All posts by James Evans

2020 Year End update

I don’t think there’s anyway of describing 2020 without it being an understatement.

Difficult, unprecedented, germy… there are plenty of adjectives that get us part of the way there.

From a real estate perspective, there was a lot of good, bad, and ugly.

Below are a few interesting news items from the past month, along with a recap of how 2020 looked for our business and what 2021 might have in store.

Noteworthy News

  • Mass Timber construction is gaining a foothold in more markets, including Boston. The cost to build n w housing has skyrocketed, primarily as a function of increased material, labor, and regulatory costs. For example, construction costs for a new single family home were 54.8% of the total sales price in 1998. In 2019, that number rose to 62% of the total sales price. While home prices have gone up over time, the cost of construction has gone up even faster. Innovative and sustainable techniques and materials such as Mass Timber should help ease this over time.
  • Multifamily developers are re-thinking the hotel-esque amenities rush and piloting more “self-serve” communities. The bet is that consumers will opt for reduced pricing / increased living space for more automated and centralized services, rather than fully staffed gyms, parking, front desk staff etc.
  • As consumers grow squirmish after a long year of travel restrictions, the appeal of owning a vacation home is soaring. Platforms like Airbnb and VRBO are also helping second-home owners subsidize their purchases by facilitating short-term rental options during times of non-use.

Gladstone Capital year-end summary

It’s been quite the year for Gladstone. Below is a month by month breakdown of our highlights and stumbles:

January: closed on the second Summer St. property, a vacant five-unit residential building in Concord, NH right next door to a six-unit building we bought in 2018.
This deal was an exercise in patience. I first got word of the building being for sale in early 2019, but  the off-market price was way too high. The property then went on the market, at the high price. About a year later and after the sellers had a few buyers back out, the price was reduced to a fair number.

This was my first vacant building purchase, which had its pros and cons.

Having no cash flow for a few months while we completed the unit rehabs put the pressure on, especially as COVID became scarier and scarier heading into the spring. Luckily, we were able to get all five units rehabbed and leased at market-rates by early May.

I also sold… a cash-flowing website I purchased and operated for the past 3 years. I wasn’t able to grow it enough, and found the return was no longer worth the headache. Once I found a buyer, I sold at a good price and funneled the proceeds into real estate activities.

March: went under contract for an 8 unit building on Hanover st in Manchester NH. The numbers looked good on the deal going in, but the looming risk of COVID was unsettling. Most of the units needed work, and the seller’s property manager did not do a great job of screening the existing tenants. I tried mitigating the risk by asking for additional work to be completed, and the vacant units filled up with tenants approved by my PM (bank was requiring at least seven units occupied by closing).

Unfortunately the sellers were also growing apprehensive, and they let the property slip out of contract to go with a cleaner backup offer without contingencies.

May: finished construction on our new house in Needham, which we bought in September 2019 and immediately started renovating. Did not forecast a global pandemic hitting right after we ripped off our dormer!

June: At long last, the modular “boxes” for the Spencer Flats condo development project with OnPoint were pieced together. It was the coolest day of construction I’ve ever seen – basically expensive adult legos.

August: Started my MBA part-time at Babson

September: Sold our Revere single family rental. All in all, probably not a great buy. We made decent money from this one, but it was a result of buying at a good price and riding the market up. We closed in December of 2018 with a 6 month lease back to the seller. We did minimum work to the house – mostly cleaning and painting, before leasing it out. The goal was to hold off on any major renovations until I had a better plan and firmed up quotes / numbers.

By the time the tenant was ready to move out and her lease was up, we were in full blown lockdown, my go-to contractor had moved up to Maine, and I was living too far away from the property to manage any significant work on my own. Luckily, the single family market was booming, so by mid-summer we made a plan to list the property and help the tenant find a new place to live. We received a great offer for the house, and closed without any issues. This one ended up working out, mostly due to luck, but it was not a great return on headache.

October: Sold our Revere duplex. We bought this building vacant in 2018 and completed a ~75% gut reno on both units, including new mechanicals and updated / separate electric. This was a rental for the past two years with excellent tenants. This year was a great selling opportunity, so we took advantage of the market and sold.

