Downtown Development Overview

[TulsaGoldenHurriCAN]

You still aren't  understanding what I am saying - come back when you are 50+ and are looking at estate planning.  Or find a financially comfortable old person you know to talk to about how to do financial planning for seniors.  Maybe they can explain to you the ramifications of this scenario.

If you have so much that a couple hundred thousand don't mean that much to you, that's great!   More power to you!   You are a 1%'er!!   The other 99% of us aren't there yet.

That person owns quite a few properties worth quite a large amount. They'd be worth far more if they would have renovated them. They apparently weren't good at taking care of properties. They should have sold earlier or renovated and taken advantage of millions more in rent over the years. Selling it would be a way to get millions up front and would've been much better for the community.

Yes, if I was unwilling or unable to renovate a $1-$2 million property, I would rather sell it years ago and use that money invested elsewhere to make up for the tax hit. That is part of business/life. I won't be the guy who buried his gold in the dirt. And had she done that back around 2011 and put the money in most any whole-market fund, she would've more than doubled her money and the building would be renovated.

It's foolish to sit on a seven-figure property doing nothing for many years to save such a small percentage. You should be aiming for 10-20% per year ROI, especially in a hot real estate market.

[heironymouspasparagus]

That person owns quite a few properties worth quite a large amount. They'd be worth far more if they would have renovated them. They apparently weren't good at taking care of properties. They should have sold earlier or renovated and taken advantage of millions more in rent over the years. Selling it would be a way to get millions up front and would've been much better for the community.

Yes, if I was unwilling or unable to renovate a $1-$2 million property, I would rather sell it years ago and use that money invested elsewhere to make up for the tax hit. That is part of business/life. I won't be the guy who buried his gold in the dirt. And had she done that back around 2011 and put the money in most any whole-market fund, she would've more than doubled her money and the building would be renovated.

It's foolish to sit on a seven-figure property doing nothing for many years to save such a small percentage. You should be aiming for 10-20% per year ROI, especially in a hot real estate market.

And again, the tax hit she would have taken is substantial enough that she obviously didn't want to bother with it.  And probably for the last 10 years of her life, didn't feel like trying to be a real estate mogul, taking a conservative, capital preservation approach.  As any financial planner would recommend at that point of her life.

Let's suppose the total is $10 million value for all her places.  She keeps them and each kid inherits $5(+) million with no tax event.  Or she sells them, and pays $1.5 to $2 million capital gains tax.  Each kid gets $4+ million. No where near a 'small percentage'.  15-20% takes a long time to make up, if ever.

As for being the real estate mogul - I bet there are hundreds of millions+ of people out there who would love to get just 10% ROI over time on real estate.  And hundreds of millions who never get it!   (There are a few - in that much less than 1% group discussed to death over the years...lots of conjecture and projections - not as much reality.)

Again, find an old person to talk to about what they do with nice sized estate starting around age 50+ and older.  Hint: they get more conservative every year.  As they should.

I absolutely do not believe for a second that you would be willing to give away that much money for the "public good".  That's a George Kaiser realm.   You can write a check right now, if you mean that...

[TheArtist]

I am 50+ and the next person that calls me old... well drop on by Decopolis and lets have a word.  I am not old, I feel like I am finally just getting started!

[TulsaGoldenHurriCAN]

And again, the tax hit she would have taken is substantial enough that she obviously didn't want to bother with it.  And probably for the last 10 years of her life, didn't feel like trying to be a real estate mogul, taking a conservative, capital preservation approach.  As any financial planner would recommend at that point of her life.

Let's suppose the total is $10 million value for all her places.  She keeps them and each kid inherits $5(+) million with no tax event.  Or she sells them, and pays $1.5 to $2 million capital gains tax.  Each kid gets $4+ million. No where near a 'small percentage'.  15-20% takes a long time to make up, if ever.

As for being the real estate mogul - I bet there are hundreds of millions+ of people out there who would love to get just 10% ROI over time on real estate.  And hundreds of millions who never get it!   (There are a few - in that much less than 1% group discussed to death over the years...lots of conjecture and projections - not as much reality.)

Again, find an old person to talk to about what they do with nice sized estate starting around age 50+ and older.  Hint: they get more conservative every year.  As they should.

I absolutely do not believe for a second that you would be willing to give away that much money for the "public good".  That's a George Kaiser realm.   You can write a check right now, if you mean that...

