“Remember as a real estate investor you should be making money in both the up and down market.
And the down market presents significantly more opportunity…
…those with business skills are the ones that will do well…
…when times are a little bit harder, you’re going to start seeing the folks with the better skill sets doing much, much better than those that don’t.”
Texas Suburbs
I got my issue of the Real Estate Center Online News from Texas A&M University Real Estate Center. And it turns out that four Texas suburbs made the 2009 most notable areas.
“Four Texas suburbs made the Gadberry Group’s 2009 list of the country’s nine most notable high-growth areas.” Interesting, isn’t it? That’s almost half. “Houston suburb Atascocita was last year’s second most notable suburb. Since 2000, the number of households there grew 108 percent,” so the population grew 108 percent.
“Average household income in that area grew from $79,000 to $99,000 a year placing Atascocita third for income growth. Katy occupies the number five position. The area is second for absolute household change, adding almost 16,000 households since 2000, and third for percent household change.” Dallas suburb Mansfield was seventh and Wylie was eighth.
Growth
So those are the top nine growth areas in the—well, in the country. And you know what? Texas Association of Realtors has an article and their latest article in the Texas news section says that Texas is the top moving-to state for the fifth straight year. More people chose to settle in the heart of Texas than anywhere in the United States in 2009, according to Allied Van Lines’ 42nd Annual Magnet States Report.
Now that’s interesting, because I’ll bet you that if you called the moving van company and asked them about rates that you’ll find that the pricing differential—you’ll see that it is probably cheaper to get out of Texas so they can transport their vans and disburse them all across the country. Texas being the number one move-to state. So that’s one way to gauge migration, I bet. Just informally make a few calls to some moving van companies.
Well, it says here that the “report, which tracks U.S. migration patterns and tabulates net relocation gains for each state on an annual basis. ‘Texas seems to be the cheap seats but with a great view,’ says Bill Jones, Chairman of the Texas Association of Realtors. ‘Just 20 years ago, our wonderful state wasn’t the first choice for many people. But now folks from all over are noticing that we have everything you could possibly want—from reasonably priced housing (that’s important), to plenty of land for business and housing development, to a wide variety of fine arts and recreational opportunities.’”
Rentals
So those two stories I think are pretty closely related. And another one that seems to be interesting is that more Austin units are renting. The Texas capital rental occupancy turned up in December ending the year at 90.4 percent after two years of decline according to Capitol Market Research.
So that’s almost 4100 new apartment units opened in the Austin area from June to December and more units were leased than delivered. Interesting. Healthy leasing activity helps landlords maintain rents. In December they averaged 942 per month for a two-bedroom/two-bath unit unchanged from June but down from 962 at the end of 2008.
State of the Union
So that seems to be in line with what Del said the other day on market stabilization. And one of the things that Del mentioned the other night at the state of the market address that he gave us Wednesday night, there was some really—well, let me say this about that particular address: Each year that I’ve seen it—and I’ve seen it now for the four consecutive addresses that I’ve seen that Del gave in January.
He was spot-on each time. Last year he mentioned that the wild card in this business would be the employment numbers. And sure enough I had more tenants lose their jobs in 2009 than I ever have in the ten years that I’ve been doing this.
And the year before that he said prepare for some significant tightening of financing, but you’re going to see a tremendous amount of folks moving from the properties that they would have been buying before and becoming renters.
So with a lower supply and a higher demand for properties that we already had, we should see and we did see in 2008 rent increases. Which was very significant for us obviously, because—well, as capital markets tightened, our incomes went up as real estate investors.
Making Money
Remember as a real estate investor you should be making money in both the up and down market. And the down market presents significantly more opportunity. Some interesting things he said this year, a few days ago, he said that those with business skills are the ones that will do well.
In an up economy it’s really hard for even, I guess, those with lesser skills to do poorly. But when times are a little bit harder, you’re going to start seeing the folks with the better skill sets doing much, much better than those that don’t.
Historically Del teaches or used to teach every month a class on the natural progression of the real estate investor. It was about a 30- or 45-minute class that really served as an orientation for new members.
And if you were in the Dallas office yesterday I would imagine you saw Brad Sumrok teach that class. And this coming Thursday here in Houston you’re going to see David Fantin teach that particular class.
Business
But in that class Del teaches that a real business owner has no job description. He’s nowhere to be found on the organizational chart, that a true entrepreneur is unemployed. For a business owner if you truly own a business you can walk away from that business for a year or more and when you return it’s operating as efficiently and as profitably if not more so than when you left the year before.
Each piece of real estate that you own is a business itself as well. Therefore the urge here is to start now in building your business to function on its own. Now, and we’re talking about really your property management business, your property locating part of it, well especially with the management part.
What I want you to do is have a procedure, a system documented and in place for everything. Remember we’re talking about what you’ve got to do. You’ve got to make sure that your business skills are there. And one of the things that you find among all successful businesses is that they have a plan. They have a plan for everything.
