Ogden Redevelopment: Update June 2011 - Walmart, Earnshaw Building & Berthana Building

Investment and redevelopment in Ogden continue on several fronts.  I wanted to highlight several more projects that are ongoing:
 

The Earnshaw Building

The Earnshaw Building is located just south of the Children's Treehouse Museum in the The Junction located at 23rd Street and Keisel Ave.   It is a mix of 32 residential condominium units and retail space on the main level.  The residential units and much of the retail space remains unfinished.  Deseret Book occupies and operates its space on the ground level.

The Earnshaw Building was recently purchased by Beckstrand and Associates after it was foreclosed on last summer. The collapse of the real estate market in 2007 put real strain on the original project owner and ultimately the project needed to be reset through a write off bad debt and change in ownership. 

The Berthana Building

A recent Standard Examiner article reports that a significant sum of $750,000 is being invested for capital improvements into the building.  The edifice is being reworked to accommodate an upscale medley of businesses including an enhanced sports bar and entertainment venue. 

(Photo courtesy Standard Examiner)

 

The structure was constructed in 1915 and boasts some very classic mission style ornamentation.  It is located on 24th Street just east of Lincoln Ave. and across the street from The Junction. 

(Photo courtesy Standard Examiner)

It will be a wonderful place when finished.  The exciting part of this project is that it is all being done with private investor capital. 

Walmart

And finally we have the opening of Walmart at 20th St. and Wall Ave.  Unlike most of the "Blue Whale" stores that you see, Walmart agreed to follow city guidelines and add some architectural appeal to their store to give it, and the area, some dignity.  I am pleased with its appearance.  Also, my recent shopping experience there was quite enjoyable.  The store and patrons were very pleasant.

As you can see from these photos, the store is a positive economic force compared to what was once there.

Before

After

Ogden's investment in the future continues...

FOR SALE: 2 Bed 2 Bath North Ogden Condos

If you are looking for an affordable condominium in North Ogden, look no further.

My client has 5 units in the Sunbrook Condominium complex for sale.  Two are upstairs units and three are ground level units.  Each unit is 1050 SQFT and comes with a master suite. 

Please see the video tour of unit #A7:



Also, all four units in building F are available as a package to interested parties.  Please contact me for current pricing and HOA information. 

Photo of the Day: Faux Window Wonder

I found this while viewing bank owed properties this week.  If you ever have a broken window, just put up a piece of plywood and paint in a new one.  Brilliant!

Investment Nightmare: Worst Case Scenario Comes to Life

It appears Ogden's reduction in rental supply continues...

When shopping for investment property with clients, one of the things I always encourage my clients to do is to get a home inspection.  There is a reason I suggest this.  The following example is NOT one of my clients. 

The fourplex at 2807 Quincy Ave. was a splendid craftsman style building with architectural charm.  Here is a photo from a couple years ago:

Here is a photo from this morning:

What was once an adorable property is now a dirt lot.  So what happened to this fourplex?  I know it didn't burn down.  I also know that several years ago the owner made some major (i.e. $50,000) foundation repairs due to some settling.  So, I pulled the title abstract to find out more.  Here is a copy of the most recent title history:

The title abstract reveals that the owner refinanced the property with Zions bank in July of 2008 for $220,000. Then in November of 2010 we see this "ORDR TO ABATE" as the last entry.  I haven't bumped into one of those before so I pulled that document to see what it says.  Here are pages from the document (click to enlarge):

WOW!  You do not want to get one of these letters in the mail.

This is a case where the owner of the property likely did not do proper due diligence prior to purchasing it.  Despite the best efforts to correct the foundation problems when discovered they were not enough.

It appears that the owner now owns a dirt lot with a $220,000 mortgage.  I don't know any crops (besides particular species of poppy) that they can harvest on that space that will make the mortgage payment.  It will be interesting to see if the owner defaults, sticks it out, or has some sort of recourse through their homeowners insurance.

Things To Do In Utah: Summiting Antelope Island

An old friend flew into town and we decided we would catch up while hiking to the top of Antelope Island.  For those of you unfamiliar with Antelope Island, it is highly visible from along the Wasatch Front and is situated several miles out in the Great Salt Lake.