I'm not talking 10%-20% annual property just on the sale of the property. That's income from rent and that is consistent earning potential in many places around the US including Tulsa (which makes Tulsa a great place for property owners). If you own a $1M property, you should be getting at least $100k/year in rent and hopefully much more if it is fixed up decently and in an especially hot area like this one is.

Maybe you didn't read/understand my previous comment. She kept the properties empty for decades and losing out on all of that rent which could've been generated at an exceptionally high rate over the last decade. $100k per year at least so could've been a million in income or more plus the savings on the interest if saved. So she threw away about a million in potential rent plus interest which would put that at close to $1.5M+ considering how the market has gone. About $1.5M lost because she chose to mothball the building. What she did was foolish, especially for estate planning. It was bad for Tulsa, it was bad for her and very bad for whoever inherits her estate.

I don't know that you understand real estate/investing very well. These are pretty basic principles. Very rarely is sitting on a vacant building in a hot market for over a decade a good idea. Do a basic reno and rent it and/or sell to highest bidder while market is especially hot.

[heironymouspasparagus]

I am 50+ and the next person that calls me old... well drop on by Decopolis and lets have a word.  I am not old, I feel like I am finally just getting started!

Lol....reality just hasn't quite set in yet, has it??  I feel the same way!

[heironymouspasparagus]

I'm not talking 10%-20% annual property just on the sale of the property. That's income from rent and that is consistent earning potential in many places around the US including Tulsa (which makes Tulsa a great place for property owners). If you own a $1M property, you should be getting at least $100k/year in rent and hopefully much more if it is fixed up decently and in an especially hot area like this one is.

Maybe you didn't read/understand my previous comment. She kept the properties empty for decades and losing out on all of that rent which could've been generated at an exceptionally high rate over the last decade. $100k per year at least so could've been a million in income or more plus the savings on the interest if saved. So she threw away about a million in potential rent plus interest which would put that at close to $1.5M+ considering how the market has gone. About $1.5M lost because she chose to mothball the building. What she did was foolish, especially for estate planning. It was bad for Tulsa, it was bad for her and very bad for whoever inherits her estate.

I don't know that you understand real estate/investing very well. These are pretty basic principles. Very rarely is sitting on a vacant building in a hot market for over a decade a good idea. Do a basic reno and rent it and/or sell to highest bidder while market is especially hot.

YOU said ROI.   That is definitely NOT the same as rent.  40+ years ago, that place probably sold for $10k or so...maybe even less.  I know of a couple of those old warehouses that sold for a couple thousand dollars.  HUD had two that I know of in the Savings and Loan ripoff that sold for $1 each.  

So IF we make some broad assumptions - fantasies more likely - like she could actually have gotten, and kept, an actual 10% real return on a $10k investment, each and every one of those 40  years, this calculator shows what that would have been today...about $450k.  You say it's worth a million, so by keeping it, she more than double the return she could have gotten by 'churning' it.  This also does NOT include tax considerations along the way on that income, which would make it worse.   There has been long periods of time in the last 40 years when 10% a year would have been a drunkard's dream.

Plug it in and see how "bad" she did...

Future value of a present sum;
PV              $10,000   (amount it cost 40 years ago...IF that much!)
# of periods  40
Interest         10         (assumed ROI annually)
Compounding  1          (assuming 1 revaluation/update of value per year)

FV of present   $453,000        Instead of $1,000,000 (your guestimate of value.)

https://www.calculatorsoup.com/calculators/financial/future-value-investment-calculator.php


She did twice as good by just sitting on it.  So, again I ask - even though I know the answer - would you have given up $500,000 in this case, just for the good of mankind??   No.  And if so, like I said, feel free to write the check today!   If you don't have it all right now, feel free to start making payments!

The market is 'hot' today...and realistically for the last 5 to 8 years.  Now would be the time to be starting to plan something if one were going to do so.  Since the daughters are likely heirs, they are likely also looking at doing something now.  We shall see.  If I were them, I would be in the midst of the planning since the mother died perhaps a year ago according to conjecture here.   Are you doing a lot of real estate investing now?   Been through an entire cycle yet??   I just love the idea/concept of "pretty basic principles"....that's what they teach in those 'house flipping' classes!   They also aren't making any more land!!


Anyone know the going rate on rent in class A Tulsa right now...dollar per foot, AND percentage of total property value?

One more quick note - I think that place will sell for big bucks just as it sits, with no reno at all.  Let the next one spend those even bigger bucks and do it the way they want.

