170 Are You Capitalizing On The Changing Migration Patterns? | Hard Money for Real Estate Investors
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This week, Bill Fairman, Wendy Sweet & Jonathan Davis are discussing bedroom communities and the changing migration patterns in our current environment.
What changes in the market are you noticing? Where is everyone moving to? How can you capitalize on these changes?
0:01 – Introduction: “How to take advantage of the changing migration patterns”
2:44 – Common concerns on the current real estate market
5:54 – Where Did Americans Move in 2020?
8:14 – What is Bedroom Community?
9:25 – Why a lot of people are moving to the suburbs?
9:53 – Bill’s walkabout in Charleston South Carolina
17:24 – Why people are moving?
18:48 – Why take advantage of these changing migration patterns?
23:17 – Why single-family rentals are popular?
24:11 – Amazon lost money for a long time to gain market dominance
25:15 – Are realtors going the way of the dodo?
26:08 – Bill’s bottom line
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Bill Fairman (00:01):
Good to see you again. I have been traveling for quite some time. I was gone for 11 days. Of course, you guys got to see me on the last week show for a little while.
Jonathan Davis (00:12):
And unrelated thing, we had a fantastic 11 days here at the office
Bill Fairman (00:16):
So Wendy is traveling as well, and it’s also been very peaceful. So this week’s show is going to be about the changing migration patterns and how you guys can take advantage of it. So we’re going to get to that right after this.
Bill Fairman (00:55):
Once again. Thank you for joining us on the Real Estate Investor show. Hard money for real estate investors. We are Carolina Capital Management. We are lenders in the south east for real estate investors. If you are interested in borrowing any money, go to CarolinaHardMoney.com and click on the apply. Now tab, if you are a passive investor, looking for passive returns, click on the accredited investor tab. Don’t forget to like share, subscribe and hit the bell. And lastly, don’t forget to sign up with, for Wednesday with Wendy, easy for me to say.
Jonathan Davis (01:32):
Bill Fairman (01:32):
Bill Fairman (01:45):
Now Wendy, on Wednesdays, that’s so easy to say. Gives up 30 minutes of her time per person to talk about anything real estate. Again, she’ll talk about anything, but your values in the real estate related piece the link to get on her calendar is in the chat. And by the way, we have a chat on either the right side or underneath your screen, depending on the platform you’re viewing us from. She’s booked out til’ September. So get on the list now. How’s it going?
Jonathan Davis (02:19):
It’s going good. It’s a busy time.
Bill Fairman (02:22):
Yeah, it is.
Jonathan Davis (02:23):
Bill Fairman (02:23):
If you’re in real estate business right now, things are booming and oh yeah. Thank you for putting that up, Cherub. If you have any questions or comments, put them over there in the chat side, it’s not just about, it’s not there just for links, but it’s very helpful to have links as well.
Bill Fairman (02:44):
All right. So I know you guys have all been wondering about where am I going to find my deals, we have inventory issues. Most of your major MSAs have got issues with,
Jonathan Davis (02:57):
Bill Fairman (02:59):
Prices going up, supply issues. And, but we always talk about this real estate is local and so not every area is going to have the same thing going on. I know, I was talking to Jonathan about this yesterday. There’s an area in Florida that Wendy and I just got a short term rental in and I was looking, I was just kind of perusing Zillow. And I told Jonathan yesterday that there is a double-wide and it’s not even new, it was probably built in the early eighties.
Jonathan Davis (03:39):
Bill Fairman (03:39):
Built and installed in the early eighties on a saltwater canal in Southwest Florida, they had it listed for $585,000. A double-wide mobile home canal, which you probably could have gotten two years ago for maybe 199. It was probably what it would count for them.
Jonathan Davis (04:04):
Bill Fairman (04:04):
So it’s amazing when you get into certain areas and you have a lack of inventory, what it does to the prices. So I’m going to share our screen here real quick, because I got a couple of things I want to show you. What we did we’re going to kind of feature Rock Hill in just a moment. We’re going to talk about the migration patterns and where your bedroom communities are coming into play. Bear with me just a little bit. I am technologically challenged.
Bill Fairman (04:45):
All right. So here was a map that was done by the tax foundation last year. This is the 20-oops. Did I just lose it? Let me start again. I thought- I’m going to have to back this up. I apologize, folks. I went away. There. All right. Can you guys see this, okay? Yes, you can. Thank you for the feedback.
Jonathan Davis (05:21):
I don’t think it’s sharing, Bill.
