Why did we choose Murray Hill?

When we started investing in Jax at the end of 2013, we were attracted to Murray Hill because of the low price points and good rents. Small single-family homes were available in abundance for ~$50k that could rent for over $900. In addition, we liked the general direction of the neighborhood as we saw lots of rehabs occurring throughout the area. We found young professionals moving in, interested in a cheaper alternative to Riverside. And Edgewood’s commercial activity was showing similar signs as the King Street Entertainment District in its infancy five years ago.

We had some concerns as well. Wide sections of Murray Hill were still a bit scary and ugly, the existing housing stock was both small and old, and values had dropped quite a bit from their highs before the crash. But overall, it was great to be able to enter a market for such small investment and to be able to expect ~10% ROI on just 50% of rent, all in an emerging area.

So over one year later now, what is the outlook?

We are still bullish on the neighborhood, but we definitely have seen a lot of things change. 2014 was a good year for Edgewood Ave in Murray Hill, which brought a handful of new establishments, headlined by two very popular local chains: Maple Street Biscuit Company and Bold Bean Coffee. If the saying is true, that “retail follows rooftops,” then we are beginning to reap the benefits of all the new residents that have arrived to reshape the neighborhood.

On the other hand, it’s much tougher to find great deals. We’ve witnessed, first-hand, more hedge funds and private equity flowing into the area (and the city as a whole) to buy up dozens of properties at a time. This has been ongoing for several years now, but at this point one has to wonder if the prices are being driven artificially high. Two to three years ago you could pick a random listing and expect it to be a good deal, but these days you really have to search carefully and be patient. With large capital flowing into the city and buying up tape (entire lists of properties), the demand has begun to exceed supply. The absorption rate, which describes how long it would take for all current listings to be sold, has historically held steady at six months in Jacksonville. It is currently just four months.

This is great news for existing owners, but for investors looking to buy it becomes a trickier proposition. For investors, Murray Hill’s popularity is starting to hurt itself a bit. Lots of construction surrounding downtown is also beginning to dilute the rental market in the urban core. It remains to be seen how quickly the demand will fill these new apartment complexes. We believe in Murray Hill’s foreseeable future as a desirable inner-ring suburb with good bones, community charm and urban amenities, but investing in the neighborhood means studying the area carefully and being patient and open-minded.

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San Marco – Our New Neighbhood

We moved to San Marco just over a month ago. We had a blast throwing our housewarming party this past weekend where we invited our good friend Jack Barrett to cook Korean Fried Chicken and also shared information about Yunus Social Business’ loan to build a sustainable Haitian factory. Yeah, this has been a good move and we like our neighborhood a lot. We had high expectations prior to relocating, and in most ways the move has met or exceeded expectations.
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San Marco is a historic neighborhood directly south of Downtown Jacksonville, situated on the east side of the St Johns River. It is a fairly walkable area and generally listed among Jacksonville’s few “urban” and “walkable” districts. But like most of urban Jacksonville, urban is really only relative to sprawling Floridian suburbs and not urban in a worldly (or Northeastern) sense of the word. For all of its beautiful vistas, outstanding fine dining, and pleasant landscaping, San Marco still suffers from a lack of vibrancy, high density and office space. And as many are painfully aware, it also lacks a grocery store (the empty dirt lot at Atlantic and Hendricks has been teasing passersby with promises of a Publix store for the past six or seven years).
outdoor seating
But we moved knowing this. We were aware that Riverside would be more bustling. We were aware of San Marco’s slightly more snobby and pretentious vibe. We were aware that there was no Publix to walk to around the corner. In fact, we actually bet on that. We’re hoping that when that East San Marco development finally breaks ground, and the 15,000 square feet of retail opens along with 280 residential units, anchored by a brand new Publix grocery store, we’re hoping that San Marco gets a bit more bustling and the real estate becomes that much more desirable.
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We’re betting on San Marco because we see plenty of room for improvement and we see a neighborhood working together to achieve its potential. Five years from now San Marco could easily have three lively corridors (Hendricks Ave, San Marco Blvd, Kings Ave) anchored by a bustling mixed-use hub stretching across from San Marco Square to East San Marco. Ten years from now there could conceivably be a multi-modal transit station for commuter rail and the skyway sitting just a few blocks east of the Square. Riverside is awesome and still has room to grow, but San Marco has room to explode.
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Walking two blocks to see the gorgeous sunset over the St Johns River has been a huge plus. Driving five minutes to get to anywhere in Downtown or Riverside has been a Godsend. Knowing that when friends visit we can walk to a microbrewery, a speakeasy, a movie theater, a stage theater, a craft beer emporium, and an indie music venue has been amazing. But by far the most exciting thing has been being on the ground floor and visualizing the transformation to come.
IMG_6859Isn’t this amazing?

