• National rent collection tracked by the NMHC through September 13th came in at 86.2%. This is essentially flat from 86.9% last month (August 2020) and down from 88.7% last year (September 2019).
• While rent collection has maintained steady, concessions are on the rise.  The most common perk is free rent (91% of all concessions), and the median duration is six-weeks. This was happening pre-COVID in expensive markets / luxury buildings.
• Even as state and city imposed eviction bans start to expire, the White House and CDC implemented a national eviction ban for renters earning less than 100k / year.
• Home prices are still soaring, despite a 9% increase in new listings. The increases are most notable in ‘relatively affordable’ cities like San Antonio and Baltimore.

• We made our first sale this year, taking advantage of the hot market for single family homes. This was a single family rental in Revere purchased in Dec. 2018. The real headache was working with the tenant to find a new apartment. We worked closely with her and the RAFT office to help her fund back rent, and with another local organization to help her with move in costs for her next apartment.
• Spencer ave (Chelsea) with OnPoint is coming together. The mechanical connections were more challenging than expected, but the plaster and paint crews are starting soon and the building is coming out great! See some exterior progress shots at the bottom of the email.
• Saratoga St (East Boston) also with OnPoint is weather tight and rough mechanicals are in progress. The framing contractor put together a great highlight video of the progress so far.

What I’m..

Listening to: The Real Estate Addicts podcast featuring Max and Garrett from OnPoint.  I’ve loved working with these guys for the past few years, and was great to hear the RE Addict guys facilitate their story.

Using: Tiller Money. It’s Mint.com but all in spreadsheets and with no ads. This probably isn’t for everyone… but if you want more flexibility and control over how you organize and track your personal finances, there’s nothing else like it.

Up to: A nomadic month. A family acquaintance had a three-week gap in between selling their house and buying a new house in our town and mentioned looking for a house to rent. We met and chatted with them and, on a whim, rented them our house out for the month. We bummed around from camping trips in NH, weekend rentals in VT, and parents houses during the week when not on vacation. What kind of complete lunatics spends a year rehabbing their house only to rent it out as soon as it’s finished? Us.

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!

Cheers,
James

P.S. if someone forwarded this email to you, you can subscribe here to get on our mailing list.

• National rent collection tracked by the NMHC through August 13th came in at 86.9%. This is down slightly from 87.6% last month (July 2020) and down from 88.9% last year (August 2019).
• Refinancing is getting more expensive. Fannie Mae and Freddie Mac came out of nowhere and announced they will impose a new “adverse market fee” of 0.5% on most refinanced mortgages starting 9/1.
• The NHMC argues that extended eviction moratoriums are doing more harm than good, and everyone (renters, owners, bankers) would all be better off if we funded direct rent relief for those affected by COVID.
• Volatile times are a good reminder that vague commentary on “the real estate market” is meaningless. Every market and asset class have wildly different dynamics… for example: apartment vacancies in New York are at an all time high. The Boston for sale market is uber competitive, but Boston renters actually have some leverage. Suburban homes are going through the roof… but so are urban homes.
• The “YIMBY” movement in Minneapolis and ban on single-family zoning will be interesting to follow, but without changes to parking requirements and building size, it’s doubtful we’ll see much of an impact on density.

Gladstone Capital updates

• Spencer ave (Chelsea) is flying along. Mechanical connections are wrapping up by the end of August, and the floodgates will open to potential buyers starting mid-September. Broker open houses went great and we have armies of agents ready to send buyers through as soon as the units are patched and plastered.  
• Saratoga St (East Boston) is flying along. The highlight so far is seeing how nice the rooftop view will be!

What I’m..

Waiting for: The next round of COVID stimulus. I understand the need to balance action and thoroughness… but I’m surprised there wasn’t at least a temporary extension on the bonus unemployment benefit. The loss of the $600/week bonus payments is expected to result in a 44% reduction of spending, according to the NBER. I was concerned about the bonus payments dampening incentives for people to get back to work (when jobs come back), but this WSJ article made me second guess that assumption.

Reading: “Why Real Estate Will Always Be More Desirable Than Stocks.” The Financial Samurai is one of my favorite personal finance blogs, and I’ve noticed a push towards more real estate related blogs over the past year or two. See also his 30/30/3 rule for buying your first (or next) home.

Surprised by: Apparently Blockbuster has a Twitter account? They came out of nowhere and tweeted for the first time since 2014. Why? The last remaining Blockbuster – located in Bend, Oregon –  is offering up three, one-night stays on Airbnb. Bananas. 

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! 

Cheers,
James

P.S. if someone forwarded this email to you, you can subscribe here to get on our mailing list.

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

Rental portfolio update (we crossed the 20 unit mark!)

406 Belmont st. (6 units, Manchester, NH): we pushed rents this year while looking to refinance – this helped produce a high valuation on the appraisal but hurt a bit on the vacancy and cash flow. I will keep looking to find a good balance between keeping rents at the market and maintaining strong cash flow.

Summer st. (11 units, Concord, NH): neighboring 5 and 6 unit buildings we are renovating as unit turnover.

81 Arcadia st (2 units, Revere) – duplex we renovated last year. Occupied and producing strong cash flow, will likely hold this one for a few more years to capitalize on the strong growth in Revere.

87 Arcadia st (Single Family, Revere) – neighboring property to 81 Arcadia, we bought this off-market after getting to know the owner from the work next door. Currently rented, prepping for potential sale this spring.

Active development projects:

Spencer ave (8 units, Chelsea): the foundation is set and the modular boxes are finishing production! Scheduled completion this spring. If you know anyone looking for a sparkling new luxury condo in one of Boston’s hottest markets, let me know! See www.spencerflats.com for more info. Note: Project sponsor is OnPoint Capital. Gladstone Capital is partnered in an advisory capacity. 

Saratoga st. (9 units, East Boston): The elevator shaft is up, however there was some lost time on this due to a mysterious, monstrous underground concrete block in the way of the approved route for water / sewer connections. It took over a month for the city to approve the new routing plans. We’re hoping to have the steel in place in the next month, and charge steam ahead with the framing once complete. Note: project sponsor is OnPoint Capital, Gladstone Capital is a Limited Partner on this project.

Our new house! (Needham): Jill and I officially became suburb people, and are renovating our new home in Needham. Living through a renovation is a completely different animal than rehabbing an investment property. Happy to share more of our learning / experience to anyone thinking about doing this in the future.

What I’m..

Reading: Essentialism – My resolution this year is to prioritize the few things that really matter to me and subtract anything with a disproportionate “return-on-headache.” I’m already taking action, and have sold an income producing website and left the property management business. If you like this book, I’d also check out  The One Thing by real estate legend Gary Keller (founder of Keller Williams).

Listening to: Tim Ferris show with real estate billionaire Sam Zell. My big takeaways were Sam’s conviction in original thinking and what “makes no sense” vs. what “is painfully obvious,” and his appreciation for the opportunities and freedom as the son of Jewish immigrants who fled Poland in 1939, just missing the German invasion.

Watching:  five-part documentary going behind the scenes of Navy SEAL BUD/S training. I was recently in San Diego near the beaches in Coronado where the SEALs train. Helps put things like attention to detail, teamwork, and mental toughness into a new perspective. Side note: need get in shape.

Events I’m looking forward to this month:

• Harvard Real Estate weekend (March 7-8, Cambridge) – this is my fourth year attending and it’s been an incredible value every time. Great speakers and networking. Plus you always just feel smarter being at HBS.
• Vetting a Multifamly Deal (March 11, Newton)
• Boston Real Estate Guild (TBD, Boston)

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!

Cheers,
James