Also in October, the Spencer Flats model units officially went on the market, and the team is working hard to drive potential buyers to our open house while finishing the punch list and final inspections for the remaining units. The fall has been challenging for the Boston condo market. Many potential buyers are content to stay in their apartments or with family, as rents remain depressed and COVID reduces demand for city access and amenities.

November: my first crowd-funded investment exited. I invested as a Limited Partner into a value-add apartment community project in greater Columbus, Ohio through the Realty Shares platform (which went under and sold to iintoo). It was interesting to see how larger deal sponsors purchase, operate, and exit from these types of investments. The investment also earned a 21% annualized return – it’s always nice to actually get paid to learn.

December: officially went under contract on our first short-term rental, a small cabin near North Conway, NH. I will hold off on giving any more details to mitigate any jinxing risk, but this is a project that Jill is excited to take on and run with.

What I’m looking forward to in 2021

Household expansion: Jillian and I are excited to welcome baby Evans to the world this Spring!

Writing more: I’ve really enjoyed sharing my thoughts with you all this year, and am amazingly appreciative of all of the kinds notes, thoughts, and feedback you’ve sent. Next year, I’m hoping to expand my writing to longer format blog posts as well. If there’s anything specific you’d like me to research and write about, please let me know!

Small Business investing: just a teaser here for now, but I’m looking to invest in local home services businesses. We have something in the pipeline, and will hopefully be able to share more on this coming next year.

I hope you have an amazing holiday season and joyful end to 2020!

October 2020 Update

Here is your monthly “Gladstone Gazette” update – a quick summary of what I’m working on, learning about, and interested by in the world of real estate.

Noteworthy News
  • Yardi Matrix study of 17 million apartment units concluded that rents came down in expensive cities, and stayed flat / grew in more affordable cities. NYC, San Jose, and SF led the pack with rent declines in August (4-6% down), while Columbus and Sacramento led on growth (2% up). Despite softening rents, Boston Capital had no problem holding a $133M first close of its second multifamily fund.
  • According to Redfin, home prices hit a new record, reaching a national median of $320,625. In MA, I wanted to dig in to see how the growth looks in Single Family Homes vs. Condos. Based on year-to-date MLS data, median SFR sales price is up 9.4% vs. Oct. YTD 2019, while condo median sales price is up 6.3%. In Suffolk County (Greater Boston), the median condo sales price is up 2.4%.
  • As the MA eviction moratorium expires the week of the 19th, a 171m rental assistance plan will be put to the test. The Federal eviction moratorium is still in affect, so we will see how smoothly the rollout of this program goes and what the impact will be on tenants and landlords.
Gladstone Capital updates
  • We made another sale this month, a duplex we renovated and rented over the past two years. This was a really smooth transaction – not always the case when selling a tenanted building. The buyer wanted to live in the top floor unit and keep the existing tenant in the 1st floor unit. We worked with the upstairs tenant to find a new apartment, and he left with no pushback or hard feelings.
  • Spencer ave (Chelsea) with OnPoint is gearing up for our first open-house this weekend!

What I’m..

Listening to:  Why are Cities (Still) so Expensive from Freakonomics, featuring an insightful interview with San Francisco Mayor London Breed (who grew up in public housing).

Following: The Suffolk Downs redevelopment project. After three years of community engagement and over 450 community / stakeholder meetings… HYM development made it through a “marathon” 6 hour meeting to secure BPDA approval. I’ve been to several of the community meetings for this project, and am wildly impressed by how patiently and thoughtfully Tom O’Brien and the HYM team have incorporated community feedback into the project scope.

Thanks for reading and please give me feedback by responding to this e-mail. What do you want more or less of? Let me know!


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July 2020 update

Hope your summer is going well and you’re taking some time to relax and enjoy the weather!

Here is your monthly “Gladstone Gazette” update – a quick summary of what I’m working on, learning about, and interested by in the world of real estate.

