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kevink

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Reply with quote  #1 
Great article from today's U-T.
Pay attention to the statistics of the cost of doing business in CA vs. Idaho.
The quote from the person working for the state about no business exodus is hogwash! Small businesses are leaving CA for Idaho, Utah, Oregon all the time. The big guys will stay because the state won't let them leave.

http://www.signonsandiego.com/news/metro/20060326-9999-lz1n26buckkni.html

Buck Knives enjoying a better business life in Idaho than El Cajon

UNION-TRIBUNE STAFF WRITER

        March 26, 2006

POST FALLS, Idaho – It feels almost like home inside the Buck Knives plant. Workers on the factory floor wear San Diego Chargers shirts. Machines rumble and grind as they always have, churning out a product long synonymous with El Cajon.


EARNIE GRAFTON / Union-Tribune
"To stay strong, we had to move," said Chuck Buck, 69, chairman of the board at Buck Knives, which moved from El Cajon to Post Falls, Idaho, beginning in December 2004. Buck examined elk antlers gathered by Boy Scouts to be used in making knife handles.
Step outside, and the illusion shatters like ice. Snow covers the ground and a crisp breeze gives the 9-degree air a bitter nip. Only the foolish would venture out without a heavy coat and gloves.

This is Post Falls, the northern Idaho town where Chuck Buck and his son, C.J., moved their company just over a year ago after 38 years as an El Cajon mainstay.

The Bucks said it cost too much to make their rugged outdoor knives in California, and Idaho was all too happy to welcome them with financial incentives. Fifty-eight employees came along. About 200 others were laid off.

Local leaders considered Buck Knives' departure a visible blow to San Diego County's economic landscape and a symbol of the state's problems in attracting and keeping companies.

“I'm always sorry when I see a company leave the state, but I use the experience of Buck Knives to warn elected officials to pay attention to competitiveness issues,” said Julie Meier Wright of the San Diego Regional Economic Development Corp.

FIRST OF TWO PARTS

More than a year ago, Buck Knives left El Cajon for Post Falls, Idaho.

Today: The San Diego Union-Tribune looks at how the company has fared since the change.

Tomorrow: Find out how the 58 employees and their families who moved with the company are adjusting to their new home.

A year later, the Bucks say they are reaping the rewards of their move in lower electricity and water bills and workers' compensation insurance rates, state and local officials keen to make them feel at home, and an eager labor force. When they opened in Post Falls in early 2005, hundreds of people showed up to apply for about 200 jobs.

The Bucks have reason to be optimistic. Last year, Buck Knives did $37 million worth of business, up $4 million from the year before. C.J. Buck is predicting a 20 percent jump this year, meaning more than $44 million in sales.

But the company also grapples with unexpected local costs and unrelenting market pressure to make their knives even more cheaply outside the United States. “To stay strong, we had to move,” said Chuck Buck, 69, chairman of the board. “I don't want my business to become smaller. I want it to grow.”

A natural fit

Moose, elk and bald eagles are plentiful in Post Falls, a town where evergreen-covered mountains rise above the clear waters of the Spokane River. Interstate 90 is the only freeway through town, and most of the businesses line one thoroughfare.


EARNIE GRAFTON / Union-Tribune
This Buck knife commemorating duck hunters was made at the new 126,000-square-foot Post Falls factory in northern Idaho.
Founded in the 1870s by a German immigrant named Frederick Post, the town once relied on lumber and mining as its industries, but now emphasizes manufacturing and tourism.

Idaho, with its large expanse of wilderness, seems a natural fit for a company that sells primarily to hunters and backpackers. The Bucks even built the lobby of their new 126,000-square-foot plant to resemble a hunting lodge.

They had considered moving to Washington or Oregon – Bend, Ore., offered a tempting incentive package worth about $1 million – but settled on Idaho because of its more conservative political climate.

“Dad said, 'I'm going to be more comfortable in Idaho, so we're moving to Idaho.' And that was the decision to move to Idaho,” said C.J. Buck, 45, the company's president and chief operating officer.


The state offered $690,000 to Buck Knives for training new employees, or up to $3,000 for each new worker. So far, the company has used more than $450,000 of those funds, state officials said.

C.J. Buck said he's saving about $1 million a year in lower costs for workers' compensation insurance compared with California. Electricity and water cost 60 percent less than in El Cajon, where environmental regulations and the cost of importing fuel and water drive up rates.