To get there, take the Antelope Drive exit in Layton and head west as far as you can go.  Plan on bringing $9 per car load of people to gain access.  Gates to the park close at dusk (which by the way totally ruined my proposal plans to my wife some 11+ years ago).  Today the gate at the toll booth had a sign reading "Beware of Biting Gnats".  Fortunately, the 45F temps and breezy conditions keep that problem at bay.  It is best to make this hike in cooler weather.  The brine flies and lake stink make summer hiking rather obnoxious.  There is a reason "lake front" property on the Salt Lake is not a big seller.

The island is also knows for its bison population which roam freely.

Our hike began at the Frary Peak Trail Head.  Just follow the signs to get there. Beware of the painfully slow 30 mile per hour speed limits on the island.

The topography, vegatation, and animal life were very interesting.  The trail starts of moderately and then levels out at parts for a breather.

These two antelope were not very afraid of our presence.

 

We had great view of the "beach" on the west side of the island.  This above shot contains some interesting lava rock formations.

There were many wildflowers along the trail.

As we reached the top the presence of burned out trees marked the landscape.  These are the remains of a very old fire.

Here I am just before we reached the summit.  Unfortunately, the trail dips down quite a bit into a bowl before an insane stairstep climb to the top.

The elevation gain from base to peak is about 2,000 vertical feet over 3.08 miles.  Not a bad conditioning hike.

Here is the view to the south from the summit.  The Ochre Mountains are on the other side of the lake.

On the way down we discovered some amazing lichen formations on the rocks.  These phosphorescent green growths were very interesting.

There were also very few trees on the island except for some junipers at the top.  The exception being these clusters of trees which tended to grow sparsely in select gullies. 

My good friend is a university professor and herpetologist (snake scientist) and so we had a moment of excitement when we stumbled on and caught a baby gopher snake.  We took this photo and quickly released it.   

I took this final photo of Mt. Ogden as we headed home for dinner.  The hike was quite enjoyable and I recommend it as a great beginner hike.

Syracuse City: Banning Vinyl Siding?

 Vinyl siding melted by a fire next door.

A recent Standard Examiner article reported that Syracuse city has eliminated the option of  exclusively using vinyl siding on new construction in city boundaries.  A new ordinance passed this week now mandates that at least 38% of the exterior of a new home be composed of brick, rock, or stone.  Here is an excerpt of the new ordinance in section 10-6-020:

(B) Regulations for New Residential Construction.

1. A minimum thirty-eight (38) percent of the exterior wall construction for all single family detached, duplex, and single family attached town homes shall be constructed of brick, rock, or stone. The thirtyeight (38) percent coverage requirement shall be calculated by measuring all façades of the structure, from foundation to top plate line of the uppermost level, excluding openings for windows, doors, and trim, and multiplying that figure by thirty-eight (38) percent. The builder of the structure shall satisfy the thirty-eight (38) percent requirement by placing the brick, rock, or stone on one or more facades of the structure, provided the façade designated as the front of the structure has a minimum thirty-eight (38) percent of that façade covered with brick, rock, or stone

2. The requirement for brick, rock, or stone exterior wall construction shall apply to any single family detached, duplex, or single family attached town home planned as part of a development for which the City approved a preliminary plat after the effective date of this Title.

I have long been a fan of design restrictions on new construction.  Critics will argue that they unfairly increase the cost of construction.  However, I would argue that they increase the aesthetic and long term appeal of a community.  Also, not all cities can justify to their public a restriction on new construction design.  It would seem that a foundation of architectural style or common construction practice would need to be in place as a precedent to allow the public to support such a measure by city government.       

Midway, Utah is an excellent example how design restrictions have created a community with distinct character and value.  I have encouraged Ogden City to adopt similar ordinances for its Historic neighborhoods in the city core.  Fortunately, much of the new construction in Downtown Ogden recently has been designed to blend with the surrounding structures.  However, formalizing the design guidelines in the zoning code would prevent odd-balls from arising in these traditional architectural neighborhoods.     

