Blown Ashore in a Storm

With yesterday's vote, the federal government will soon be injecting pure sugar into the veins of our economy which could delay the recession we have been waiting for.  Speaking of over stimulation (and its after effects), I think 8 year old Texas Ranger Bobby said it best in Talladega Nights when he told his grandfather he was "all jacked up on Mountain Dew!"  

The minutes do click by slowly when waiting for an 8 year old boy to crash after sugar and caffeine or an 8 year old expansion to crash after a big tax cut.  So get yourself another margarita, spin up the Stones' "Time is on My Side" and make the best of it.

In other news, two members of our Del Boca Vista posse have now purchased property in Edmonds and it turns out to be a fun little town with great views, good walking, and a growing list of eating and drinking establishments.  The oldest town in Snohomish County, Edmonds was founded in 1890 and the census says it counted 40,490 souls in 2015. 

Apparently a logger named George Brackett had his canoe blown ashore in a storm in 1884 and avoided admitting he was lost by forming a town and saying he was home!

These days, Edmonds is benefiting from its great location and the fact that it is not governed by those social experimenters in Seattle or King County.  

To further investigate the opportunities in Edmonds, I am expanding our analysis engine to include Snohomish County data.  While waiting for that you might want to check out this interesting article in the Seattle times talking about how few condos are being built in Seattle and why.

I particularly like the quote towards the end where a state lawmaker was asked about changing the laws to encourage more development and he said he had no interest in helping “the rich Seattle developers.”

The next section of the article states that the developers currently building condo projects in Seattle are from Vancouver BC!  It is worth reading and also has many links to other articles and research you may find interesting.

If you find yourself wandering near Edmonds in the near future, you may want to check out the Churchkey Pub.

Here is a link to a My Edmonds News article about it.

Ugly Enough?

I have been tinkering with my real estate data analysis machine lately so now we have the ability to look at all of the sales of condos in a condo building.  This is a nice addition to our analysis toolbox.  First we establish a list of desired characteristics (age, location, number of units...) and use it to create a map of buildings, then we drill into the building and look at each of the sales.

We can create a map of 243 condo buildings built before 1980 with between 20 and 40 units:

We are quite taken with Alki in West Seattle, so we can drill into that area:

And then we can find the ugliest one (not super scientific...) but I think you will agree!

1156 Alki SW, Seattle

And now we can evaluate each of the sales back to 1996.  The building was built in 1966, but we can only get the data back to 1996.  Strangely, the data availability seems to vary quite a bit building by building.  Unfortunately, we do not quite have enough data on this building to calculate a historical average hold period.  We could apply our research from the overall market for 1 bedroom units of approximately 8 years.  From this we see that 13 of the 22 units have exceeded the average hold period.

Building built in 1966 but data only available from 1996 to present.

Remembering our guiding criteria of ugly + view + walk to the bar, this property is pretty good.  The picture speaks for itself, and it is located on the point at Alki with a full sound view and if you look to the right, a view of the city.  It is a 12 minute walk to the passenger ferry to Seattle, a 17 minute walk to Salty's, and a 28 minute walk to the Nook.  Thank goodness someone invented Uber, because this place looks great, but I am not sure I want to walk 28 minutes up that hill.

The NOOK on California Ave SW.

As we look at these buildings, more criteria is emerging.  Here is a list of things we may want to consider:

1. Parking:  A good, secure and navigable parking garage.
2. Unit Size:  This building is 640 square foot, 1 bedroom units.  (the last one was 1,200 square foot 2 bedroom units)
3. Number of Units:  This building has 22 units -- smaller buildings will be easier to take over, but will not support as many amenities.

In the end, I am thinking this building is ugly enough, but the units are too small and there may not be enough of them.

We will keep pointing our new analysis machine at these buildings and see what we can learn -- and continue to wait for that market correction.

Feel free to leave your comments!

First Miss

We launched the Del Boca Vista project a couple of months ago based on an idea (wanting a fun place to live with our friends someday) and an aspirational list of qualities for the property we wanted to find:  1) Ugly/run down, 2) Great view, and 3) Walk to a great watering hole.  

A couple of weeks ago, less than 60 days into the project, we thought we found a perfect property: 2104 Alki SW in West Seattle.   This property checked all of the boxes on our high level list, but in the end did not turn out to be suitable for our project due to a pretty heavy restriction on renting the units.  Our plan only works if we can each rent out our units until we decide to move in.

This is only a small disappointment because we are also waiting for the market to correct -- so at this point our search for properties is really just educational.

Our evaluation of 2104 did advance our education though.  The property is ugly with 1973 rock on the outside and a goofy little tiny pool and a killer view.