Bill Fairman (05:31):
All right. So do me a favor guys, in the background. Give me a thumbs up. If you can see that screen or not. Scott or Cherub, no?
Jonathan Davis (05:40):
She said no.
Bill Fairman (05:40):
Okay. Let me share.
Jonathan Davis (05:45):
Here, go back here. Yeah.
Bill Fairman (05:45):
I told you, I was not technologically.
Jonathan Davis (05:49):
There you go. Click on that one. Yeah. And then share.
Bill Fairman (05:52):
All right, here we go.
Jonathan Davis (05:54):
There it is. It’s now sharing . It’s there.
Bill Fairman (05:57):
So sorry about that guys. All right. So I’m going to have to start this over. All right. So here’s our map. The green is where people are moving to, and these are the top 10 states for either inbound or outbound migration, so the green are where they’re moving to the red are where they’re moving from and if you’ll notice where smack dab in the middle of the green,
Jonathan Davis (06:22):
It seems like there’s a lot of migration into the Southeast.
Bill Fairman (06:25):
Obviously the folks from that, it doesn’t mean that Texas isn’t getting plenty of people. We know that. We also know that Nevada is getting a lot of people from California. And so it was Washington. It’s just that they’re not the top 10. Yeah, that said,
Jonathan Davis (06:42):
So you can see mumber three and number five, Oregon and Arizona for inbound. I mean, that’s probably correlated to the Exodus of California.
Bill Fairman (06:51):
Number one is Idaho.
Jonathan Davis (06:53):
And number one is, yeah.
Bill Fairman (06:54):
It’s probably all going to quarter lane. We have some friends that live there and it’s crazy to think Florida’s crazy, quarterl lane Idaho’s nuts.
Jonathan Davis (07:05):
But look at number two, number two for inbound migration.
Bill Fairman (07:09):
Jonathan Davis (07:10):
Bill Fairman (07:12):
And we’re going to show you a bedroom community of Charlotte, which is Rock Hill, South Carolina. And that is exactly where our office is located. It’s interesting. And don’t hate me if you’re from North or South Dakota, if you’re the Codian, I can only assume that North Dakota, somebody told them to move south for better weather. So they just moved one state.
Jonathan Davis (07:38):
You know, I wonder if that, you know, obviously there’s, you know, there’s incentives for moving to South Dakota, but I do see a lot of conservatives moving there just for the political aspect of it as well.
Bill Fairman (07:52):
Both the Dakotas have, are in the energy sector as far as their jobs. You know, either one of them is going to be cold in the winter. So I don’t know
Jonathan Davis (08:05):
But I’d rather be in the south of the Dakota then the north and it’s going to be cold.
Bill Fairman (08:09):
So what we’re going to show you here is a little walk about if you’re, if you don’t understand what a bedroom community is, it’s going to be the communities that surround your MSAs, major MSA. So Charlotte is like the 15th largest city in the United States and prices are getting higher and higher there because as populations move in, where are you going to go? So you’re going to start going out to the surrounding areas. The bedroom communities, first and foremost, you’re going to go to are the ones that have an easy interstate access,
Jonathan Davis (08:49):
So anything out of 77 or 85. If we’re talking about Charlotte.
Bill Fairman (08:51):
Yeah. If you have easy, quick commuting access to the major population center, a lot of people are going to move to the bedroom communities for a couple of reasons. One, we had a tendency in the last 10 years, people were moving into the urban areas. They liked the walkability. They like being able to walk to the corner coffee shop or a bar or a restaurant that they wouldn’t go to and that’s what they loved about the urban living. A lot of people are now moving to the suburbs. Number one, because of crime, Number one, you’re typically, or number two, your schools are typically better. So they’re moving to the suburbs, but they still like tha kind of an urban feel as well. The walkability
Jonathan Davis (09:42):
I’ll tell you what. Everyone always calls me right when we’re on this. My contractor always calls me when I’m on the show.
Bill Fairman (09:50):
That’s the way it goes. So I did a walk about town. This is one of our borrowers who started this project. He’s building a Charleston style homes. He bought a tract of land that covers almost a city block.
Jonathan Davis (10:07):
And if you’re not familiar with Charleston style homes, we call them tall skinnies, they’re usually two or three levels. And they are very long.