[rebound]

YOU said ROI.   That is definitely NOT the same as rent.  40+ years ago, that place probably sold for $10k or so...maybe even less.  I know of a couple of those old warehouses that sold for a couple thousand dollars.  HUD had two that I know of in the Savings and Loan ripoff that sold for $1 each.  

So IF we make some broad assumptions - fantasies more likely - like she could actually have gotten, and kept, an actual 10% real return on a $10k investment, each and every one of those 40  years, this calculator shows what that would have been today...about $450k.  You say it's worth a million, so by keeping it, she more than double the return she could have gotten by 'churning' it.  This also does NOT include tax considerations along the way on that income, which would make it worse.   There has been long periods of time in the last 40 years when 10% a year would have been a drunkard's dream.

Plug it in and see how "bad" she did...

Future value of a present sum;
PV              $10,000   (amount it cost 40 years ago...IF that much!)
# of periods  40
Interest         10         (assumed ROI annually)
Compounding  1          (assuming 1 revaluation/update of value per year)

FV of present   $453,000        Instead of $1,000,000 (your guestimate of value.)

https://www.calculatorsoup.com/calculators/financial/future-value-investment-calculator.php


She did twice as good by just sitting on it.  So, again I ask - even though I know the answer - would you have given up $500,000 in this case, just for the good of mankind??   No.  And if so, like I said, feel free to write the check today!   If you don't have it all right now, feel free to start making payments!

The market is 'hot' today...and realistically for the last 5 to 8 years.  Now would be the time to be starting to plan something if one were going to do so.  Since the daughters are likely heirs, they are likely also looking at doing something now.  We shall see.  If I were them, I would be in the midst of the planning since the mother died perhaps a year ago according to conjecture here.   Are you doing a lot of real estate investing now?   Been through an entire cycle yet??   I just love the idea/concept of "pretty basic principles"....that's what they teach in those 'house flipping' classes!   They also aren't making any more land!!


Anyone know the going rate on rent in class A Tulsa right now...dollar per foot, AND percentage of total property value?

One more quick note - I think that place will sell for big bucks just as it sits, with no reno at all.  Let the next one spend those even bigger bucks and do it the way they want.

Yeah, but nobody is saying they had to sell.  Just they should have done something with the space.   If, say 10 years ago, they would have done  a basic gut reno and leased it out, they would be far (far) ahead of where they are now, and would still own the property.   The basic point is that it is ridiculous to leave it sitting idle in a one of the hottest areas in Tulsa for the past decade, at least. The situation continues today.  Do something, don't just sit there.

[heironymouspasparagus]

Yeah, but nobody is saying they had to sell.  Just they should have done something with the space.   If, say 10 years ago, they would have done  a basic gut reno and leased it out, they would be far (far) ahead of where they are now, and would still own the property.   The basic point is that it is ridiculous to leave it sitting idle in a one of the hottest areas in Tulsa for the past decade, at least. The situation continues today.  Do something, don't just sit there.

That's what the calculator shows - it would not have happened in 40 years, let alone just the last 10!

Hasn't been that hot for a decade.  Blue Dome district was just "named" what...about 7 - 8 years ago.  There was a growing time, and now, for the last few years (4?  5?) it has been 'hot'.  Much of the appreciation in value of that place has occurred just in those last few years - the previous 30 to 35 were a slow go.  Ask Blake what he paid for the Joe Momma building?   And would it have made sense to even think about it at the much higher values seen today?  (No, it wouldn't - that is why he got out when he did, most likely.)   And why isn't he, or the current owner, selling that empty place so someone can rebuild it and do something valuable to the community with it??   The old place looked very empty when I was by there a couple weeks ago - why is someone just holding that without doing something in it??

And why move it to another place?  Was the new building that much cheaper than the value of the old one?

[Conan71]

That person owns quite a few properties worth quite a large amount. They'd be worth far more if they would have renovated them. They apparently weren't good at taking care of properties. They should have sold earlier or renovated and taken advantage of millions more in rent over the years. Selling it would be a way to get millions up front and would've been much better for the community.

Yes, if I was unwilling or unable to renovate a $1-$2 million property, I would rather sell it years ago and use that money invested elsewhere to make up for the tax hit. That is part of business/life. I won't be the guy who buried his gold in the dirt. And had she done that back around 2011 and put the money in most any whole-market fund, she would've more than doubled her money and the building would be renovated.

It's foolish to sit on a seven-figure property doing nothing for many years to save such a small percentage. You should be aiming for 10-20% per year ROI, especially in a hot real estate market.