The Bucks had hoped the move would bring lower labor costs. Idaho has no state minimum wage and is covered only by the federal minimum wage of $5.15 an hour. The minimum wage in California is $6.75.

Shop floor workers at Buck Knives make an average of $10.25 an hour, compared with $13.50 an hour at the El Cajon plant. Labor costs in Idaho also have been reduced because so many longtime El Cajon employees were replaced, Vice President Phil Duckett said.

But they haven't saved as much as they expected.

Soaring job growth in Kootenai County, where Post Falls is located, has caused unemployment to fall to its lowest level recorded there, meaning wages must be competitive to attract workers. And Post Falls is just four miles from the state line with Washington, where the minimum wage recently increased to $7.63 an hour.

When Buck Knives opened in Idaho, starting workers were offered $7 an hour. That has since gone up to $8.50 an hour.

Property taxes and the cost of medical benefits have also been higher than expected, but those costs are far outweighed by the decrease in workers' compensation insurance, Duckett said.

“The net result is it's a lot cheaper to do business up here,” he said.

A return to Idaho


EARNIE GRAFTON
/ Union-Tribune
Buck Knives employee Jeff Legerton worked at the new factory in Post Falls, Idaho. Though many workers say they enjoy living in a more peaceful environment, some say they miss the San Diego area.
The move to Idaho was a homecoming of sorts for the company and the Buck family. In the 1930s, Chuck Buck's grandfather, Hoyt, made knives in a church basement after moving from Kansas to Mountain Home, Idaho.

After World War II, Hoyt Buck moved to San Diego and with his son, Al, formed H.H. Buck & Son. They incorporated in 1961 and in 1968 opened a 180,000-square-foot plant in El Cajon because land was cheaper there. Eventually, Chuck Buck learned the business and took over from his father.

The company became known for its reliable knives with a lifetime warranty, especially the Model 110 Folding Hunter. Designer knives, like the custom-made Bowie knife with an elk antler handle, sell for up to $600.

Each knife comes packaged with a biblical quotation: “For God so loved the world that he gave His only begotten son; that whoever believeth in Him should not perish, but have everlasting life.” (John 3:16)

Chuck and C.J. have side-by-side offices. The elder Buck, an easygoing storyteller, travels around the country to etch his signature on knives during store visits, and to speak at prayer breakfasts. C.J. leads the company's day-to-day operations.

Sometimes C.J. thinks his dad gave him the reins too soon. He wryly notes that Buck Knives lost money in 1999, the year he became president and chief executive officer. The company was starting to recover from that dip in 2001 when the 9/11 terrorist attacks caused a backlash against the knife industry. The public was more turned off to weapons, C.J. said, and traveling with knives became a hassle under new airport restrictions.

The Bucks fought back by setting up a more efficient manufacturing process. They banked on a highly touted new multipurpose gadget, the BuckTool, then saw it flop because of its steep price.


EARNIE GRAFTON / Union-Tribune
Jeff Legerton (left), Jim Hypes (center) and Chuck Buck shared a laugh at the factory on a winter day in Post Falls. "I had no idea it was quiet when it snows," said Chuck Buck about an experience in his new hometown.
Meanwhile, major retailers like Wal-Mart, Buck Knives' biggest customer, were demanding lower-cost products the company couldn't afford to make in El Cajon. So in 2000, Buck Knives opened a plant in China. The company now imports 30 percent of its knives from there, mostly for outdoor recreationists and selling for less than $30.

The decision to go overseas was agonizing for the Bucks. Chuck Buck winces when he hears from customers upset to see “Made in China” on a Buck knife.

“We feel like we have to do it,” he said. “Most of the time they don't agree.”

Even with the imports, the company's business costs in California were out of control. State workers' compensation insurance and utility costs were skyrocketing. The threat of rolling blackouts in 2001 made the Bucks anxious about having a reliable source of electricity.

The Bucks, both lifelong San Diego County residents, announced in April 2002 they were thinking about moving out of the state. Hoping to keep them here, county Supervisor Dianne Jacob called a meeting of utility officials and other local leaders to see how Buck Knives' costs might be reduced. Rep. Duncan Hunter, R-El Cajon, convened a summit on whether California was unfriendly to business.


EARNIE GRAFTON / Union-Tribune
Searching for a less expensive place to do business, Buck Knives moved its operations from El Cajon to Post Falls, Idaho, in December 2004.


EARNIE GRAFTON / Union-Tribune
Kelly Vredenburg packed knives.
The last-ditch efforts didn't raise the company's bottom line, so the Bucks went ahead with the move.

