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GRDadof3

The "Affordable Housing" Discussion in GR

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1 hour ago, x99 said:

But when you add the third stall, you're easily over 700.  And that third stall is fairly common tract house design now--that's how they managed to suck down the rest of it down to 22x22.  Otherwise is just barely enough to fit two cars in.   If you do two 9' doors you're automatically at 24'.   An ADU needs stairs, so there's another 3'.  But since we build garages in multiples of 4, you're at a 28' wide minimum for an ADU garage.  And depth, well... No one is going to build something 20' deep on purpose.  They'll go to 24 or 28 to be able to fit stuff.  So that's a 700+ square foot garage right there.  Yes, whitemice built smaller, but per the PC minutes it wasn't entirely financially motivated.  We're talking about making these things commonplace.  Building 500 square foot efficiency apartments over a garage to make money does not make sense (or cents... hahaha).  (Checking Craigslist, I'm not convinced you could rent 500 square feet for a grand.  No one is asking that much for anything in Grand Rapids that doesn't have utilities.)

I think you need to go to 700+ to make it financially viable.  And then you need to NOT have dormers.  Which again, are wildly expensive (siding, insulating, framing, roofing--all go way up).  You need a simple trussed roof.  I checked the PC minutes.  Both organsynder and whitemice used no dormers, went over the now mandatory 20' maximum (unless you can manage to site it more than 25' off the rear property line, which few can), and per comments here, they both spent $100k+ on just the ADU.  And they were both just economical boxes.  So the city just banned (on most lots) duplicates of the only two ADUs that anyone has built in years.  New ones MUST cost more (barring the rare ultradeep lot).  Hence my conclusion that they have done nothing to make an ADU more viable.  Just the opposite.  Even if they scrub the $2000 SLU fee, the construction costs just ballooned by over $10,000 thanks to their shiny new height limit (presumably to encourage or requirement those pretty but pricey dormers).  Good intentions, but a major misfire.   

 

This gets to be kind of fun after a while. :) 

Why do 2 doors on a 2 stall garage? One 16' wide garage door is pretty friggin standard. So 20' or 22' wide is PLENTY.  Urbanite millennials are supposed to be progressive and minimalists. Are you suggesting their wants in garage size are larger than their suburbanite peers? 

24' deep is pretty comfortable. A typical extended cab pickup truck is 19' to 19.5' long, and most urbanites aren't doing those.

Don't go to craigslists to find rental listings. No one goes to that shithole any more. :) (that's where all the scammers live, on the craigslist rental listings). Try Zillow's rental side, that's where most of the legit home rentals are listed. I hate zillow but it is what it is. 

At 500 square feet footprint on two-stories (why do you keep mentioning dormers, go full two stories with a 6/12 or 8/12 roof) you should be able to stay under $100,000. Even if your profit is minimal on your monthly rent, the appreciation on your ADU will be quite large, maybe even larger than the appreciation on your primary home. 

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13 hours ago, GRDadof3 said:

This gets to be kind of fun after a while. :) 

At 500 square feet footprint on two-stories (why do you keep mentioning dormers, go full two stories with a 6/12 or 8/12 roof) you should be able to stay under $100,000. Even if your profit is minimal on your monthly rent, the appreciation on your ADU will be quite large, maybe even larger than the appreciation on your primary home. 

I'll leave out the excess verbiage this time.. :)The new code effectively PROHIBITS 2 full stories.  It's unstated, but you MUST use dormers or pricey custom trusses which will result in wonky (expensive) interior finishes.  I suspected this was the case before, but looking at the Planning Commission minutes where they approved two of them (before the change) proves it.  Take whitemice's plan (roughly):  [first floor] 3" of concrete above ground, 8" of block to get the siding off the ground, 8' of studs, 5" of plates, [second floor] 14" (or 16") I-Joist to span without posts, 5" of plates, and 7'9"' of wall.  Add it up.  18.6 feet, minimum, to the eve.  Realistically, you'll need probably need another 8" to a foot in there somewhere.  For a 4/12 pitch (minimum for shingles), over a 24 span, you're up 2' at the midpoint before the raised heel truss to hit ideal insulation levels, and before roof decking and ridge vent.  Yes, we're counting the little stuff since this is so tight...  That puts you at 20.6 feet with a NON-WAIVABLE restriction to 20'.  Can't build it.  A 6/12 or an 8/12 roof?  Fuhgeddaboutit.