Some people have a fear of selling something and regretting it later because that $1M property might be worth $2M in 10 years or someone might turn around and flip it and make a tidy profit.  As I recall the owner of the old Ford building which now houses Prairie Brew Pub was paranoid about someone snookering him out of his property and it sat vacant for years as everything around it was being renovated.  My understanding is that GKFF didn't end up buying the building but signing a 99 year lease with the family.  Totally anecdotal on this one and it may be totally bogus, just what I remember hearing at the time.

I've dealt with this for many years dealing in vintage motorcycles.  People are afraid someone might make a profit on their back, it's a weird paranoia but that's why valuable classic cars or motorcycles sit rusting in a backyard or barn and sometimes why properties like this sit and rot while others around them are being renovated and being put to good use, or they think they might get around to "doing something with it some day".

I've got a 1970 Ford Bronco that's my daily driver.  I've got a soft spot for these trucks and any time I see one sitting on blocks in a yard I try to see if it is available and someone in the family is always going to get around to restoring it or getting it running.  It blows my mind how people in New Mexico hang on to junk until it rusts into the ground.  I call it their "cosmic savings account" because as long as Uncle Antonio's 1973 Vega wagon is still in the back yard, they aren't broke.

[Breadburner]

That's what the calculator shows - it would not have happened in 40 years, let alone just the last 10!

Hasn't been that hot for a decade.  Blue Dome district was just "named" what...about 7 - 8 years ago.  There was a growing time, and now, for the last few years (4?  5?) it has been 'hot'.  Much of the appreciation in value of that place has occurred just in those last few years - the previous 30 to 35 were a slow go.  Ask Blake what he paid for the Joe Momma building?   And would it have made sense to even think about it at the much higher values seen today?  (No, it wouldn't - that is why he got out when he did, most likely.)   And why isn't he, or the current owner, selling that empty place so someone can rebuild it and do something valuable to the community with it??   The old place looked very empty when I was by there a couple weeks ago - why is someone just holding that without doing something in it??

And why move it to another place?  Was the new building that much cheaper than the value of the old one?

Lol..You sure yammer a lot about things you obviously know nothing about...

[heironymouspasparagus]

Lol..You sure yammer a lot about things you obviously know nothing about...

You really are regressing rapidly, aren't you?   Back to 5th grade dropout this morning!  Maybe earlier - at least 5th graders can do multiplication and division.  Shame you can't...or even understand it when it is shown to you!

But that's what we have all come to expect, so keep up the 'good work'...!   Do you need some new crayons?  And the latest My Little Pony coloring book??   I bet several of us here could pitch in and replenish your supplies..!!

[rebound]

That's what the calculator shows - it would not have happened in 40 years, let alone just the last 10!

Hasn't been that hot for a decade.  Blue Dome district was just "named" what...about 7 - 8 years ago.  There was a growing time, and now, for the last few years (4?  5?) it has been 'hot'.  Much of the appreciation in value of that place has occurred just in those last few years - the previous 30 to 35 were a slow go.  Ask Blake what he paid for the Joe Momma building?   And would it have made sense to even think about it at the much higher values seen today?  (No, it wouldn't - that is why he got out when he did, most likely.)   And why isn't he, or the current owner, selling that empty place so someone can rebuild it and do something valuable to the community with it??   The old place looked very empty when I was by there a couple weeks ago - why is someone just holding that without doing something in it??

And why move it to another place?  Was the new building that much cheaper than the value of the old one?

You are still talking about selling.   I'm talking leasing.   I used ten years, because McNellie’s opened in '04 (14 years ago), and El Guapo has got to be  10 years, or very close, by now.   Agreed though, it's been "hot" for maybe 6-7 years or so.  But there is no downside to leasing.  It provides additional cash flow, and benefits the neighborhood.

[heironymouspasparagus]

You are still talking about selling.   I'm talking leasing.   I used ten years, because McNellie’s opened in '04 (14 years ago), and El Guapo has got to be  10 years, or very close, by now.   Agreed though, it's been "hot" for maybe 6-7 years or so.  But there is no downside to leasing.  It provides additional cash flow, and benefits the neighborhood.

Leasing is what I was asking about at the end of one post - anyone know the going rate for leasing in Blue Dome area?   For a fully reworked space...   Or without where one does build out oneself....

$10 a foot?  20?  $4.63?

[TulsaGoldenHurriCAN]

YOU said ROI.   That is definitely NOT the same as rent.  

