PHOENIX — A stack of shipping containers sitting in a lot in an industrial section of Phoenix has some developers thinking inside the box.
The structures usually used to transport cargo have been transformed into eight apartments. Scuff marks, old serial numbers and shipping company logos remain, but a look inside each unit reveals a 740-square-foot modern home.
“It doesn’t even feel like a shipping container. It’s also insulated really well,” said Patrick Tupas, who is in the Air Force and along with his wife signed a one-year lease for $1,000 a month. “It just feels like a regular apartment.”
There was a downside, he said — passers-by asking questions and sometimes pressing to see inside their home.
Housing and retail projects using the containers have popped up in recent years in Las Vegas, Detroit and Washington, D.C., as developers and cities try to cater to millennials and baby boomers who want to live closer to the cultural offerings in urban hubs.
To meet those needs, “cargotecture” has become a quick way to fill urban housing gaps.
“They are faster, cheaper and now potentially have much more of an aesthetic range,” said Dana Cuff, director of cityLAB, a think tank at UCLA that looks at architecture and urban growth. Some mask their shipping origins, but the ones in Phoenix don’t, she said.
“They’re celebrating them,” Cuff said.
In the Containers on Grand project in Phoenix, the architecture firm, StarkJames, designed the apartments in a way that retained the corrugated metal exteriors. Each unit is made of two containers, but inside there are no signs of the cargo hauling days.
The walls are painted white. The original wood flooring is encased in epoxy. There is enough space for a bedroom and living area.
The two rooms are connected by two separate hallways. One hallway has the kitchen, oven and some counter space. The other one has closet space and a nook. There is also a washer and dryer unit. Monthly rent averages about $1,000.
All but two of the eight units are occupied. One is being marketed as a vacation rental.
In Washington’s Brookland neighborhood, university students and young professionals have been living in a four-story housing cluster since September 2014. In Las Vegas, containers make up the building blocks of a downtown retail complex.
In Detroit, Three Squared Construction is working on $14 million in new projects involving shipping containers because they save time. The company erected the city’s first residential shipping-container development in April 2015.
The three-story building is used as a showcase with the top floor periodically rented out. CEO Leslie Horn said there’s been a high demand among millennials and “empty-nesters.”
On the brokerage side, cultivating a list of private listings is key.
“There’s a fair share of purchases and sales that are off-market transactions,” Weiner says. These are high-profile people who might not want their names in the papers or pictures of their homes splashed across the Internet.
Weiner estimates that 20 percent of his transactions are whisper listings, and he employs former executives in the NHL and NFL, a former MLB pitcher, and a fashion model, among others, to maintain an inside track.
He also thinks long term—very long term. These clients may buy and sell over and over again. Weiner’s business is far more about the people than it is about the properties.
“Three years later, they may need you again,” says Weiner. “We don’t just try to make a big buck.”
The typical brokerage model includes a buyer connecting with local agent. “This industry is very hyper-local and fragmented,” says Weiner, so the network includes agents across the U.S., Canada and the Caribbean. The local agent may change, but the agency won’t.
And most of these clients come with teams of their own, teams that need to be included in the unfolding history. “One thing we really work on and have a lot of experience in is working with their advisers, wealth managers, and attorneys,” says Weiner.
In the end, pro athletes and those in the entertainment industry need to plan for what you can never really plan for: the unexpected. You could be traded, your show could be canceled, you could get injured, or your life could erupt in some kind of scandal that suddenly dampens your career.
“It’s not just a transaction. It’s a long-term plan,” says Weiner. “If there’s one thing we really try to instill in their heads, [real estate] is an exit strategy.”
Hat tip to GM for pointing this out – did you know that the Obama Administration has been trying to modify the 1031 exchange rules?
Potential sellers of investment properties are already paralyzed by the thought of the excessive taxation by federal and state governments. The 1031 exchange allows properties to be sold and the excessive taxation be deferred – any limiting of the 1031 rules will cause fewer transactions.
If this change is implemented, it will apply to 1031-exchanges that are completed after this year. If you want to upgrade your investment portfolio, let’s move!
The proposal would limit the amount of capital gain deferred under section 1031 to $1 million (indexed for inflation) per taxpayer per taxable year. The proposal limits the amount of capital gain that qualifies for deferral while preserving the ability of small businesses to generally continue current practices and maintain their investment in capital. In addition, art and collectibles would no longer be eligible for like-kind exchanges. Treasury would be granted regulatory authority necessary to implement the provision, including rules for aggregating multiple properties exchanged by related parties.
The provision would be effective for like-kind exchanges completed after December 31, 2016.
Buying a luxury home is expensive enough. Moving into it can be costly, too.
Many wealthy homeowners hire traditional moving companies for household goods and retain specialty movers to handle things like rare paintings, antique furniture and other high-value items.