There is no way the planning commission people did not know exactly what they were doing since they just approved TWO of them in August that were both over 21 feet.  They set the height limit juuuuust low enough to make it almost impossible to do.  You MUST now use dormers or far more expensive custom trusses.  Even if they eventually take away the $2000 permit fee, they tacked on five times that in added architect and construction costs by going from 25' to 20'.  That's why I'm irritated.  The changes make the ADU situation worse, not better--the opposite of what Housing NOW was intended to do.

 

Edited by x99

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2 hours ago, x99 said:

I'll leave out the excess verbiage this time.. :)The new code effectively PROHIBITS 2 full stories.  It's unstated, but you MUST use dormers or pricey custom trusses which will result in wonky (expensive) interior finishes.  I suspected this was the case before, but looking at the Planning Commission minutes where they approved two of them (before the change) proves it.  Take whitemice's plan (roughly):  [first floor] 3" of concrete above ground, 8" of block to get the siding off the ground, 8' of studs, 5" of plates, [second floor] 14" (or 16") I-Joist to span without posts, 5" of plates, and 7'9"' of wall.  Add it up.  18.6 feet, minimum, to the eve.  Realistically, you'll need probably need another 8" to a foot in there somewhere.  For a 4/12 pitch (minimum for shingles), over a 24 span, you're up 2' at the midpoint before the raised heel truss to hit ideal insulation levels, and before roof decking and ridge vent.  Yes, we're counting the little stuff since this is so tight...  That puts you at 20.6 feet with a NON-WAIVABLE restriction to 20'.  Can't build it.  A 6/12 or an 8/12 roof?  Fuhgeddaboutit.

There is no way the planning commission people did not know exactly what they were doing since they just approved TWO of them in August that were both over 21 feet.  They set the height limit juuuuust low enough to make it almost impossible to do.  You MUST now use dormers or far more expensive custom trusses.  Even if they eventually take away the $2000 permit fee, they tacked on five times that in added architect and construction costs by going from 25' to 20'.  That's why I'm irritated.  The changes make the ADU situation worse, not better--the opposite of what Housing NOW was intended to do.

 

That part I didn't know. That just all-around sucks. 

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The only place I find the 20 foot height mentioned is here:

Quote

2. The maximum permitted height for a detached ADU is twenty-five (25) feet where the applicable zone district setback requirements for a primary structure are met. Where zone district setback requirements for a primary structure cannot be satisfied, the detached ADU shall be no higher than (20) feet.

If I'm reading this right, this would have no impact on our project: we moved our garage from the grandfathered setback of 2.2' to the required 5' to avoid a host of restrictions on building materials, attic venting, etc.

This part is interesting:

Quote

The following ADU use regulations hall [sic] not be waived for altered by the Planning Commission.

We went with 864 sqft (over the 850 sqft maximum) because it allowed us to go with multiples of 12 for the dimensions. Getting to 850 would basically involve us lopping a foot off of the back and creating additional scrap lumber. Since it was an SLU, the PC could waive that restriction (and they didn't bat an eye at it—probably because it doesn't change the look of the building from the street one iota and our lot is so large). But now, it looks like they wouldn't be able to do that.

That language strikes me as very antagonistic by the city commission: why did they feel the need to curtail the PC's freedom in that manner? This does sound like more of the same story as we've seen throughout the Housing Now process: the PC is much more pro-reform than the City Commission is, likely because of how noisy some of the more connected neighborhood associations are being (and they have more sway with elected officials than appointed ones).

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2 hours ago, organsnyder said:

The only place I find the 20 foot height mentioned is here:

If I'm reading this right, this would have no impact on our project: we moved our garage from the grandfathered setback of 2.2' to the required 5' to avoid a host of restrictions on building materials, attic venting, etc.

It would not have impacted yours with that 3/4 acre lot you mentioned.  :)  It would impact 95% of the lots, though.  If memory serves, setbacks for a house means 25' off the rear lot line, and 5' off the side.  So you have to hit that with a detached garage to get 25'.  What sense does that make?  None.  And don't think for one minute that the planning department and commission were not fully aware of what they were doing to straight-up two story ADUs.  They were.   They just don't think it will stop people from building them.  We'll see.