Bill Fairman (10:15):
This is a style of home. That is a predominant in the historic area of downtown Charleston, South Carolina. The difference here, these are new. And as you can see, they’re square, the ones in Charleston. If they’re leaning to ones that they call it character, but they were built a hundred years ago and the soil tends to drift around a little bit. So as you can see, there’s enough room for one more set of foundation on this side of the lot. This foundation just went up, as you can tell and in this case, we’re not financing this particular spot because it’s already sold the borrower went ahead and got their own financing for the construction. We finance the one that’s you’re seeing right beside of that, this white home. I love the little front porches. I’m trying to give you a little indication of what the streets look like. And it’s a, by the way, I have to mention my little iPhone takes one heck of a video. Does it not?
Jonathan Davis (11:26):
Yeah. That was your iPhone? That’s really good.
Bill Fairman (11:28):
That’s the cool thing with my iPhone. It’s amazing. The technology in your phone.
Jonathan Davis (11:33):
And these houses are between 1,820 400 square feet. The size of these houses. Typically three twos or four threes.
Bill Fairman (11:43):
And now the ones that are existing that are already built. I believe, what was our loan amounts on those generally around?
Jonathan Davis (11:52):
First one that we built, the construction amount was 206,000 and it ended up selling for 339,000. The next one that we financed, prices went up. The structure and budget went up to about 220,000 and anticipated to be around that same 330 to 350 mark for the ARV.
Bill Fairman (12:19):
As you can tell by the size of that house, that’s very affordable. By the way, the one that’s under construction right now that we’re financing is taking a little bit longer because they only have the one guy to do the job. So if you are little motion sickness challenged, I didn’t think you wanted me to spend 20 minutes cause that’s how long it took me to walk through town. So I sped up the video a little bit. So this is fountain park. As you can tell, it didn’t take long to walk, really to that downtown area. We’ve been here for five years and the one day I decided to film down, they have a, got half the water out of the fountain. The fountain is under maintenance. But you know, this is a quaint little town. They’re getting ready to build an outdoor entertainment facility on the left side of this park.
Bill Fairman (13:15):
It’s going to have a nice band stand.
Jonathan Davis (13:17):
And there are hotel going in somwhere.
Bill Fairman (13:19):
A hotel going right across there and that blank spot. And as we go up here, you’ll see the, where they’ve already torn down a little bit of a building and they had a shared wall, I guess they’ll paint that wall eventually. But this gives you an idea of, you know, the, like I said, the quaintness of a little small town. It still has a nice, core urban area. The businesses there are still thriving, even coming out of COVID. These buildings were built between late, very late 18 hundreds and mid, probably around 1930, 35. I’m going to back this up just a little bit. I want to show you this. This at the end of the street is brand new housing and it does comply or look a lot like the rest of the downtown area. So they did a nice job. This is only a couple of years old.
Jonathan Davis (14:18):
Yeah, that’s just two years old.
Bill Fairman (14:20):
Luxury apartments right there in downtown. This parking lot across the street from the building offers express bus trips into downtown Charlotte, and you just parked there and get on the bus, go downtown Charlotte.
Jonathan Davis (14:38):
And see the construction.
Bill Fairman (14:39):
So we’re going to move in a little bit slower. I want you to see the factory across the street that used to be a textile mill. They redeveloped it into office and retail as well as residential. Behind that and we’ll just let it go. There’s also an entertainment facility, indoor sports arena, right behind that factory. Here is a brand new development that’s going up, it’s going 177 units of luxury apartments. The building to the right, you can see going up, that’s retail and restaurants, dining office, as well as you can see the city itself and the state. Look at the sidewalks. They’re improving all the walkability areas in these areas, because now they’re getting all this tax revenue and they’re improving all this. Now it’s been taken a little bit longer on our street.
Jonathan Davis (15:37):
And this is our street.
Bill Fairman (15:38):
But they are improving the sidewalk here as well. And lastly, a shameless promotion of Carolina Capital Management. This is the building we occupied at the top floor. 3 unit condo. So there’s three businesses in here at the top floor.
Jonathan Davis (15:58):
It used to be the, it was the first post office in Rock Hill and then they buit the bigger one in 19, whatever it was like, 1930. And they moved this one, a block from where it was to where it is today and the fun story is, they moved it. Well, they reached out to engineering firms to see how they could move it and all the engineering firms said that you, you can’t move it and then some local guy said, well, I’ve got some mules in some rollers. I bet I can move it. And that’s what he did.
Bill Fairman (16:36):
Yep. A wagon and a team of mules
Jonathan Davis (16:41):
They were bringing fresh mules in every week is what I understand.
Bill Fairman (16:50):
Nice. So that building, not only was it the original post office, once they moved it to its new location, they turned it into the public library.