Give Baby Food for my Birthday!

In this post, we have decided to write about something other than real estate, because it’s Kelly’s birthday. It would mean the world to her if you would do one or more of the followings:

1. Make a small donation ($10 bucks?) to Grameen, a social business that we are supporting in Haiti. Donate here.

2. More importantly, click “Share” after your donation via FB, email, twitter, whatever.

3. Want go to Haiti to check out where your donation is going with us? Contact me.

Why is Kelly doing this?

Our friends April and Graham April actually made their wedding registry a matching fund to donate to this cause (they got married October 2014). So the least I could do is to donate my birthday (12/15) to support my sister. I’m looking for small donations, because I know you didn’t account for this pop-up charitable cause. Many of you probably already have causes that you support and Xmas presents to buy. But I just hope that more people would learn about this, and maybe some really generous or passionate people would find this amazing and want to donate a lot or help us fundraise everything we need (at the moment: an additional 60K).

baby foodGrow fruit trees and process fruits from Haitian producers to create nutritious baby food.

Donation will go to a social business that:

1. Provides nutritious baby food to the local infants

2. Creates sustainable jobs

3. Helps reverse the serious deforestation in Haiti

4. Will have Immediate results (by Fall 2015 if we have funding by Q1)

What’s a social business? What’s Yunus?

If you are not sure if this donation is going to a good cause, Yunus already vetted it for you (the organization supports roughly 1% of applicants, and have so far 100% success rate for the businesses they support). If this doesn’t convince you, please contact me and we will go to Haiti together to see the place (Planning on going in 2015)! Seeing where your contribution goes is very satisfying! If not, I promise to write detailed reports on our progress next year.

Thanks,

Kelly (& Max)

PS: April and I would both love to talk to you more about this if you are interested. Again, donate here!

Vibrancy: Lessons from Europe

We’d been to Europe before. In the summer of 2005, I spent two months studying and traveling through Austria, France, Germany, Italy and several other countries and Kelly spent five weeks traveling with Contiki. But this was before my elective course in Social Geography and long before I became attuned to the principles of urban planning and design. So this return trip in 2014 was in a lot of ways my European awakening.

In our travels to urban areas across America we always seek vibrancy. It’s the first thing that strikes me, and really most visitors, when setting foot in a big city. Things like bright lights, skylines, and big stadiums might be more noticeable from a distance, but it’s ultimately the hustle and bustle, the traffic (vehicular and pedestrian), the transportation hubs, and even the noise that tangibly delivers the pulse of a big city. Vibrancy is a buzzword for city lovers; we talk about it like it’s a color or a texture. The kind of thing you know when you see…the kind of thing that can’t be faked. And the truth is that most mid-tier metropolitan areas in America struggle to achieve vibrancy outside of perhaps one or two distinct neighborhoods.

So it was quite a shock for me to experience European-level vibrancy this time around. Sure, I had experienced it already less than a decade ago, and sure, I was aware of the reputation for walkability and transit in Europe as a world standard. For me, rather, the shock came upon researching the population numbers of these vibrant cities that we visited.

I’ve seen Vienna pop up near the top of numerous “Best Cities to Live” lists. It has fantastic architecture, wonderful walkability, and a transit system with trams, buses, commuter rail and heavy rail that almost rivals the biggest cities in the world. It is the capital and largest city in the country where I studied abroad, so I’ve long had a personal affinity for Vienna. Total population? Less than 2.5 million. That’s like Pittsburgh or Charlotte. While they are both awesome cities, no one would ever confuse them with a global cultural and social mecca.

Prague is the darling tourist destination of the region. More or less “discovered” by mainstream tourism in the past decade, Prague offers an amazing combination of history, fun, beauty, charm and value. Before we arrived I told Kelly that Prague was a true big city bigger than Vienna and more in line with Milan. The street level activity proved my statement correct. The transit system was efficient and comprehensive, featuring an effective underground subway system, a complementary streetcar network, and timely express bus routes. Prague delivered on my initial promise but to my amazement when I actually looked up the numbers I was wrong all along. Prague has a population around 2 million. That’s comparable to Indianapolis or Columbus, Ohio!