Edited by x99

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17 hours ago, organsnyder said:

But now, it looks like they wouldn't be able to do that. That language strikes me as very antagonistic by the city commission: why did they feel the need to curtail the PC's freedom in that manner?

This was intended all along, explicitly.  The "deal" of the Housing NOW regulations in relation to ADUs was (A) create certainty: clear rules, so every project isn't an open question  in exchange for (B) certainty: aka, "by-right" development.  Stay within the rules and you can just-go.   In terms of a deal I was OK with that - - - they did increase the 25% to 40%.  Playing with the math 40% appears to cover the v-a-s-t majority of reasonable structures.

What we got was screwed;  a "promise" that in the future they will consider changing ADU development under the new less flexible rules from SLU to Director Approval (hey, that's $~1,500 instead of $~2,000!)  As I've said before:   Imagine having a new Master Plan written under the auspices of this Commission?  That should be the very last thing anyone calling themselves an Urbanist would want.

Aside:  I still feel the arbitrary maximum is .... arbitrary.  http://urbangr.org/critiqueOfNowADU-201810 Listening to people complain about the arbitrary changes being made to the Zoning code,  I just want to laugh out loud.

17 hours ago, organsnyder said:

2. The maximum permitted height for a detached ADU is twenty-five (25) feet where the applicable zone district setback requirements for a primary structure are met. Where zone district setback requirements for a primary structure cannot be satisfied, the detached ADU shall be no higher than (20) feet.

And where did this provision come from?  I attended the meetings. kept up on the proposals.  This came out of the blue.  Nobody ever mentioned Primary Structure setbacks.  @x99 is correct that this will end most ADU development;  someone would need the space to build a ranch-style ADU with a garage on the side.

800468878_Screenshotfrom2019-01-0906-36-59.thumb.png.1162ae35e1487469c75c6ae62f8dfc8e.png

16 hours ago, x99 said:

And don't think for one minute that the planning department and commission were not fully aware of what they were doing to straight-up two story ADUs.  They were.   They just don't think it will stop people from building them.

"they just don't think it will stop people" . . . Nah, the CC simply doesn't care.  They needed it off the agenda and the Neighborhood Associations had already yanked their leashes.  This was a way to do it.

17 hours ago, organsnyder said:

why did they feel the need to curtail the PC's freedom in that manner? This does sound like more of the same story as we've seen throughout the Housing Now process: the PC is much more pro-reform than the City Commission is, likely because of how noisy some of the more connected neighborhood associations are being (and they have more sway with elected officials than appointed ones).

Yep.  The wealthy NA's got to keep their tacit Land Use Authority,  everyone else can get-stuffed.  This entire process was so depressing, and I believe we are now worse off than when we started;  it has felt for awhile that's how it would end. :(  Again - just wait for them to create new zoning under a new Master Plan. :(

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19 hours ago, GRDadof3 said:

Take whitemice's plan (roughly):  ....  Yes, we're counting the little stuff since this is so tight...  That puts you at 20.6 feet with a NON-WAIVABLE restriction to 20'.  Can't build it.  A 6/12 or an 8/12 roof? 

True,  we are at ~24ft.  Higher than the original plan actually, as the Planning Department required us to increase the pitch of the roof from the original design to "match" something (the roof pitch of the {Primary Structure is essentially one large dormer with a pitch at ~3ft on each end].   No way on earth we could build under the 20ft rule.

Aside:  The entire thing about the Accessory Structure roof pitches matching those of the Primary Structure . . . why?  As it is only roughly half of them do.   More Form nonsense.  Houses next to each other do not match each other?  The best neighborhoods are a bushy pastiche of roof lines.

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1 hour ago, whitemice said:

True,  we are at ~24ft.  Higher than the original plan actually, as the Planning Department required us to increase the pitch of the roof from the original design to "match" something (the roof pitch of the {Primary Structure is essentially one large dormer with a pitch at ~3ft on each end].   No way on earth we could build under the 20ft rule.