Jonathan Davis (17:00):
Yup. Until 72 and then it became this.
Bill Fairman (17:02):
Yeah, it’s a historical building. We love them because it has character, but at the same time, the installation in that grade.
Jonathan Davis (17:16):
I love the burlap sacks on my wall. You know, like the, whatever that is.
Bill Fairman (17:20):
Yeah, but that was interior design from the eighties. The reason we’re bringing all of this up is that the, again, the demographics are changing. People are, number one, they’re moving into the suburbs because it costs less. They’re moving into the summer because the school districts are a little bit better.
Jonathan Davis (17:39):
Taxes. Taxes are more favorable typically cause you’re in the next county over.
Bill Fairman (17:42):
Yeah. And, but you still have the component of being in that urban setting. Downtown rock Hills got three different microbreweries in there. They’ve got a nice little specialty restaurants. They’re not chain restaurants. I know the first one I walked by was a Jimmy John’s, but that’s really the only chain type of restaurant that’s even in the downtown area. All of them are locally owned. They all have their own little, you know, American flare or, Asian flare or a Italian. It’s just, again, it’s not a chain, so you’re going to get some nice specialty dining experiences, in those areas. Now, Jonathan has properties in other parts of our MSA or bedroom communities. You want to talk about Concord and Conneticut and Salisbury?
Jonathan Davis (18:36):
Sure. Yeah. It’s the same thing. I mean, so, Concord is a, I don’t have a video to show, but it’s a cute town, it’s, it’s really growing same thing. So the whole takeaway from this is, it’s our belief that focusing in on those bedroom communities is where your wins are going to be for the next few years. So if we’re talking about Charlotte specifically, I mean, Concord, Kannapolis, Salisbury, Gastonia, Rock Hill, Monroe would be another one. Huntersville, but that’s really, it’s kind of already known and pretty,
Bill Fairman (19:19):
That a little bit further to Kings mountain is really only outskirts of being a bedroom community. Salisbury, took a long time for it to start to move, but it was because of the interstate situation. It took them awhile to finally improve the interstate to where it’s taking you 30 minutes, 45 minutes to get into town. And that’s the main draw. You want to be far enough out where you are in that little community. But you need to have access to get to the major MSA, fairly quickly. You don’t want it to be a whole day trip.
Jonathan Davis (20:00):
No, I mean, typically what you find in bedroom communities, they’re a 45 minute drive from the downtown area of the major Metro. So if you look at Rock Hill, we’re what? 25 minutes? Something like that. Concord is going to be the same thing, 20, 25 minutes. Kannapolis. Gastonia is going to be, you know, 25, 30 minutes. Monroe might be closer to that, 30, 35 minutes.
Bill Fairman (20:28):
Monroe doesn’t have a interstate. It has a four lane state highway, but there’s a lot of traffic lights and stuff. So it takes you a little bit longer. Yeah. It can get out that way. I live out that way and it’s just, it’s booming, like crazy.
Jonathan Davis (20:41):
No, but yeah, no, it’s a bedroom communities, our state, I mean, that’s where we see the migration patterns going. We see more build outs. I mean, just in that little walk you did around Rock Hill, you know, the new construction that was going on and you can see that people are doubling down on rentals on multifamily and single family rental.
Bill Fairman (21:02):
Keep in mind too. You’re not going to be competing with the big hedge fund, folks that are coming in and buying up all the single family. They want to be in the major MSA. They want to have homes that are 15 years old or newer and they are paying way too much for them because they can
Jonathan Davis (21:25):
You know, it’s interesting. In my neighborhood, my neighbor is in the process of, they’ve got the final number from Zillow. So Zillow has been trying to buy their home and Zillow is paying them, over a hundred thousand more to buy their home than what I paid for my home three years ago and my home is almost a thousand square feet, bigger and double the lot size, like it’s insane, what’s going on. Like these buyers coming in and doing that. So, I mean, Zillow is, you know, what do they, do you think they’re going to resell that and make a few thousand bucks? Or do you think they’re going to put a tenant in there?
Bill Fairman (22:14):
Well, it’s hard to say because you get them up to a particular point and you can’t justify renting it.
Jonathan Davis (22:22):
Well, it depends on what your cost of carry is on your funds.
Bill Fairman (22:25):
And I heard something recently that Zillow’s, whatever it’s called, purchasing directly is actually, they continue to lose money in that particular side of the business. So while they have plenty of money, they’re not going to continue to do something that’s losing them money. So I don’t know how far that’s going to go with that part of the eye buyer thing.