Bratislava is the small brother of Central Europe, rarely anything more than a stopover for tourists traveling between Prague, Budapest or Vienna. And so it was for us, but standing in the central district (Old Town) of Bratislava felt like being in the center of the European universe. People everywhere; business suits rushing briskly into buildings, students sauntering about the bars and clubs, trams running constantly in every direction. It helped that we stumbled upon a glitzy fashion show right in the middle of Slovakia fashion week. Anyway, Bratislava population: ~600k. We’re talking Augusta, Georgia or Jackson, Mississippi numbers. No knock on those old Southern towns, but certainly neither evokes bustling metropolis the way Bratislava somehow manages to.

In a way I am stating the obvious. Most European cities developed centuries earlier than their American counterparts, long before automobiles and highways existed. My point is that although I knew all of this already, it’s one thing to understand things in theory and it’s another thing to experience it in real life. I was absolutely blown away by the vibe created by these differences in urban design. The things that so many of us want to see in our American communities do really make a huge difference.

And with that I leave you with three observations:

1) Every city has tons of transit options. You do not need a car to explore urban Europe. The multimodal options allow for effective transport in a variety of geographical areas and situations. It also allows for better walkability focused around transit lines and stations. In America, good transit also serves one more benefit; it helps to shape real estate development in an organized way and boosts property values (and taxes too!) As a regional railroad hub with a substantial private streetcar network during the early 20th century, Jacksonville has an incredible opportunity to return to its roots with much of its transit and rail infrastructure still in place. The urban core neighborhoods stand to benefit significantly if the city and transit authority can ever take advantage of this.

imageone part of a comprehensive transit system that takes you all around the Vienna region…as far as Bratislava

2) Many European cities have relatively few skyscrapers, if any. They achieve vibrancy, walkability and density through smart planning and urban fabric that almost always includes street-level interaction. Skyscrapers do not necessarily add to vibrancy and pedestrian-scale. Many mid-tier American cities would do well to have a dozen four-story mixed-use buildings rather than one 48-story supertall. This is one reason why the neighborhoods in which we invest surrounding downtown Jacksonville seem much more vibrant than downtown itself.

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Prague city view

3) Architecture in Europe is breathtaking…to me, a guy who is impressed by old Jacksonville buildings from the early 20th century. But to people who walk amongst 90% historic structures, they don’t seem so special anymore. My new friend in Prague, a video producer who does primarily corporate and government work, says it’s incredibly difficult for him to find areas worth filming. Meanwhile, he looks at pictures or on Google streetview and dreams of filming “any street in America.” On the other hand, he says that producers from outside Europe have no trouble finding locations. I guess architectural beauty really is in the eye of the beholder. Jacksonville has demolished a lot of its history in and around downtown, but the urban neighborhoods have fought hard to preserve what history is left. While I hate to see preservation at the expense of progress, it’s important that we find balance and don’t erase too much of our history. In a few centuries visitors from other continents might have a similar impression of America as I did in Europe.

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Jacksonville History & Historic Neighborhoods

The Jacksonville metropolitan statistical area is home to the oldest city in the US. St Augustine will be celebrating its 450th birthday next year, and the lion’s share of tourists to Northeast Florida will likely be visiting Jax’s old neighbor to the south. But Jacksonville itself is full of history and was the earliest major city to develop in the state.

Railroad tycoon Henry Flagler built the first railways to Jacksonville (and later St Augustine) positioning the city as a winter getaway for the rich and famous. Before Hollywood turned Los Angeles into the home of the glitterati, Jacksonville was the de facto winter capital for the film and entertainment industry with over two dozen film studios in its heyday. Following the Great Fire of 1904, many budding young architects rushed to Jacksonville to be part of the rebuild. The first structure incorporating “skyscraper technology”…

Henry Dupont built his winter home on the banks of the St. Johns River just south of downtown, to where his wife would eventually relocate following his death.