Aside:  The entire thing about the Accessory Structure roof pitches matching those of the Primary Structure . . . why?  As it is only roughly half of them do.   More Form nonsense.  Houses next to each other do not match each other?  The best neighborhoods are a bushy pastiche of roof lines.

Reminds me of the food truck debacle. As Paul Lee said at the time, the food truck ordinance that they crafted to try and help the food truck industry (and bring peace to the land) was worse than when there wasn't one. 

Not to be even more down on the city of GR but I just purchased another rental property... in Plainfield Twp. We were considering one in the city of GR but after reviewing the rental inspection and registration program (and related fees and inspections and fees) we bailed on it. I didn't want to take the risk of paying a normal inspector to look at the property, and then after closing having to put up with another inspection and possible arbitrary fixes I'd have to make. 

It really favors big out-of-town investors and professional management companies who can absorb all of those fees and repairs more easily. So much for the little guys and gals. 

Which then begs the question, is an ADU even worth the hassle? Seemingly not. 

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1 hour ago, GRDadof3 said:

. We were considering one in the city of GR but after reviewing the rental inspection and registration program (and related fees and inspections and fees) we bailed on it.

I own rental property in GR; it's never been a problem.  I find their fees to be very reasonable.  I've dealt with all kinds of inspections, they've always been reasonable.
This is normal in my experience:

  • The city departments are great.  Helpful and professional.
  • The City Commission delays, over complicates, and poison-pills  just about every good idea.
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7 minutes ago, whitemice said:

I own rental property in GR; it's never been a problem.  I find their fees to be very reasonable.  I've dealt with all kinds of inspections, they've always been reasonable.
This is normal in my experience:

  • The city departments are great.  Helpful and professional.
  • The City Commission delays, over complicates, and poison-pills  just about every good idea.

That's been my experience as well. The Planning department was great to work with throughout the entire SLU process. They definitely see themselves as enablers more than gatekeepers (though I'm sure they adopt the gatekeeper role when needed).

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13 minutes ago, whitemice said:

I own rental property in GR; it's never been a problem.  I find their fees to be very reasonable.  I've dealt with all kinds of inspections, they've always been reasonable.
This is normal in my experience:

  • The city departments are great.  Helpful and professional.
  • The City Commission delays, over complicates, and poison-pills  just about every good idea.

Isn't it about $350/year though? For the registration and inspection? 

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16 minutes ago, GRDadof3 said:

Isn't it about $350/year though? For the registration and inspection? 

No.  For an SFU I last paid $260 for a permit.  The permit is good for 3 - 5 years.

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2 hours ago, whitemice said:

No.  For an SFU I last paid $260 for a permit.  The permit is good for 3 - 5 years.

Ah, it's not spelled out very well on the city's website. It just says what the registration fee is and that it has to be re-registered every year. 

 

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With 616 filing for bankruptcy, many people are posting on the Mlive article on FB saying "no wonder, they're overpriced and the buildings are half empty." 

So I did a little digging in the census data and found 2018 rental vacancy information by city. Grand Rapids has the 8th lowest average rental vacancy rate in the country for 1st, 2nd and 3rd quarters 2018, at 4.2%. (tied for 8th with Minneapolis).   I was trying to get them to filter in the right order of lowest to highest but was having trouble in excel with the census' tables. :)

46726834811_76934b182f_o.jpg

Showing my research, teach!:

https://www.census.gov/housing/hvs/data/rates.html

Anecdotally a friend of ours lives in that new apartment community Springs of Knapps Crossing which just opened last year and they're full and on a waiting list for many of the units. $1900/month for a 2 bedroom with fireplace. Yoiks. 

Edit: linked to a better quality image. 

 

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On 1/12/2019 at 1:57 PM, GRDadof3 said:

With 616 filing for bankruptcy, many people are posting on the Mlive article on FB saying "no wonder, they're overpriced and the buildings are half empty." 