Some interesting news and data:

  • National rent collection tracked by the NMHC through July 13th was at 87.6%, down from 90.1% in July 2019. 
  • It’s crunch time for lawmakers to put together a second round of funding and stimulus as the $600/week CARES Act unemployment bonuses fade out at the end of July. 
  • Banks are “flying blind” into a potential credit storm. Lenders can’t tell who is creditworthy, so many are pulling back and tightening their lending criteria. I’ve heard this first hand for weeks from the lenders I talk to. Many smaller banks / credit unions are feeling the stress from PPP loans coupled with a waive of  forbearance and deferral requests.   
  • In Massachusetts, the introduction of the Housing Stability Act to cancel evictions and freeze rents was met with….err… apprehension from many landlords and lenders. The Mass Real Estate Law blog has an interesting summary of landlord concerns with the bill.

Gladstone Capital updates

  • By far the coolest day of construction I’ve ever seen was the set day for the Spencer Flats project with OnPoint Capital. The 60 second highlight video is a must-watch for an orchestra of adult legos.
  • Unfortunately, the sellers backed out of our 8 unit rental building acquisition in Manchester. While frustrating, I’d much rather lose out on a potentially good project than give up discipline with pricing and terms. On to the next one!

What I’m..

ReadingThe Week magazine. As much as I love twitter, there’s something refreshing about getting The Week delivered and reading a physical magazine with succinct recaps of what’s going on.

Finishing: after ten months of living through a gut rehab, our house is finally done (98%)! There’s still a few odds and ends left and we’ll always find new projects to take on, but for now the sounds of saws and drills have gone away. I’ll organize some before/after pictures for next month.

Watching: This webinar on Boston’s co-living climate. I always love hearing Benjie’s industry insights, and the co-living industry will be fascinating to see evolve post-COVID.

Thanks for reading and please give me feedback by responding to this e-mail. What do you want more or less of? Let me know! 


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June 2020 update

Hope you’re doing well and enjoying the early summer weather!

Here is your monthly “Gladstone Gazette” update – a quick summary of what I’m working on, learning about, and interested by in the world of real estate.

Some interesting news and data:

  • Rent collections continue to trend close to last year’s levels – through June 13th the NHMC tracked 89% collections, slightly above the 88.9% collected through June 13th 2019.
  • Digging in a bit more as to why / how rent collections are still so close to last year’s levels… both median personal income and personal savings rates are way higher than pre-COVID levels. If you’re inclined to nerd out on the data, the BEA charts show unemployment assistance (including the $600/week ‘bonus’ payments) is having a big impact on median incomes. The looming question is how things will change as the CARES act  benefits phase out.
  • Some states (like New Hampshire)  are pumping direct rental assistance to tenants to help them catch up and stay current on rent. In some cities (e.g. San Francisco), landlords are still pleading with legislature to implement rental assistance to help offset the effects of eviction moratoriums.

Gladstone Capital updates

  • Big week for the Spencer Flats project in Chelsea with OnPoint Capital. Eight of the modular boxes are already on site, secured in a nearby gated parking lot. Steel was erected Monday, and the remaining 14 boxes are coming up from PA this week. We have a tentative set-day for the June 23rd and I can’t wait to see these puppies get stacked!
  • We are also gaining momentum marketing the units for presale. Our website and social ads have generated a number of qualified leads we will continue engaging with and bring through the units once they’re up and the final connections are made. We are live on Zillow new construction and just put out a new virtual walk-through video. More to come, but great to see the momentum building.
  • Saratoga Street in East Boston also saw a lot of action with the lifting of Boston’s construction moratorium. Steel is up (despite a blown hydraulic line) and framing is underway.
  • The rental portfolio is still humming along with marginal COVID impact, and we’re working towards closing on a new 8 unit building in Manchester NH.

What I’m..

ReadingThe Changing World Order – an online series by Ray Dalio.

Recording: I was on a podcast a few months ago (pre-COVID). I’m not expecting to beat Joe Rogan’s numbers, but it was a fun experience and I’m hoping to do more over the coming months. Let me know what you think and most importantly…. why it’s awesome.