Some of the company's problems stemmed as much from its line of business as where it was located.

Although the Buck name on a knife is highly regarded, the company has only about a 9 percent market share. The knife industry is not like soft drinks, C.J. Buck explained; there are no huge companies like Coke or Pepsi dominating the market.

Like other U.S. manufacturers, the industry has faced intense pressure to make products at prices competitive with imports. One of Buck's biggest rivals, Imperial Schrade of Ellenville, N.Y., closed in July 2004 after a century because it couldn't compete with imports. About 250 workers lost their jobs.

C.J. Buck said he and his father vowed their company would not suffer a similar fate.

“Making products in the U.S. would not have been possible without relocating to Idaho,” he said. “The move to Idaho really is a testament to our dedication of not losing our manufacturing background.”

A new business climate

When Buck Knives began moving in December 2004, the company exchanged one of the most expensive business climates in the United States for one of the cheapest.


A study by the Milken Institute found that California had the fourth-highest business costs in the country as of 2004, behind only Hawaii, New York and Massachusetts. Idaho had the fourth-lowest costs.

Other Western states have run ads in California seeking to lure companies away, and officials from Gov. Arnold Schwarzenegger on down have fretted about the loss of businesses.

Schwarzenegger backed an overhaul of the California workers' compensation system that is estimated by the state to have saved businesses $8.1 billion since it was passed by the Legislature in March 2004.

Despite fears over companies like Buck Knives leaving the state, at least one study suggests the economic impact may be less than thought.

A 2005 report by the Public Policy Institute of California, a nonprofit research organization based in San Francisco, found that job losses from company relocations have never been more than a tenth of 1 percent of all of the state's jobs.

“There has been no substantial business exodus from California, and there has been little if any change in the rate at which businesses are leaving California or avoiding California,” the study said.

C.J. Buck still sees problems ahead for California. He felt San Diego County officials backed the company, but politicians in Sacramento didn't.

“I don't know what California needs to do,” he said. “Maybe they just need to get in trouble before an entire state can embrace a different mind-set.”

In Idaho, he said, he's found an atmosphere where his business is welcomed and supported. There aren't as many restrictive regulations or laws that raise costs.

Advertisement

“From the governor to your next-door neighbor, there's an understanding that being kind to business is good for the state,” Buck said. “People celebrate our success knowing it's good for the state. It's a heartfelt philosophy.”

It's unclear whether another generation of Bucks will continue to run the family business. C.J. Buck doesn't mention any of his five children and stepchildren as a natural successor. Chuck Buck said he hopes his 23-year-old granddaughter, Sarah, might one day take over. She works in the company store, leads tours and helps organize the annual sales.

For now, C.J. Buck said he's enjoying running the company and developing new products. He said he misses the people he left behind in California, but enjoys his new life in Post Falls.

“I'm not worried about power, water and politics, and it's great,” he said. “We're set to shine.”


 Anne Krueger: (619) 593-4962; anne.krueger@uniontrib.com



RonaldStarr

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Reply with quote  #2 

Kevin Koskella--CA--------------

 

Thanks for the article.  I found it interesting.

 

Do you suppose you could post the second article also?  I'd like to see what the individuals who moved have to say.


Good Investing and Good Understanding**********Ron Starr***********

 

kevink

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Reply with quote  #3 
Ron,
What's the second article you are referring to?

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Kevin Koskella--CA-------

 

From the sidebar on the right side, near the top of the article:

 

"FIRST OF TWO PARTS

More than a year ago, Buck Knives left El Cajon for Post Falls, Idaho.

Today: The San Diego Union-Tribune looks at how the company has fared since the change.

Tomorrow: Find out how the 58 employees and their families who moved with the company are adjusting to their new home. "

 

Good Investing and Good Posting*********Ron Starr*********

kevink

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Reply with quote  #5 
Ron,
Here's the link to today's part 2 of that series:
http://www.signonsandiego.com/news/metro/20060327-9999-lz1n27buck.html

I won't post the article because it contains an ad, which is a big no-no on these boards!

Sorry Greg for the last one.