So I did a little digging in the census data and found 2018 rental vacancy information by city. Grand Rapids has the 8th lowest average rental vacancy rate in the country for 1st, 2nd and 3rd quarters 2018, at 4.2%. (tied for 8th with Minneapolis).   I was trying to get them to filter in the right order of lowest to highest but was having trouble in excel with the census' tables. :)

 

Two things appear to be going on here:  1)  My prior posts that a large number of these 616 Lofts projects couldn't possibly make economic sense were probably somewhat accurate; and 2) 616 Lofts was a property management and development company that actually owned (or at least now owns) nothing, and possibly manages nothing.  It appears to have turned over all of its management functions to some outside third party in 2017, so now it (probably) has (almost) nothing to manage and probably (almost) no revenue.   Presumably, you don't get into situation #2 unless situation #1 was also true.  616 took on some pretty far out projects that I don't think most other developers would have.  Thus, I don't think their lack of success is really a reflection on the broader market (yet).  Still, it seems possible that if their buildings are in fact somewhat empty, their aggressiveness (and resulting empty spaces) will ultimately have trickle-down effects.  Whoever owns these buildings is going to have to lower rents.  That will pressure other developers, and depending on the number of units at issue, could have a cascade effect.  Since the apartments themselves don't appear to be included in the bankruptcy, though, the owners will still probably have some stickiness in their rents.  The bankruptcy itself probably won't have much an impact upon anything (yet).  Still, it's not bad news for housing affordability.  So there's that.  

Edited by x99

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This project on Eastern and Logan is moving along fast.  This is the first new development in Baxter in a very very long time.  

211AD739-28D5-4675-856F-CFE92EF3758D.jpeg

95084FD7-02AD-45A4-8088-F9718304E5E1.jpeg

329CF296-46B4-406F-A623-D23CC7EEF17C.jpeg

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3 hours ago, x99 said:

Two things appear to be going on here:  1)  My prior posts that a large number of these 616 Lofts projects couldn't possibly make economic sense were probably somewhat accurate; and 2) 616 Lofts was a property management and development company that actually owned (or at least now owns) nothing, and possibly manages nothing.  It appears to have turned over all of its management functions to some outside third party in 2017, so now it (probably) has (almost) nothing to manage and probably (almost) no revenue.   Presumably, you don't get into situation #2 unless situation #1 was also true.  616 took on some pretty far out projects that I don't think most other developers would have.  Thus, I don't think their lack of success is really a reflection on the broader market (yet).  Still, it seems possible that if their buildings are in fact somewhat empty, their aggressiveness (and resulting empty spaces) will ultimately have trickle-down effects.  Whoever owns these buildings is going to have to lower rents.  That will pressure other developers, and depending on the number of units at issue, could have a cascade effect.  Since the apartments themselves don't appear to be included in the bankruptcy, though, the owners will still probably have some stickiness in their rents.  The bankruptcy itself probably won't have much an impact upon anything (yet).  Still, it's not bad news for housing affordability.  So there's that.  

Take it with a grain of salt, but someone who works for the management/maintenance company says they're 97% occupied. That might make you scratch your head even more. I met with Coppess about a year ago though and he said he never wanted to be a big apartment management firm. He wanted to be a developer and wanted to go back to that. That's why he dissolved the company and worked out a management deal with this Midland company (or somewhere on the other side of the State). 

So again, some company somewhere has assets probably in the neighborhood of $100 Million or more in buildings and property, on some balance sheet. And liabilities somewhere as well. And probably cash flow positive, making a profit. But that company is not 616 Development. 

3 hours ago, mjak68 said:

This project on Eastern and Logan is moving along fast.  This is the first new development in Baxter in a very very long time.  

211AD739-28D5-4675-856F-CFE92EF3758D.jpeg

95084FD7-02AD-45A4-8088-F9718304E5E1.jpeg

329CF296-46B4-406F-A623-D23CC7EEF17C.jpeg

And big!

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12 hours ago, x99 said:

  Whoever owns these buildings is going to have to lower rents.  That will pressure other developers, and depending on the number of units at issue, could have a cascade effect.  Since the apartments themselves don't appear to be included in the bankruptcy, though, the owners will still probably have some stickiness in their rents.  The bankruptcy itself probably won't have much an impact upon anything (yet).  Still, it's not bad news for housing affordability.  So there's that.  

"The reports of my death have been greatly exaggerated".   Exhibit number bagillion of why comments on Mlive should never be referenced even in a speculative manner.