In all seriousness, I’d like to keep getting better at communicating my story and things I’ve learned along the way, so please let me know if you have suggestions for me.

Starting: my part-time MBA at Babson, an entrepreneurship focused business school located a mile down the street from our home. I was on the fence about going to business school for the past few years – but now with my employer reimbursing the cost, I decided to pull the trigger. Only a couple of more years until I’ve mastered business! 

Thanks for reading and please give me feedback by responding to this e-mail. What do you want more or less of? Let me know! 


P.S.  you can subscribe here to get on our mailing list.

May 2020 update

I’m not sure if April flew by or if it was the longest month in history, but we made it through and are looking forward to warmer weather and end to the daily downpours around Boston.

A couple of relevant notes on the real estate front:

  • The good news for multifamily investors is that rents are still coming in despite surging unemployment. The National Multifamily Housing Council has tracked 80% collection for May 1-6, compared to 78% in April. Last year, May collections were actually behind April (82.9% in April 2019 / 81.7% in May 2019). May 2020 collections should track towards ~95% by the end of the month as a chunk of tenants regularly pay rent mid-month.
  • Home prices are going up as the supply of new listings dropped faster than demand, and the median home price rose 8% year-over-year to $280,600 in March. There are signs of purchase demand increasing, as mortgage transaction volumes are rising after plummeting in March.

Rental portfolio update:

The main headline is that people are paying their rents. For our multifamily portfolio – we’ve collected 100% of expected payments in April and May.

We have one single family rental that I self manage, and is rented to the only tenant who has fallen behind on rent. She is an LPN who works at a nursing home and has had her hours reduced due to COVID. While we planned to sell the house this spring when her lease expired, we agreed to extend her lease until the fall due to her concerns about moving and funding another security deposit + 2 months rent while underemployed. We’re confident she will catch up on her payments and are glad to be in a position to help her. Our bank has also agreed to defer our mortgage payments for the next few months, so our bottom line cash flow has not been significantly affected.

The secondary headline is that people are still looking to rent apartments. The five-unit building we purchased vacant back in February has already seen three units leased since we started marketing early-April.

With these factors coming to light, as well as the end of the NH eviction moratorium, we are moving forward with our new 8 unit Manchester acquisition. This should be a great addition to the portfolio with strong cash flow and in the path of progress. If you’re interested in learning more or investing with us, let me know and I will get in touch with more info! 

Active development projects:

As mentioned last month, Mayor Walsh issued a city-wide construction ban in Boston mid-March. These bans are set to lift in phases with caveats and restrictions, including COVID safety plans. This is good news for the Saratoga st. project, which can hopefully ramp back up as soon as we get the green light from the city. 

We’ve amped up our social media marketing efforts for The Spencer Flats and have seen some great results. Once the 28 modular boxes arrive on site, we’ll begin to engage more aggressively with our digital leads and broker network to pre-sell as many units as possible.

What I’m..

ReadingThe Willpower Instinct by Kelly McGonigal. When quarantine life started, I thought of all things I could get done. I would read, write, and take advantage of the extra training time for the Boston Marathon. Instead, I snacked. I snacked hard. This book is a great blend of science, theory, and practical actions to help understand the science of willpower and how you can use it to improve.  

Exploring: It had been a while since I spent time on Bigger Pockets (the #1 place to go if you’re interested in getting started with real estate investing), but in times like these its an invaluable resource to see what’s going on in the trenches. There have been tons of great forum posts, blogs, and podcasts recently. They also built a COVID resource center compiling relevant guides all in one place.  

WatchingVolnay Live with Catalyst Development’s Gene Voloshin. My friend Ricky started a new Instagram Live series and featured one of the top developers and custom home builders in the Boston area. Gene got his start after purchasing a house, hiring a general contractor, and having $100k stolen by the contractor who never finished the job. After taking over the permits for his own home, he fell in love with development and is now one of the most well known developers in the area.

Thanks for reading and please give me feedback by responding to this e-mail. What do you want more or less of? Let me know!