Cheers,
Kevin


Greg

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Reply with quote  #6 
I read the 2nd article. Some of the buckeroos were homesick for San Diego. And  I liked the part about the old timer telling them to go back to California, that they were "runing his style of life" or something like that.
Greg





livinineurope

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Reply with quote  #7 

 

I've lived in So Cal and idaho for 3 years each.. it's flat out impossible to beat SCal weather and I think the ocean and close by mtns is what keeps people coming back.  Id is not for people who like metro activity.  Any word on how Meridian is doing?  Tuscon and Phoenix inventory is surging and I know Boise inventory is up substantially since Aug/Sept, but wondering what those who bought precons are doing?

kevink

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Reply with quote  #8 
I bought 2 precons in Meridian in the birchstone subdivision, like many others, in September last year and had to walk on both of them and lose my em deposits because of no appreciation. This was more due to the fact that Birchstone was oversold to investors and locals were just not buying there, combined with the fact that
Boise RE slows WAY down in the winter because of the weather. I also bought a precon Eagle which I closed on 2 weeks ago and has gone up about 25k since we put down em in October. We plan to sell this in April.

I also have 2 under contruction in Nampa:
1- 5 BR 2100 sf reserved at 179k in Dec, they are selling the same model for 219k today and mine closes in May.

2- 3BR 1440 sf reserved at 169k in Jan, they are selling the same model for 179k today and mine closes in June.

Things have picked up quite a bit in Boise since January, but you have to be in the right area and the right subdivision.

Kevin

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Kevin .....  I have contracts for a 2363 SqF very well appointed home in Nampa Creekside PArk  and a 2100 SF in Hillside Manor ..  @ 266 and 244 respectively ..  Not sure of the value now, these close or I would rather flip the contracts in May ...  Are you familiar with these subs ?

 

Jay Berman

Premiere Investment Group, LLC


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Reply with quote  #10 

Hi,

 

What is minimum deposit required for these deals?

 

 

kevink

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Reply with quote  #11 
Quote:
Originally Posted by jaypnc

Kevin ..... I have contracts for a 2363 SqF very well appointed home in Nampa Creekside PArk and a 2100 SF in Hillside Manor .. @ 266 and 244 respectively .. Not sure of the value now, these close or I would rather flip the contracts in May ... Are you familiar with these subs ?

Jay Berman

Premiere Investment Group, LLC



Jay,
I'm not familiar with those...mine are both in the Blackhawk subidivision.
You can check http://www.idahoproperties.com to see if they have anything there similar to yours.

cheers,
Kevin
kevink

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Reply with quote  #12 
Quote:
Originally Posted by reisuccess

Hi,

What is minimum deposit required for these deals?


Hi,
The ones I got in nampa were $1k em each.
Right after I reserved the second one I heard they raised the em deposit requirement to $2500.


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anyone investing in the emmett project ?

Jeff

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Reply with quote  #14 

(picture me with my hand raised over my head...)


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(pictured) lol what are your thoughts on that area of Id?.
jaypnc

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I'm in on a project in Emmett ....  and 2 pre-con in Nampa ..

 

Jay Berman

Premiere Investment Group, LLC


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livinineurope

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Reply with quote  #17 

Jeff, Jay and Kev,  Gentlemen,  Thanks for your input.

 

A little more background for you.  I also lived in S.A. TX for 4 years.. I was wondering what took so long for it to take off..  Easily the best of the Tx cities..  maybe some prefer Austin, but S.A. has the spurs and more culture..

 

Have a rental there for 12 years.. 1st 10 the price didn't budge.. last 2 up 15-20%.. this year up about 10%.. Have always had break evene or a little positive cash flow (with a 7 1/2% rate)..  Not great but reliable..  only been empty 2 weeks.  Rents are going up as well. 

 

Even before prices went up in Boise I could not generate cash flow, so I stayed clear.. I believe Ron Starr on this board speaks a lot to this.  Who else has decent experience on this board in that area.  Curious, if you are picking your cities on appreciation, or Robert Campbells methods or something else.. Thanks

 

 

Jeff

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Quote:
Originally Posted by sdinv
(pictured) lol what are your thoughts on that area of Id?.

I have mixed feelings on Boise and area.  First of all, I am a NAR/OFHEO guy, and until very recently the numbers did not suggest that Boise was above average in appreciation (of course, the best time to buy is just BEFORE the "numbers" go up...).

 

Now the numbers suggest perhaps 22% to 29% appreciation (can anyone confirm this?). 

 

When I said "mixed" feelings, here is why.  Some people can justify buying homes in ANY area that is appreciating rapidly.  Other people can't justify ANY market price purchase in an area where the rents wont cover the mortgage.  Boise is a little bit of both of these (I think).  Appreciation is high (albeit not everywhere!), but rents don't come ANYWHERE near covering mortgages (I hear).