While 616 Lofts is dead, I don't see any evidence that  it has anything to do with the ability to fill these places up.  I am one of the few people on these boards who is an avid renter.  I just can't bring myself to commit to a mortgage. I also get bored easily so I tend to move about once a year.  This means that I'm constantly browsing the rental market around GR.  These properties are almost categorically full.  Per @GRDadof3's comment based on the number of units I think they are actually closer to 99% occupancy, and they have NOT lowered rates significantly to do so.    The website for Lofts of GR itself will tell you:

http://www.loftsofgr.com/

The building on Michigan has 2 units available.  The Sackner building on Monroe has 5 units available.  The Lofts at Alabama are currently 100% leased.  There is one 1 bed unit listed at the Kendall for $1500/mo, and I have no doubt it will get filled soon.  The other properties are fully leased.   To that point there is almost no market rate availability in any of the Brookstone properties either.  The flooding of the market with these several other big projects has not yet forced them to lower pricing.   Some places have dropped their price points $50-$100, but that's about it. I have not noticed any major shift in price points beyond that.   There is a chance that there are actually enough people moving to the area to absorbing these units at a pace that won't cause a crisis. (Any data I have to that point is anecdotal beyond the city posting it's largest year over year estimate gain since I've been tracking them.)

 I would suspect the downfall of 616 lofts was likely to do with expanding more rapidly than they had the ability to handle.  I'm sure garnering a quarter billion dollars worth of financing in 3-5 years crushed them.  IIRC it was founded by some smaller local investors that seized on early rabid market demand.  They got too big for their britches, I don't think they were quite ready for the leagues they found themselves in.  Even then there are no financial institutions listed as creditors in this bankruptcy.  For all we know the founders of 616 are still involved with these properties.  The talk is of a 3rd party management company.  For all I can tell they are only managing these properties. Has there been any mention of these properties actually being sold, or taken over by creditors?   Can anyone say for sure the original investors didn't reorganize the assets under a new LLC, and just let what was left of  616 Lofts die as a shell?

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6 hours ago, MJLO said:

 There is a chance that there are actually enough people moving to the area to absorbing these units at a pace that won't cause a crisis. (Any data I have to that point is anecdotal beyond the city posting it's largest year over year estimate gain since I've been tracking them.)

This.   See: Employment.  Those feeling they are sniffing the scent of an oncoming crash are, IMNSHO, missing the larger picture.  A crash will come when these jobs begin to disappear at a significant rate.
1933216952_Screenshotfrom2019-01-1506-25-51.png.fd0a1dfb8e73cd3b0305252e9744ec49.png

7 hours ago, MJLO said:

The other properties are fully leased.   To that point there is almost no market rate availability in any of the Brookstone properties either.  The flooding of the market with these several other big projects has not yet forced them to lower pricing. 

I have a steady drip of family relocating to Grand Rapids;  what you describe is accurate.  There is still very low vacancy, and units turn over quickly.     A couple of corridors show some signs of, what may be temporary, saturation - but not enough to significantly increase prices.  One can find the occasional first-month-free deals . . . provided you have an amazeballs credit score.
There is an annoying lack of diversity in housing options; for-purchase options are especially scarce (unless you actually want a 100 year old piece of crap).  That also serves to drive people back to rental.

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9 hours ago, MJLO said:

"The reports of my death have been greatly exaggerated".   Exhibit number bagillion of why comments on Mlive should never be referenced even in a speculative manner.

While 616 Lofts is dead, I don't see any evidence that  it has anything to do with the ability to fill these places up.  I am one of the few people on these boards who is an avid renter.  I just can't bring myself to commit to a mortgage. I also get bored easily so I tend to move about once a year.  This means that I'm constantly browsing the rental market around GR.  These properties are almost categorically full.  Per @GRDadof3's comment based on the number of units I think they are actually closer to 99% occupancy, and they have NOT lowered rates significantly to do so.    The website for Lofts of GR itself will tell you:

http://www.loftsofgr.com/

The building on Michigan has 2 units available.  The Sackner building on Monroe has 5 units available.  The Lofts at Alabama are currently 100% leased.  There is one 1 bed unit listed at the Kendall for $1500/mo, and I have no doubt it will get filled soon.  The other properties are fully leased.   To that point there is almost no market rate availability in any of the Brookstone properties either.  The flooding of the market with these several other big projects has not yet forced them to lower pricing.   Some places have dropped their price points $50-$100, but that's about it. I have not noticed any major shift in price points beyond that.   There is a chance that there are actually enough people moving to the area to absorbing these units at a pace that won't cause a crisis. (Any data I have to that point is anecdotal beyond the city posting it's largest year over year estimate gain since I've been tracking them.)