As an added bonus, it has a great underground garage, and large two bedroom units, and is just down Alki from the big beach -- so there would not be so much noise or beach traffic in the summer.

The third leg of our evaluation is proximity to a great watering hole.  Just 15 minutes walk down Alki we found the Alki Beach Pub which does seem to satisfy our needs -- but I am going to have to do a bit more research to make sure!

Looks like good food, live music, and a very interesting crowd.

In the reading of the condo association rules, we did find several negatives.  As I mentioned above, there is a tight restriction on renting units.  There is also a prohibition on pets, and strict noise limits (no musical instruments...).  On the one hand, these restrictions are likely to keep the prices down.  On the other hand, it presents an insurmountable hurdle on our purchase and hold strategy.

So we will keep looking and waiting for the market to reset.

How to help Hurricane Harvey / Irma / Maria Victims

Hurricane Maria forecast from NOAA as of 5 PM AST Tuesday (2 PM PT)

Unlike Jerry Seinfeld's fictional Del Boca Vista which cannot be harmed by extreme weather events, millions of people in the real Florida and Houston, and the Caribbean have been impacted by Hurricanes Harvey and Irma -- and soon to be Maria.  If you are inclined to help, please let me know or follow the links below:

I have contacted the five rotary clubs in the Florida Keys and asked them what they need most.  Two have responded so far and both requested building supplies in the form of Home Depot gift cards that they will distribute to needy people in their areas.  

In addition, Rotary International has set up this site to collect donations.

Also, ShelterBox is a Rotary supported not for profit that provides temporary shelters to victims of weather and other unrest.  Here is the ShelterBox website.

The Red Cross is also a highly regarded place to donate.

Let me know if you want to get more involved.  (jaycleon@gmail.com)

Everest, Rainier, or Mt. si

I have ideas all of the time and most of them are not worth the pennies of electricity my brain consumed making them.  Lucky for me, Lindsey never holds back and helps sort the good from the not so much.  When we started talking about the Del Boca Vista project, it was lightning.  

We floated Del Boca Vista in conversations with friends and they seemed to like the idea too.  Who wouldn't be interested in spending some of the post empty nest years living with friends in a fun place?

Then, I got involved with ANEW Apartments in Seattle, building micro apartments on Capitol Hill.  When we toured the 49 finished luxury micro units at 1722 Summit we looked at each other and said - this is what we were imagined Del Boca Vista would be like -- just filled with all of our friends.

Getting from our idea to a real place to live is no small project.  It might not be Everest, but it is at least Rainier.  A large sequence of events that all have to go just right in order to get to the top.  To get to the top of our project we have to assemble our group of friends, find the right site, design the improvements, arrange funding and financing, get permits and approvals, and build it.  Chances of success seem minimal! Someone once said, doing a start-up is easy: it's like jumping out of a plane with the makings of a parachute -- all you have to do is sew them together before you hit the ground!

While we were joking around about Del Boca Vista, I was doing an analysis of the condo market in Seattle and trying to build a model based on the hypothesis that condo prices are more volatile than home or apartment prices, and therefore may be an early indicator of a change in the economy.  And then the two ideas met and it was love immediately.  Assemble Del Boca Vista one condo purchase at a time!

Our friends might be similar in age, but everyone is on a different timeline and nobody is ready to pull the trigger on retirement living just yet.  So each of us buying a condo in the same building as they become available and their personal timing is right -- reduces the complexity of the project.  Now we are climbing Mt. Si, no training required -- just pack a lunch!

Launching the Del Boca Vista Project

Lindsey and I are excited to be launching the Del Boca Vista project today.  Don't get too excited yet because so far it is all talk!  Action will follow soon though, as we search for the first ideal condo building.

The idea is simple. Over the next several years, individuals in the Del Boca Vista Project will buy condos in the same building -- creating the best neighborhood ever!  Early buyers will rent out their units while the neighborhood is forming and the building is being improved.  Ultimately, we will each have a nice place to call home, with great neighbors, and a good investment.

We plan to pool our efforts so the work of buying, renovating, and renting out the units is as easy as possible.  We know many questions need to be answered.  Who will buy the first unit?  How do we make sure Del Boca Vista people are not bidding up each other in the purchase process?  What if we never get complete control of the building?  What if we get control but cannot agree on the improvements?  These are all good questions we will be working together to address in the months ahead.

If you have thoughts, feel free to contribute to the conversation in the comments below.  If you know of someone that we should include in the Del Boca Vista Project, please have them sign up here.

Sincerely Yours,

Jay and Lindsey