ROI can absolutely include rent, not just a sale. That is Return on Investment. Who knows how much she bought it for, but it still has a lot of inherent value and her trust could've been cashing in on that all the while. Who knows how much a basic reno would've been at that time as we don't know the condition, but it's possible to hire a GC so you can take a hands-off approach and even use building to fund work so you don't even have to be out anything. It might be worth around $1 million right now or it could be closer to the latest assessment in March 2018 of $455k (but likely worth more on the open market. Around $1M looks about right considering price of recent sales nearby). If it were a finished building, considering the 26,000 square feet, it would likely be pushing $3-$4 million value or even more if done at a really high level. Also, considering that much square feet and properties getting quite a bit more than $1/square-foot in rent a month around there, it should've fetched closer to $300k/year even at just $1/ft2, so more like $3M in 10 years.

So could have increased the property value by ~$2M and potentially $3 million more in rent by renovating when it was the obvious thing to do. There is no way sitting on the property the last decade added anywhere close to $5 million of value. And it probably didn't even add more than a million. Even if you use ultra conservative numbers, she would've been millions ahead renovating and if she sold, would've also saved $50k in taxes. Even the 99-year lease option would've been better than doing nothing.

[heironymouspasparagus]

ROI can absolutely include rent, not just a sale. That is Return on Investment. Who knows how much she bought it for, but it still has a lot of inherent value and her trust could've been cashing in on that all the while. Who knows how much a basic reno would've been at that time as we don't know the condition, but it's possible to hire a GC so you can take a hands-off approach and even use building to fund work so you don't even have to be out anything. It might be worth around $1 million right now or it could be closer to the latest assessment in March 2018 of $455k (but likely worth more on the open market. Around $1M looks about right considering price of recent sales nearby). If it were a finished building, considering the 26,000 square feet, it would likely be pushing $3-$4 million value or even more if done at a really high level. Also, considering that much square feet and properties getting quite a bit more than $1/square-foot in rent a month around there, it should've fetched closer to $300k/year even at just $1/ft2, so more like $3M in 10 years.

So could have increased the property value by ~$2M and potentially $3 million more in rent by renovating when it was the obvious thing to do. There is no way sitting on the property the last decade added anywhere close to $5 million of value. And it probably didn't even add more than a million. Even if you use ultra conservative numbers, she would've been millions ahead renovating and if she sold, would've also saved $50k in taxes. Even the 99-year lease option would've been better than doing nothing.

What recent sales nearby?   I see 3 class b and c for sale within a few blocks - already 'renovated'...probably need some paint and polish...in the $150 to $250 per sq ft.  

What is it gonna cost in real dollars to get that place up to class C?   $100 a ft?  $150 a ft??  Would never make it to class B without tear down and start over, which destroys the whole ambiance thing.  Lets go with $100, since that gives your argument the best possible light.  $2.6 million to redo, plus $1 million original property value.  $3.6 million - the high end of your guestimate of value.

For rent, let's use the highest possible wild, out of control, number we can think of - about $1.5 a ft.  As available at the Williams tower now.  There are a couple places much closer to the same type of building that are $1 a ft, but gonna give you a break.  That's half a million a year....almost.  Let's round it up to make it easy.

Mortgage for a place like that probably would be a 15 yr at 3.9%, if lucky, on a $3.9 million investment.  Anyone got a better deal out there?   That's $28,700 a month, or $344,000 a year in payments.  Doesn't include any other expenses, like property  management (or you could do it yourself), maintenance, taxes, etc.  that leaves about $150,000 out of that rent for all those things.

Now, if you already have the $4 million and just wanna put it all somewhere right up front, ya gotta ask yourself, "Can I do anything with $4 million cash that will give me a better return than less than 4% per year - the cost of mortgage alone??  THAT is the question, not all these ridiculous fantasy numbers  you are slinging around.  It is YOU who has no experience with real estate.   Or any other kind of money management/financial planning, apparently.

And if ya just build it out, and are able to sell it for $4 million, then you end up with about $3.3 million left over after taxes and who knows how much real estate agent fees (5 or 6%?? or another couple hundred thousand).   After spending $3.6 million to buy and build.  You just lost a couple hundred thousand.

You are welcome for saving you hundreds of thousands of dollars!   If you want to show your appreciation, make a cash donation to the Salvation Army in my name.

What she did still put half a million into each kids pockets that simply would not have been there in any scenario you have talked about so far.