The point is, the history in Jacksonville is remarkable and often very surprising to those who don’t know about it. The city developed earlier than the rest of the state, and as it grew, dense residential neighborhoods popped up around commercial corridors and often along streetcar lines (hence the term streetcar suburb). At Glocal Network we are generally focused on these inner-ring historic neighborhoods that were built around the urban core. We believe in the urbanization and sustainability movement happening across the country and see this trend taking hold in Jacksonville. Because of the high availability of cheap land in the area and the cyclical nature of suburban development, we are more comfortable investing in the urban core. We are confident that the real estate will eventually reap the benefits of higher demand and a relatively fixed supply.

I’ve categorized the historic neighborhoods based on our interests, but all of these areas are seeing some level of private and/or public investment. I will write more about each neighborhood to do a more in-depth analysis and explanations why we are bullish (or not) about the area’s prospects.

High-focus: Brooklyn, Murray Hill

Secondary-focus: San Marco, Riverside

Low-interest: Avondale, Downtown, Springfield, LaVilla, Eastside

Berkshire Hathaway Home Services

10/14/2014 – 1 am Milan time – On the train from Milan to Vienna

It’s been almost 3 weeks since I got my license and started this blog. Since I have also just gotten married and my best friend was also getting married last weekend, my post-wedding and her pre-wedding stuff has kept me pretty busy. However, I still managed to decide on which company to partner with to start my real estate agent career—Berkshire Hathaway Home Services Florida Network Realty.

After researching many companies I really think it is a no brainer. The main reason is that BHHS is the top producer in the our focus area for investing. BHHS also offers the most robust training program–a rolling 4-week long training for agents to take and retake for free. Since I am planning on working with investors overseas, I think that Warren Buffett would be a good name to associate with. The technology, marketing and legal support are amazing. I have already met the head of each team and they all want to schedule meetings with us to make us better. Because Max and I travel so much, having a strong support team would be great.

What I really love about the company is how much they care about the safety of their realtors and how ethical they do business. I believe that trust is the number one reason why someone would want to do business with you. People need to believe your vision and trust your character. “When you always do the right thing, then you don’t have to worry about getting into trouble.” This line really stuck with me from the orientation. The brokers are also non-competing (they are not allowed to sell homes) so you just have so much more support too.

I have thought about smaller companies, but I really believe that when I’m first starting out, working for bigger companies can offer more comprehensive knowledge and better benchmarks if I were to eventually branch out on my own.

Through my first week I’ve already gotten my business account set up, business cards printed, welcome card on Facebook, and I’ve completed two trainings. All of these have prepared me just enough to continue working while abroad. Yes, Max and I are traveling across Europe and Asia for a month and a half. It’s our honeymoon but we are also meeting potential investors. The crazy thing is that we still have a triplex that is being rehabbed and will be complete while we’re gone. Good thing I have Berkshire Hathaway to help me lease out my properties while we are gone. I am praying that this is all going to work out relatively smoothly.

Soon Max will write a bit more on the different locations in Jacksonville. We also will look for locations like these in our future investments outside of Jacksonville.

Starting our Life in Jacksonville

It’s been 3 years and 1 day since my husband Max and I met in Washington DC. I cannot believe the chain of events that brought me to Jacksonville last month. When I turned in my resignation a little more than a month ago, many people from my engineering firm thought I quit my job to get married. “What are you going to do in Jacksonville? Will you have a job?” These are probably the two most FAQ’s I hear.

So this is a quote from part of my farewell email:

“Since Max was born and raised in Jax and knows the area well, we have been investing in real estate there for a little while. Our plan is for me to take a risk and not look for a job for a year, and instead, I will be dedicating full time to real estate and other projects. I will also be getting my real estate license to focus on purchasing investment properties in FL. Part of our honeymoon will actually be in Asia to connect with investors. I’ve been to Jacksonville many times and actually am excited for its tremendous potential (and the low cost of living). So though it seems like I am moving to get married, a bigger reason for this move is actually my career. ”

I am starting this blog to share my experience and keep a journal for us to reflect on our journey together. I am happy to write that we have so far purchased seven units in Jacksonville and are in the middle of rehabbing three units at the moment. It’s definitely not smooth sailing but it’s been fun so far. I am also excited to start this blog because I actually passed the Sales Associate exam this morning!! I had told myself that I will start a blog once that happens.

So let the journey begin!

To celebrate, we drank a bottle of wine from our wedding and bought another bottle to drink next year. (We went to the Fresh Market grand opening in Brooklyn and the sommelier was very adamant)

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