Landscaping for Landlords: Bullet Proof Plants

One of the best ways to reduce vacancy and increase curb appeal of a rental is to plant flowers.  However, the problem with many flowers is that planting them is an annual time consuming affair.  My wife and I planted annuals at our rentals...once.  Then it simply became too much of a chore.  This has become particularly true since the number of rentals we care for has increased over the years.  To work around this problem we explored planting perennial flowers (ones that come back year after year) and have been very glad we did.

So you can beautify your rental property and benefit from happier tenants, here are a few plants that we have found to be bullet proof for landlords:

The Iris

The iris is a hardy and drought resistant flower.  The top photo is a siberian blue iris that we acquired several years ago.  Since we planted them they have multiplied prolifically.  We took the bulbs from the growth and spread them to many of the rentals that we own.  Our tenants love them.  They come in a variety of sizes and colors.  The top photo is a short variety that flowers in April or early May.  The lower photo is a larger variety that flowers in late June.

The Tulip

 The tulip is one of my favorite flowers.  It requires no maintenance whatsoever.  Spring snow melt provides the water that they need.  They come in an infinite variety and they have proven to be a tenant favorite.

Grape Hyacinth

 

You may not remember the name but you will definitely remember the plant when you see it.  It is also a vigorous grower. It grows about 8 inches tall.  It is great for filling planter boxes and other contained spaces.  WARNING: it will spread to your lawn if you aren't careful with placement.  However, the lawn mower makes quick work if it gets out of hand.

The Dandelion

 Finally, for the ultimately lazy landlord, you can always rely on nature's tried and true champion.

Fall is typically the best time to purchase and plant these if you want flowers the following Spring.  Other varieties that are attractive and require little maintenance are daffodils and day lilies.  The bottom line is that spending a small amount of money on flowers will go a long way to keeping happy tenants. 

Restoring Old Homes: False Ceilings and Noxious Pet Stains

I have been working with a client on restoring a beautiful Victorian legacy home that is need of a lot of TLC.  Today we explored some territory that many owners of old homes have had to deal with: the false ceiling.

Many folks I talked to recommended just leaving the ceiling in place.  I didn't feel that 1980's acoustic ceiling paneling was in line with the character of the home so we dug into it to find out how much space was available above it.  To our pleasant surprise, we discovered an additional 18 inches of headroom.

Fortunately, the panels came off with little effort at all.  It took about 10 minutes to pull the ceiling down in two rooms.  These rooms will have nearly 12 foot ceilings when finished.   

The paneling turned out to be a paper/cardboard type product and it was extremely light.

The last step will be to remove the ceiling fans and cut the framing boards out with a saws-all.

Another issue that was dealt with today was the nauseating stench created by dog urine present in the carpets and flooring.  Removing the carpet revealed many sins.

 
The white powder is a treatment used to cover up the odor when the carpet was still in place.  It passed through the carpet and pad and ended up on the fir floors underneath.  You will notice the powder is yellow in the right side of the photo.  That isn't a good sign because it means that the owners just let the dog use this spot even after they put the powder down.  Yuck!  When this area was treated with bleach it blossomed with bubbles...a sure sign of the presence of urine.  Fortunately, another treatment of bleach and a follow up with KILZ will permanently nuke any odor that exists.  Problem solved.

JUST SOLD! Bargain Bank-Owned Bungalow

Yesterday I closed with a client on this investment-priced home on Jackson Ave. in Ogden.  In February, my optometrist of the past 12 years called me to refer his extended family from Wyoming who were moving to the Ogden area.  After meeting with the young couple, we began our search for a home.

One of the challenges we faced was our need to use FHA financing while finding an investment-grade home in the $55,000 price range.  After reviewing several properties we placed a higher-than-list-price offer on a different bank owned property with the caveat that the bank would make the repairs needed to allow that home to pass an FHA inspection.  The bank-seller of that different property declined which put us back at the drawing board.

We scoured the market.  The Jackson Ave. home you see above was excluded from the search initially because the roof would not pass an FHA inspection.  Ultimately, we changed out terms to cash to avoid dealing with the FHA bottleneck.   

The Jackson Ave. property was listed at $42,000 and had multiple offers including ours.  We increased our offer to $45,000.  The bank-seller countered our offer asking for our earnest money increase from $500 to $2,000.  We agreed and placed the home under contract.  After passing a home inspection we closed.

