Source:


Deaton Investment Real Estate & The Wake County Apartment Association



Thursday, July 31, 2008

Feedback on the PROP

I decided the time was right to get something out about the PROP to the local newspaper. While they have covered the issue, I don't feel the impact of the PROP has really been examined. Furthermore, it's origin seems surreptitiously derived, at least in the eyes of the general public. For those who cared to poke around, those who engineered the PROP into existence were no more covert than a dump truck driving through a nitroglycerin factory. "We want student rentals out of our neighborhood!" was their battle cry. But I don't think anyone expected the city to supply such a comprehensive war strategy. Even though I argue their efficacy, they did what their neighbors wanted. To heck with the apartment owners.

Have a read.

Wednesday, July 23, 2008

Prison Medical Center Gets Go Ahead

To the surprise of many local residents, the Raleigh City Council voted to move forward with the development of a new hospital and mental facility ofr inmates. Details about this decision can be found here: http://www.newsobserver.com/news/wake/raleigh/story/1150857.html It sounds like another "public" hearing that was not well-publicized.

Thursday, July 17, 2008

Shocked? Or Just Surprised?

If I am reading the headlines correctly, then we might as well crawl into a cave and hibernate for a couple of years until this “crisis” goes away.

Seriously? Let’s think about this for a minute. Who really thought our economy could continue outpacing itself when America was spending more than it made?

People claim that deals aren’t getting done and businesses aren’t expanding because it’s just too hard to borrow money. Let’s have some perspective. Is it really hard to borrow money now? Well that depends on your definition of ‘hard’. It might be harder than it was two years ago, but is it harder than it was in the early 80’s when rates were well above 10%? Did we really think that banks could continue loaning money to people based on how much money they ‘said’ they made? You mean people don’t tell the truth all the time? Are we really that na├»ve?

I read an article yesterday that insinuated a 5% - 10% down payment was “a lot”. Really? Have we gotten that spoiled?

I am not pretending that I predicted this downturn coming, although some economists probably did. Sure the increasing number of foreclosures and the need for the government to get Freddie and Fannie out of detention is surprising. But are you really shocked that the market is trying to correct itself? Sooner or later you have to actually pay a debt off with real money. You can’t keep “making” money by borrowing more.

We were going to be faced with this reality at some point. I would make the argument we are handling it pretty well. Despite the negative forces at hand, our economy as a whole and especially in N.C. is continuing to grow. We are adding jobs, building schools, expanding hospitals and more. You can accuse me of being an optimist, but its all fact. Actually I like to use the word realist.

Wednesday, July 16, 2008

Are all home runs created equal?



If you are a baseball fan at all, you know the story of Josh Hamilton. After his amazing display at Monday night’s All-Star Homerun Derby even non-sports fans are now familiar with his journey. I remember playing against Josh in high school and thinking that he was the most incredible athlete I had ever played against. Little did I know, nine years later I would watch him hit 500+ foot homeruns into the upper deck of Yankee Stadium.

So what does this have to do with real estate? Well, I am sure you could draw up a convoluted correlation, but in reality it has little relevance to whatever deal you are working on right now. I think sometimes we just need to step back, look at the big picture of life and realize that miracles can happen.

For those who aren’t familiar with the details of Josh’s comeback, a quick google search will tell you everything. However, I don’t think anyone has said it better than Peter Gammons… “We are reminded that baseball can help us remember what we stand for, not against, what we believe, not what we fear, and that while we learn from the past, what we all want is to open the door to the future.” Gammons blog at ESPN.com

Monday, July 14, 2008

This isn't Russia. Is this Russia?


You now need to register with the city to own rental property in Raleigh. And you need to pay.

The registration fee is $30 for the first unit and $10/year for every unit you own. Here is an article from the N&O about it.

And another. And another.

The problems with this are ten-fold. It's hard to know where to start, really. Not only has the city created yet another bureaucracy, they have done so at the behest of just a couple of spoiled, vindictive inside-the-beltline neighborhoods pursuing the eradication of rental properties regardless of the fact that they live next to a major university.

While it seems clear to most people with more common sense than a rutabaga that if you move in next to a college you may end up with some rental property nearby. Nevertheless, people in that position are certainly due their peace and quiet. However, and I'll try to say this as clearly as possible: a landlord can't stop a tenant from partying. If the law isn't being broken and rent is being paid on time, eviction really isn't an option. The city believes, however, that by evicting the tenant responsible for the PROP violation, the problem will eventually be solved. As if those tenants will simply move to another neighborhood and never bother anyone again.

The most problematic component of the PROP is the fact that violations remain with the property, even after the bad tenant is gone, whether through eviction or lease termination. How does that help? Again, I'm not sure people really understand rental property. Landlords do not ask for their property to be wrecked, partied in or transformed into a landfill. Tenants sign leases with specific clauses to those very issues. When a tenant does so, they are in violation of their lease. But, a landlord can't physically be at their property every day. It's literally impossible. Weekly checks? Sure, that's reasonable enough. But all it takes is one mattress, one time; on the day the landlord is out of town, to warrant a PROP violation.

Now that the city has funding and a staff, look for a much more aggressive approach toward curbing the ownership of rental property in Raleigh. This vision they have conjured of a shiny happy city where no property is left un-spit-shined like a pair of Meeker's boots licked clean by his councilmen is nothing more than that, a complete and utter delusion of grandeur.

The PROP will not curb blight in the city. It will not stop bad landlords from owning property. What it will do is spike the number of evictions in the city, push poor tenants from property to property, raise rents and strongly bolster the already formidable wall built between city government and the citizens of Raleigh who happen to own rental property.

I would welcome insight on this topic. I will be glad to respond.