think about these facts for a second.  ARGs are established before anything is developed in the community.  They are specifically noted as GUIDELINES.  The Developer can make changes at will.  And yet, when the homeowners take control of enforcement, they often adhere to strict enforcement as opposed to seeking the broader intent of what was intended.

I know I may be acting a bit harsh here.  As I stated at the beginning, individuals serving on these committees should be applauded for their efforts.  However, the next time a controversial item is brought before the committee for approval, please take the time to seek to understand the intent of the ARGs before rendering an opinion that will truly make your neighbor say ARGHHH!

Until next time…

Keep kicking the dirt!

Sunday, August 11, 2013

The more things change...

The more things change…

My blogs typically focus on forward thinking real estate advice and insight.  This week, I have decided to be more reflective and share some personal thoughts and experiences.
In about a week, my house will become a quieter place.  Both daughters will be in college this fall.  One daughter will be studying abroad, while the other will be a college freshman, leaving just my wife and myself to get to know each other all over again.  It has made me take a step back and look to the past to my own homeownership adventures.

I remember being extremely anxious when deciding to purchase our first home.  We were originally looking for a home closer in to town, only to find a brand new subdivision with decent production homes and killer price points, but a bit further out than we had originally planned.  However, good prices, strong floor plans, lakes and amenities won over the day.  We had just had our first child, so we were interested in the number of young families buying homes, proximity to elementary schools, a third car garage for storage and sufficient bedrooms to keep the family growing.  Being young and upwardly mobile, I was not that concerned with energy efficiency, community control, adequate reserves and HOA fees.  It was all about the needs of today and establishing roots for a new, growing family.
My second home was in a different part of the state.  In this case, there was an existing custom home community that was about 70% sold out.  We bought a vacant lot and proceeded to design our dream home.  I learned from what was missing in my first house and planned it accordingly.  In this case, it was all about the details and finishes.  Ceiling heights, cabinetry, flooring, countertops, that sort of stuff.  I had achieved a degree of professional success, and this was the house where I was going to show it off.  School districts were still important, but, once again, I was not focused on cost of ownership issues as my economic future remained bright.

My current home is an older home in another part of the state.  In this case, it was all about location.  Location to schools (always a concern until college hits), access to downtown, shopping etc.  I refused to be in an inconvenient location for the sake of home value.  Also, I was now comfortable with a home renovation project instead of buying new.  (Professional aside:  For those truly interested in home renovation work please note the following:  Set aside more than you budget.  Plan on it taking longer than you anticipate.  Pray your marriage is strong enough to weather the bumps in the renovation road.)  We have now been in this house long enough to see the kids finish school, live through a series of hurricanes, and have the house prove to us that nothing lasts forever – new plumbing and new roof to name a few (these were in addition to the home renovations). 
We have also lived here long enough to see the community change and mature.  This is actually something that most people don’t give enough consideration to during the purchase process.  It is neither good nor bad.  It just is.  I call it the aging in place of a community.  You can always measure a community’s aging by Halloween.  At first, we would have tons of kids every year.  Then, we noticed that the kids were getting older (no more parents taking them around) and, more recently, that there were fewer children coming by at all.  Hence, the community has gotten older.  It is interesting to see this phenomenon taking place.  The location is still desirable, but with only 5 – 10% of the area changing hands every year, it will take quite some time for the area to turn over to young families again. 

I am not sure what our next home will be.  However, if I were to guess, I would assume that it would be a smaller home.  One with bedrooms for family visits, not for family permanence.  (Please, oh please, let my children be gainfully employed after college!)  One that does not require much of a mortgage so that we will not have to dedicate a sizeable portion of our resources to home affordability.  Energy efficiency will also be important as we cruise into the fixed income years.  Finally, it will probably be one of low maintenance.  Getting on the roof to clean the gutters a couple times per year is getting tiresome.
So, you ask, what is the point of my trip down memory lane.  Well, outside of the nostalgia, there are a few items to consider.  At each home purchase, we planned on living there forever.  As we learned, nothing is forever.  Second, what fit our needs in our early years changed as our tastes and needs have changed over the years.  Third, a home is a living thing.  Treat it right and take care of it and it will take care of you for many years.  Neglect the home and it will bite you in the butt for those items that you have ignored.  Lastly, respect your home as a friend.  Allow your relationship to grow over the years.  You will have good times.  You will have bad times.  But realize that you are tied together and will mature together. 

So, when your home is quiet and you hear the whispers in the night, they are not all the whispers of your own memories.  You may also be hearing the heartbeat of your own home, reminding you that your relationship together has a long way to go.  Remember, it is not the destination, but the journey.  Enjoy the ride.

Until next time…

Keep kicking the dirt!


Monday, August 5, 2013

If things don't change, I will have to join NASCAR

If things don’t change, I will have to join NASCAR

How often have you visited a new development and been told all the wonderful things that are going to be constructed during the build out of the community.  Parks, pools, clubhouses, new schools and all the other fabulous things that make a community uber-attractive.  Now, let me ask you a question?  How often have you paid attention when the conversation turns to the off-site road infrastructure that will be built over the years.  Specifically, how often have you paid attention to any discussion that may have occurred regarding the installation of traffic lights.
While traffic signalization is something that is often overlooked when making a purchase decision, it is amazing how noticeable it becomes after you move into your house.  It is also not just the signalization at the direct entrance to your community.  It may be the missing traffic lights on ancillary streets that you drive on to reach your community. 

It is also something that sneaks up over time.  Early on in a community’s development, traffic patterns may be light and it may not be much of an issue to just look both ways before gunning it to make that left hand turn out of your community.  Then, you wake up one day to find that the once quiet main street is now full of morning commuters and that you are facing an incredible amount of stress crossing what was once an easy intersection.
The answer to this problem seems to be staring you in the face like a red, burning bright light (Yes, the symbolism is intentional).  Install a traffic signal!  It seems like the easiest thing in the world to do.  Obviously the developer will install it when the community feels it is necessary.  They want to sell homes and they want the community to support their efforts.  So, why hasn’t it been installed?

Here is the rub.  Regardless of whether or not the developer is obligated to install a traffic signal and whether or not the homeowners want one, the Department of Transportation needs to sign off on a demonstration of need to have one installed.  The nice thing is that usually the needs of the community and the needs of the DOT are typically aligned and that needed stop light is usually installed in an appropriate timeframe.  However, it sometimes does not happen as expeditiously as some would like. 
So, understand that traffic studies and demonstration of need is what determines the installation of a traffic light.  If you feel one should be installed at a local intersection that does not yet have one, you may still want to call your developer.  However, you may want your first call to be made to the Department of Transportation.

Until next time…

Keep kicking the dirt!