Congratulations to the buyers on purchasing such a great bargain and welcome to Ogden!

Unindependence: The Case For Eliminating the Mortgage Interest Tax Deduction

There has been a recent call-to-action by the NAR and our state Realtor Association to fight against any actions that would eliminate the Mortgage Interest Tax Deduction (MID) that most homeowners presently enjoy.

As a full-time Realtor and the sole breadwinner in my home, it would make sense for me to parrot the talking points that it pays to support.  However, what is good for one special interest is not always good for everyone.  For many reasons, I believe the MID should be eliminated.

The history of the MID dates back to the institution of our income tax back in 1913.  Back then, most homeowners owned their homes outright.  They often built them from kits and purchased them with cash on hand.  Interest on debts were deductible because most loans at that time were business loans.  Businesses paid taxes on their revenues and therefore a tax deduction was allowed for the interest portion of loans incurred that enabled that business to create revenue.  Today, a person's private home is not a source of revenue that can be taxed.  Instead, it is a personal expense based on the person's willingness and ability the pay the price established in the market. In our day, that typically means borrowing a large portion of that purchase price.  Despite our homes coming with many enjoyable benefits like shelter, status, community, access to amenities, or even equity, it is still not a business nor a true investment per se.

Unfortunately, the government's manipulation of the tax code alters people's natural behavior and changes the fundamental dynamics of the housing market.  Ron Phipps, President of the NAR recently said: "....any changes to the MID now or in the future could critically erode home prices and the value of homes by as much as 15 percent, according to our research."  So, in other words, thanks to our government, housing is 15% more expensive than it should be.  These should be comforting words to first time homebuyers who want to purchase but simply cannot afford to do so.

The MID is basically a government subsidy of housing.  Will people go homeless without it?  No they will not.  However, some may opt to rent rather than own.  Is that so wrong?  I think not.  In a recent podcast Ron Phipps states that homeowners have an average net worth of $160,000 and renters have an average net worth of $4,000.  What is interesting about this statistic is that this is based on today's structure of subsidizing housing via the MID.  If somebody went from being a homeowner to choosing to be a renter instead, would that wipe out their net worth or their ability to make wise financial decisions?  I doubt it.  Interestingly, the NAR also states that the MID should be kept intact because 93% of people making less than $200,000 a year utilize the deduction.  That is because folks making more than $200,000 are likely paying cash for their homes.  I would argue that just because we created a system that makes a majority of the people dependent upon it doesn't mean we shouldn't work toward unwinding the system.

Another interesting aspect to consider is the natural balance that exists between owners vs. renters and, in a subsidy-free market, how these ratios gravitate to their normal levels.   

As you can see from this chart, home ownership percentages have been steadily declining since the burst of the housing bubble.  However, during the bubble, we were far above historical averages.  The cause: government (and Federal Reserve) intervention in housing.  What would this chart look like if government had had a laissez faire policy toward housing.  Would it be less volatile?   

Another reason the MID should be eliminated is the influence it has on household balance sheets.  Because of the tax deduction, many homeowners will justify taking on and maintaining debt on their balance sheets due to the deductible nature of the interest.  This defies the natural laws of economic prosperity that include frugality, thrift, and savings.  Adam Smith tells us the fastest way to opulence and wealth of a nation is for people to be employed so they can save.  Debt is a dead weight around the necks of those trying to obtain wealth.  For a government to create incentives to obtain and keep debt is folly.

Finally, eliminating the MID would create an incentive for more people to invest in real estate rather than purchase it for their own consumption as they see the comparative advantage of owning income property.  As a business asset, income properties are subject to 27.5 year straight line tax-deductible depreciation.  The rent is taxable income and therefore a tax deduction is given on the depreciation of the asset whose purchase made the generation of taxable income possible.  People would begin to treat their own homes as an expense rather than an asset and look at income properties as the true business assets that they are.  
 
The bottom line is that government intervention in markets has always resulted in unintended consequences.  I support a move away from the MID along with other government interference in the housing market.  Only then can we truly have a free market.