 

So what is a buy and hold investor to do?  Well, at first I said to myself...stay clear, you could get burned.  While I did this, others who were comfortable "flipping" and thus did not care about rents, bought and made money (~half of which they will lose to taxes?).  Still others put EM down, and then later walked away losing their deposit because they missed the area that was appreciating.

 

The Emmett project appealed to me for several reasons:

1.  I could purchase below market (or so I am told--we will see)

2.  I could use my SDIRA funds and, thus, not have to worry about losing half my profits to taxes on a flip

3.  I could buy just a lot, and flip it to an investor or end-user without ever having to worry about rent or insurance (property taxes, of course, are still a possibility)

 

This is how it was supposed to work (if I understood correctly).  The lots would "record" in mid-summer.  At that time the developer (a SDCIA member here in SD) would either buy back the lot from you (at about a 25%-30% profit) or you could wait and sell it to an end-user at a potentially higher profit.  Now the current developer is reporting that he might sell the whole thing to another developer, and that investors will see their profit even sooner.  Either way, 25%-30% return (50%-60% annualized?) sounded pretty good to me, especially as I wouldn't be hit for taxes on the gain...so I bought TWO.

 

We will soon see if I made the right decision...

 


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dansimo

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Jeff,

I always enjoy reading of your adventures... Journeys of Jeff.

Keep 'em comin'...they always motivate me!


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FYI.  The highway plan between I-84 and Emmett was cancelled.  It was on Saturday March 4 newspaper. 

 

Vatt

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Quote:
Originally Posted by Vatt

FYI.  The highway plan between I-84 and Emmett was canceled.  It was on Saturday March 4 newspaper. 

 

Vatt

Crap!

 

Canceled or postponed?


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It said "removed fromthe plan".   I went to Boise that weekend.  I still have a newspaper with me.  If you like to see it, I can fax it to you.

 

Vatt

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Quote:
Originally Posted by Vatt

It said "removed fromthe plan".   I went to Boise that weekend.  I still have a newspaper with me.  If you like to see it, I can fax it to you.

 

Vatt

If it is not too much trouble...858-586-1548...

 

Thanks!


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Reply with quote  #24 

jeff, so iam assuming you are going along with the build out correct?

50%-60% annualized... of what amount?

 

How will using your sdira funds save you from losses half to taxes?

Jeff

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Quote:
Originally Posted by sdinv

jeff, so iam assuming you are going along with the build out correct?

50%-60% annualized... of what amount?

 

How will using your sdira funds save you from losses half to taxes?

No...if things go as planned...no build out--just flip the lot.  Financing would be difficult/complicated for me as I own the lot in my retirement account...

 

SDIRA profits go back into the retirement account entirely untaxed (in the current tax year)...or so I hear.  This is MUCH better than paying short-term capital gains or worse, being labeled as a "dealer" and having to pay SS to boot!

 

Marginal Fed Rate + State Rate + SS = 33% + 9% + 14% = 56%?

 

I would rather pay zero than 56%!

 


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Greg

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Reply with quote  #26 
Do you guys still fell good about Idaho??
Greg


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Reply with quote  #27 

Quote:
Originally Posted by Greg
Do you guys still fell good about Idaho??
Greg


Absolutely, feel awesome about it.

 

Depends on which context you are referring to as "good":

 

a) investment versus speculation

b) category of RE for investment/speculation

 

Also since you said "Idaho" and not "Boise" :

 

a) Buying below mkt cents on dollar - real good, deals all over to be had

 

b) Land Development - real good, if you know the growth patterns and where to head to buy dirt (since you said "Idaho")

 

c) Preconstruction Speculation - not good in Boise, maybe good in Twin Falls or Pocatello or Post Falls. Again, I'm not doing too much of this, so I wouldn't know, but based on inventory and other numbers, perhaps not.

 

d) Preconstruction Investing - real good (buy below market value, help developer get financed, and sell back to developer below market value) - safe option

 

e) Commercial Land Development/Properties - real good (residential boom leads commercial booms, and theres still need for commercial out there)

 

f) Apartment buildings - average (except if you buy cents on dollar, then it doesn't matter)

 

g) buy and hold as rental (single family) - not good

 

The answer to your question, as my opinion (not fact), depends on which category of investing/speculation you were referring to when you asked your question.

 

Vivek

 


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Greg

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Reply with quote  #28 
Quote:
Originally Posted by cyberjb

Absolutely, feel awesome about it.

