December 22, 2021
Winter is coming! Well, for many across this great nation it has already arrived. In Cave Creek, just north of Phoenix, we have had temps dropping to the low 30s! That's nearly 0° Celsius for our Canadian and European friends. It's true. It's that cold. Imagine.
Yesterday morning it was around 50°. I had my winter jacket on, long pants and the heat on in the rig. When I dropped into a store there were people there in shorts and t-shirts; which I wear 10 months a year, by the way; just not when it's nearly arctic weather. Yep! It's that time of year where we know who is visiting and who lives here. I saw a guy walking into Tractor Supply in shorts and a t-shirt and asked, "Are you in town for Christmas?" He looked at me a bit surprised and said, "Yep. How did you know?" I told him he forgot to dress for winter. He smiled and said he's here from Utah and didn't even bring long pants along. Yeah, we can pick out the visitors.
In business there is also a phrase that "Winter is coming". What could that possibly mean? It means that there is always a need to prepare. Regardless of the season, business cycle, economic change and migratory shift, we need to be ready. A constant is not normal nor does it exist. So, what does it mean in our world? That there is change in the winds and we should get ready for it. What do we do? How do we prepare? We prepare for a softening market by underwriting an increase in interest rates with a bump in the Cap Rate. We also know rents are increasing and expenses are going up. But, is it enough to cover the increased cost of money? It's important to keep a close eye on these changes and make conservative decisions. If the market doesn't soften? We are still safe. AND, we gain equity which we can pull out through refinance and supplemental loans. Either way we, and our investors win.
As much as we want to discuss the weather, we have other things we need to talk about! Electrical work is getting done in many of the units. In the pic above it's the Studio. There will be counters, cabinets, a little stovetop and of course a sink. We will install a microwave oven with convection ability so they, in effect, have an oven. The electricians are doing some very neat work! Look at the detail! We are pleased. What is the framing for? That is for the soffit going above the upper cabinets. Things are taking shape!
And, here is another unit completed. This is exciting. And, we will be able to incorporate the exposed block into the architectural design. I think it looks pretty awesome! Don't worry, we will patch the holes in the drywall as well as put in some cool flooring. As rustic as that would look without it, we don't feel it would add any comfort to the residents. Oh, adding cabinets and stuff too.
As I was touring the property last week I looked up. And, what do you know? There is a hole in the ceiling. This is where the toilet drain from the upstairs unit used to be. As I peaked into the unit from below I realized I can clearly see what you can fuzzily see that the sprinkler system is installed upstairs. For a clue, it's an orange pipe. And, I could see the electrical was run into the unit and since it's framed out I can tell that it is the 1-bed unit and not the studio. Also there is framing for the cabinets in place. To better understand this I need to grab a picture from a 1-bed unit.
As we examined these we heard a buzz of activity outside. We quickly went out to see what the racket was about. And, what did we find? Broken glass! Yep. Someone was busting the windows and glass was flying everywhere! It was nuts! But, we were not worried. We were safe inside.
Well, actually we were not afraid nor worried at all because they were busting out the glass to install the new windows.
The electricians also installed the gutters for running the electrical work throughout the property. Being the walls, floors and ceiling are concrete, we needed a system to carry the electrical wiring which will carry the electricity to the units. This is what was designed:
Back to the coming winter...
As we see inflation hitting our pocketbooks and depleting our bank accounts we may wonder what causes inflation. For a moment I would invite you to look at it differently. What if increased prices at the marketplace is really the result of inflation? What if inflation is actually, by definition, an increased money supply? Ponder that for the next two weeks until my next blog entry after the new year. It will be around the 5th when everyone is deep into their New Year's Resolution saying, "This is the year. This is the year I stick to my goals."
Winter is coming. Change is in the air. How are you preparing?
No comments:
Post a Comment