 I would suspect the downfall of 616 lofts was likely to do with expanding more rapidly than they had the ability to handle.  I'm sure garnering a quarter billion dollars worth of financing in 3-5 years crushed them.  IIRC it was founded by some smaller local investors that seized on early rabid market demand.  They got too big for their britches, I don't think they were quite ready for the leagues they found themselves in.  Even then there are no financial institutions listed as creditors in this bankruptcy.  For all we know the founders of 616 are still involved with these properties.  The talk is of a 3rd party management company.  For all I can tell they are only managing these properties. Has there been any mention of these properties actually being sold, or taken over by creditors?   Can anyone say for sure the original investors didn't reorganize the assets under a new LLC, and just let what was left of  616 Lofts die as a shell?

Here's your answer: minus Coppess, it's all the same investors. 

The company managed assets owned by individual investors, according to David Grinzinger, the regional property manager for Mt. Pleasant-based KMG Prestige Inc., which has served as the property management company for 616 Lofts’ mixed-use buildings since 2017.

In November 2018, 616 Lofts’ mixed-use properties rebranded as Lofts of GR LLC, which is owned by the same investors, Grinzinger told MiBiz.

But I guess the bigger question is, with the way this went down, do you think anyone at the city is going to let the new entity develop any more projects here? 

Grand Rapids-based creditors named in the filing include: 616 Holdings LLC, David & Wierenga PC, First Companies, FITB LLC, Rhoades McKee PC, Donald Visser, James Cook, and the Jeffrey L. Baker Trust. The Internal Revenue Service, Michigan Department of Treasury and Kent County Circuit Court also were included in the list. The filing did not indicate which creditors are secured or unsecured, or the amount each is owed.

Seems to me a group of guys developed a bunch of buildings, left the "bad" stuff and took just the "good" stuff, and walked away from their obligations to the above named creditors, including the State of Michigan and Kent County Circuit Court. 

https://mibiz.com/sections/real-estate-development/developer-616-lofts-files-for-bankruptcy

2 hours ago, whitemice said:

This.   See: Employment.  Those feeling they are sniffing the scent of an oncoming crash are, IMNSHO, missing the larger picture.  A crash will come when these jobs begin to disappear at a significant rate.
1933216952_Screenshotfrom2019-01-1506-25-51.png.fd0a1dfb8e73cd3b0305252e9744ec49.png

I have a steady drip of family relocating to Grand Rapids;  what you describe is accurate.  There is still very low vacancy, and units turn over quickly.     A couple of corridors show some signs of, what may be temporary, saturation - but not enough to significantly increase prices.  One can find the occasional first-month-free deals . . . provided you have an amazeballs credit score.
There is an annoying lack of diversity in housing options; for-purchase options are especially scarce (unless you actually want a 100 year old piece of crap).  That also serves to drive people back to rental.

Yes, unlike the last recession, employment is still way high and not expected to cool off any time soon. I believe unemployment just before the last housing crash was at 6 or 7% and had been for quite a few years (stagnating employment). The rapid drop in prices hit everyone in the only place they had any money, home equity. And builders all over the country were building WAY too many homes, with some markets in the South selling 2 to 3 homes to each buyer. I had a friend who worked for Pulte/Del Webb Homes down in Tampa at the time and buyers from New York and New Jersey would call up and buy 2 or 3 spec homes at a time sight unseen. It was pretty common down south for a lot of Pulte developments. Those days are gone (and he moved back up here to Michigan). The only way to increase supply for housing is to build new and builders are only at about 65% of the levels back then, which is probably a pretty healthy spot to be in. 

For people who complain about the rents in the new projects downtown, the only solution is to build more suburban complexes (everyone cringes). Even the Grandville Castle has way lower prices than downtown and it will fill up because of that. 

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18 minutes ago, GRDadof3 said:

do you think anyone at the city is going to let the new entity develop any more projects here? 

Sure, why not.  Do you expect anyone at the City to be assertive and proactive?