Jonathan Davis (22:55):
So what do you, like, I’m just thinking out loud here. What would motivate someone to do something for an extended period of time of losing money? It’s not because they’re stupid.
Bill Fairman (23:07):
Well, sometimes I need to write off other parts. So it’s making money
Jonathan Davis (23:11):
Perhaps, perhaps. I mean, or they’re banking on something else. You know?
Bill Fairman (23:17):
Yeah. Listen, single family rentals is very popular because let’s face it. You can’t put your money in anything else that is going to produce a decent yield. The reason the stock market is booming is because you can’t make any money in the bond market. The companies that are starting to pay dividends, you’re going to see a lot of people dumping money into their stocks.
Jonathan Davis (23:41):
Do you see when Winn-Dixie? Man, Winn-Dixie did a great job?
Bill Fairman (23:45):
No, I did not.
Jonathan Davis (23:46):
The people who have invested in Winn-Dixie. I think they, I was just reading a quick article this morning. I think they’re going to get an $87 million payout from the cash that Winn-Dixie has, because how well Winn-Dixie is thriving right now.
Bill Fairman (24:00):
Interesting. Well, this is for another show, but the part
Jonathan Davis (24:06):
See? And Brian made the point that I was alluding to Amazon lost money for a long time to gain market dominance. You know, who is Amazon fighting against right now? BlackRock other large hedge funds
Bill Fairman (24:19):
For the buying homes.
Jonathan Davis (24:21):
For the buying homes. Yeah. Yeah. So I mean to gain dominance, I mean like, yeah, you have to lose, I mean, in this market you would have to throw one of those money
Bill Fairman (24:31):
You know, Brian, one of the reasons Zillow gained so much market share was because your a national real estate association kept giving them all their leads.
Jonathan Davis (24:43):
Yeah. Oh, and I saw the fee for Zillow. It’s 1% fee. Yeah. Does that mean like, if I’m a real estate agent, man, I’m starting to get ahold of terms
Bill Fairman (24:53):
t’s the same. The realtor were sold out by the national association because they kept giving them all the access to the MLS and they wouldn’t be anything without access to the MLS. So it’s their own fault. Sure.
Jonathan Davis (25:14):
Well, yes. It’s got asked our realtors go in the way of the Dodo. I mean, I think there will always be a group of people who want that hands-on experience with somebody. I mean, I don’t think they’re going to go away completely, but I think the market share of people who are using real estate agents is greatly going to decrease and it has greatly decreased
Bill Fairman (25:36):
And there’s a lot of moving parts. And then there are some niche markets that you definitely are going to have to have a realtor to help you navigate.
Jonathan Davis (25:44):
Well, luxury homes. You’re always like, when someone’s paying a million dollars plus for a home, they want that experience of someone walking through the property saying, Hey, here are the great features. You know, they want that, but it, you know, on the more affordable housing side, I think people are looking for ways to save money.
Bill Fairman (26:05):
Yeah, absolutely. Well, listen folks, bottom line here is if you follow the migration patterns and the different demographics, you’re looking for areas to market in, it’s going to be the bedroom communities around the MSA, the major MSA. That’s where you’re going to find your deals right now, the places where are going to be the least expensive, are going to be the bedroom communities that don’t have that interstate access and it’s going to take people a little bit longer to get to. But it’s like anything else you’re going to work it until it gets too expensive. Then you’re going to go out a little bit further.
Jonathan Davis (26:45):
See I have no problem telling people like I have, I have rentals in Concord, Kannapolis, Gastonia, Rock Hill, and then I’ve also ventured into, Columbia, South Carolina and, High Point North Carolina and High Point is a great rental market for a bedroom community for a different NSA.
Bill Fairman (27:06):
Wendy and I grew up in High Point. It doesn’t look a whole lot different than it did when we were going up there. That’s one of the reasons why liked it so much.
Jonathan Davis (27:16):
We like consistencies.
Bill Fairman (27:16):
Folks, thank you again for joining us on the Real Estate Investor show and it is called Hard Money for Real Estate Investors. We are Carolina Capital Management. We are lenders in the Southeast for real estate investors. If you are looking for a loan for your property, go to CarolinaHardMoney.com. If you’re a passive investor, hit the apply now button. If you’re a passive investor, looking for passive returns, go to the accredited investors, have don’t forget to like share, subscribe, hit the bell. And don’t forget to sign up for a Wednesday with Wendy. You guys have a great week. We have a next show coming up at one o’clock. There’s a link to it. Hope to see you there. Bye.