Depends on which context you are referring to as "good":

a) investment versus speculation

b) category of RE for investment/speculation

Also since you said "Idaho" and not "Boise" :

a) Buying below mkt cents on dollar - real good, deals all over to be had

b) Land Development - real good, if you know the growth patterns and where to head to buy dirt (since you said "Idaho")

c) Preconstruction Speculation - not good in Boise, maybe good in Twin Falls or Pocatello or Post Falls. Again, I'm not doing too much of this, so I wouldn't know, but based on inventory and other numbers, perhaps not.

d) Preconstruction Investing - real good (buy below market value, help developer get financed, and sell back to developer below market value) - safe option

e) Commercial Land Development/Properties - real good (residential boom leads commercial booms, and theres still need for commercial out there)

f) Apartment buildings - average (except if you buy cents on dollar, then it doesn't matter)

g) buy and hold as rental (single family) - not good

The answer to your question, as my opinion (not fact), depends on which category of investing/speculation you were referring to when you asked your question.

Vivek



Thanks for your complete answer despite my vague question. I should have specified I'm interested in a pre-con flip. I'm not sure what you mean by precon speculation vs precon investing above.
Greg

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Reply with quote  #29 
Quote:
Originally Posted by Greg
Quote:
Originally Posted by cyberjb

Absolutely, feel awesome about it.

Depends on which context you are referring to as "good":

a) investment versus speculation

b) category of RE for investment/speculation

Also since you said "Idaho" and not "Boise" :

a) Buying below mkt cents on dollar - real good, deals all over to be had

b) Land Development - real good, if you know the growth patterns and where to head to buy dirt (since you said "Idaho")

c) Preconstruction Speculation - not good in Boise, maybe good in Twin Falls or Pocatello or Post Falls. Again, I'm not doing too much of this, so I wouldn't know, but based on inventory and other numbers, perhaps not.

d) Preconstruction Investing - real good (buy below market value, help developer get financed, and sell back to developer below market value) - safe option

e) Commercial Land Development/Properties - real good (residential boom leads commercial booms, and theres still need for commercial out there)

f) Apartment buildings - average (except if you buy cents on dollar, then it doesn't matter)

g) buy and hold as rental (single family) - not good

The answer to your question, as my opinion (not fact), depends on which category of investing/speculation you were referring to when you asked your question.

Vivek



Thanks for your complete answer despite my vague question. I should have specified I'm interested in a pre-con flip. I'm not sure what you mean by precon speculation vs precon investing above.
Greg

 

Precon speculation :

 

You put down deposit 2k to go under contract today June 7, with builder, for price of 180k.

 

6 months later, property is worth 220k, you close, sell immediately, pocket profits.

 

Why speculation ? because you do not know that the property will be 220k for sure 6 months into the future. So you are, in a sense, speculating 2k of your money.

 

Precon Investing:

 

You invest 20k with a builder/developer who's preselling 180k mkt value condos for 100k to buy them back at 120k in 1 yr, thus giving you 100% annual return.

 

OR

 

Builder could be just pre-selling those condos 20-30% below today's market value (for example: preselling 180k mkt value condo for 120k in return for 20% down on 120k => 24k down).

 

Whats good in this scenario? You have got under contract at a price below mkt, and a buyback clause price below mkt as well, therefore you are not relying on appreciation. However you are relying on the fact that the mkt will not correct by 33% (180k to 120k) downwards in the 1 year that your money is at risk => a probabilistically unlikely but still possible with less than 1% probability scenario.

 

Precon investing would be safer way to go.

 

Why is the developer/builder offering this? Because he can use your money towards development hard or soft costs, or support for bank financing, and a million other land development/construction or financing reasons.

 

The risk is that your money is tied up for 1 year or so, and released to the developer/builder. You have to do careful due diligence to ensure the builder/developer is reputed and has a successful past track record plus excellent development experience. This risk is identical to the precon speculation risk because almost all builders/developers (the ones I've encountered anyway) require earnest money to be released to them, not held in escrow, and mostly not refundable.

 

Now, again you mention "precon flip", and I'm assuming you mean precon speculation as in "put down earnest money, wait 3-12-24 months, then close, then flip" ? If so, Boise might NOT be your market for that if your precon contract price is today's retail mkt value, but other parts of Idaho might be good bets for this (I do not know which other parts, you have to do some more due diligence to find out).

 

Vivek

 


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Vishram Corporation
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