These “white glove” services cost more because the items may need delicate wrapping, climate control and custom crates, for example. Some companies, such as New York-based Roadway Moving, offer concierge services to help plan and supervise the move, says Roadway CEO Ross Sapir.
For a move from Austin, Texas, to Manhattan, one recent Roadway client requested special vaults constructed to transport his rare paintings, sculptures and musical instruments. The company complied with an additional request that the vaults be sealed so that only the client could open them, Mr. Sapir says.
After five vaults were loaded onto two trucks, the client insisted on following them in his car. “At some point, however, he gave up following and switched to his private jet,” Mr. Sapir says.
Forklifts were needed to unload larger items and the vaults out of the truck to the door of the client’s Fifth Avenue condo building. In the end, this move cost the client about $35,000.
Using photographs from the homeowners’ previous property, Roadway’s concierge can also walk through the new home to mark where the audio system needs to be installed and ensure that closet layouts are reproduced exactly, Mr. Sapir says.
“On the high end, planning is everything,” says Nir Shuminer, owner of New York-based Scanio Movers, which specializes in luxury moves. Wealthy clients value careful packing over speed. While a traditional mover might provide six to eight people to pack up a home in a day or less, Scanio typically sends no more than two or three skilled packers who may take up to three days to ensure that fragile items, such as chandeliers, artwork and crystal, are packed so they won’t get lost or damaged. Scanio recently completed a move that cost the client about $27,000 and included chandeliers, expensive artwork and some historical artifacts.
In addition to the moving company, the homeowner may retain a personal assistant or personal organizer to work on the move. This person may inventory and photograph every item that is packed and oversee the finer details of unpacking so that everything ends up in the right place in the new home, Mr. Shuminer says.
Project managers, such as New York-based NouvelleView, may also perform such tasks as calling utilities, arranging a cleaning crew, and hiring a contractor to wire a home-theater system, says Pamela Muller, the company’s owner.
Helping clients sort through 35 years’ worth of possessions can be emotional, Ms. Muller says. She compares her role to that of a “move therapist,” as clients decide what items to take and how they should be organized, she adds.
Management fees vary based on the scope of the move and services performed, Ms. Muller says. Last year, her smallest project cost the client $7,000, and four other moves cost more than $25,000, she says. These prices are on top of what the movers charge. In one case, the client paid NouvelleView $15,000, a traditional mover $30,000, and a fine-arts specialty mover an additional $25,000.
When preparing the Transfer Disclosure Statement, the seller sets forth any property defects they know or suspect to exist. Defects to be disclosed in the TDS include any conditions known to the seller which might negatively affect the value and desirability of the property for a prospective buyer, even though they may not be an item listed on the TDS. Thus, disclosures to the buyer are not limited to classic conditions preprinted for comment on the form. [CC §1102.8]
Further, the buyer cannot waive the seller’s delivery of the statutorily-mandated TDS. Any attempted waiver, such as the use of an “as-is” clause in the purchase agreement, is unenforceable as against public policy. The words “as is” are never to be used in the context of real estate transactions.
“As is” implies a failure to disclose something adverse known to the seller or their agent, a prohibited activity. In contrast, “as disclosed” is the condition of the property as known by the buyer when the seller accepts their purchase agreement offer. [CC §1102.1(a)]
Thus, all buyers purchase property:
“as disclosed” by the seller, the seller’s broker and the broker’s agents; and
“as actually observed” by the buyer prior to entering into the purchase agreement.
Brokers and their agents who list one-to-four unit residential property have a duty to all prospective buyers, separate from the seller’s, to timely disclose any physical aspects of a property:
– observable by the broker or their agent on a reasonable inspection of the property; and
– affecting the property’s market value.
A buyer of a one-to-four unit residential property has two years from the close of escrow to pursue the seller’s broker and agent to recover losses caused by the broker’s or agent’s negligent failure to disclose observable and known defects affecting the property’s physical condition and value. Undisclosed and unknown defects permitting recovery by a buyer for the cost to cure the defect or loss of value are those observable by a reasonably competent broker during a visual on-site inspection. A seller’s agent is expected to be as competent as their broker in an inspection. [CC §2079.4]
However, the buyer is unable to recover their losses from the seller’s broker if the seller’s broker or agent inspected the property as a reasonable competent broker, did not observe the defect and did not actually know it existed. [CC §1102.4(a)]
For more on seller disclosures and case law, click here:
February’s Case-Shiller Index for San Diego rose by 0.1% over January. Our average of +0.3% per month over the last six months is probably what we can expect for the rest of the year, with the next couple of months being elevated (like in 2015) due to the ‘season’.
But the higher-end market dropped 0.3%, and with 459 active listings of NSDCC houses priced over $2,400,000, it’s a buyer’s market there. We could see more pricing turbulence on the high-end before the year is out.