19 minutes ago, GRDadof3 said:

developed a bunch of _______ left the "bad" stuff and took just the "good" stuff, and walked away from their obligation

Capital intensive industries have been working that way since the invention of capital;  which is why they are also so prone to boom-bust.  Witness: Housing, Railroads, Airlines, Shipping, etc...
I have no doubt it will continue to work that way, uninterrupted.

20 minutes ago, GRDadof3 said:

to the above named creditors, including the State of Michigan and Kent County Circuit Court.

The PTBs will let them skate; always have, always will.  Nothing is more American that varied enforcement of the rules.  Ranging from fierce enforcement if you are poor to maybe-you-get-a-shrug if you are very wealthy.
These events won't impact anything.

23 minutes ago, GRDadof3 said:

Yes, unlike the last recession, employment is still way high and not expected to cool off any time soon

Yep.  The metro unemployment rate for non-farm workers is something around 2.5%, which is cwazy.  The housing shortage may be artificially repressing that number.

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13 minutes ago, whitemice said:

Sure, why not.  Do you expect anyone at the City to be assertive and proactive?

Capital intensive industries have been working that way since the invention of capital;  which is why they are also so prone to boom-bust.  Witness: Housing, Railroads, Airlines, Shipping, etc...
I have no doubt it will continue to work that way, uninterrupted.

The PTBs will let them skate; always have, always will.  Nothing is more American that varied enforcement of the rules.  Ranging from fierce enforcement if you are poor to maybe-you-get-a-shrug if you are very wealthy.
These events won't impact anything.

Yep.  The metro unemployment rate for non-farm workers is something around 2.5%, which is cwazy.  The housing shortage may be artificially repressing that number.

Just in the construction industry alone, locally a couple more thousand people (easily) could be hired if there was anyone around to take the jobs, which are skilled but training is available. And pay starts at $40,000+/year.  I would imagine that issue is way more pronounced in hot markets over 2 Million in population. 

I was going to comment on 616 but I'll personally let that one die (for now) unless new news comes out. 

 

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In other news! I'm working with a group that is trying to develop a prototype home that is about 1000 square feet with an attached carport (that can be turned into an enclosed garage down the road). 2 or 3 bedrooms with modular walls/built-ins to make for flexible spaces. Standard basement with egress windows for a future additional bedroom. "Mid-century modern" style. Primarily suited for urban lots in places like Walker, Wyoming and Kentwood (maybe GR but lots are tough to find). If we can stay under $225,000 - $240,000 we think we will have a hit. Thoughts on that? 

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57 minutes ago, GRDadof3 said:

In other news! I'm working with a group that is trying to develop a prototype home that is about 1000 square feet with an attached carport (that can be turned into an enclosed garage down the road). 2 or 3 bedrooms with modular walls/built-ins to make for flexible spaces. Standard basement with egress windows for a future additional bedroom. "Mid-century modern" style. Primarily suited for urban lots in places like Walker, Wyoming and Kentwood (maybe GR but lots are tough to find). If we can stay under $225,000 - $240,000 we think we will have a hit. Thoughts on that? 

*Checks Bank Account* Contact me in about 10 years :rofl:

But I do think that would be a hit. Seeing small but very well designed 3 bedrooms homes in GR hitting $250k+, there is definitely a market.

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On 1/15/2019 at 8:37 AM, GRDadof3 said:

Seems to me a group of guys developed a bunch of buildings, left the "bad" stuff and took just the "good" stuff, and walked away from their obligations to the above named creditors, including the State of Michigan and Kent County Circuit Court. 

So that's a third prospect I didn't really consider:  That all of this stuff actually makes money hand over first, and that they did roughly what you said in order to, apparently, leave nothing left for the creditors.  A substantial number of which are law firms.  And on top of that, they went and filed bankruptcy so that a trustee could go and root around for even a whiff or a hint of fraud.  The insane stupidity of that scenario is so mind-boggling I can't hardly imagine anyone would try it.  If they actually did that, hopefully they covered their rear end really well, and paid some other lawyer lots of money to stiff the other ones.  I'm sure the lawyers will all have a grand old time with this one.  The news stories indicated that they are trying to walk on over a million dollars in claims.  Hooboy.

Edited by x99

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