Showing posts with label Van Gogh Development Corporation. Show all posts
Showing posts with label Van Gogh Development Corporation. Show all posts

Friday, June 13, 2014

Leschi Art Walk


Come visit me at my real estate booth at the Leschi Art Walk tomorrow, Saturday, June 14 from 11am until 4pm. I will be hosting a booth with Cheryl Taylor, my mortgage lender at American Pacific Mortgage, for both my residential real estate firm, Home Land Seattle, and for my commercial development company, Van Gogh Development Corporation.

Van Gogh Development Corporation will be developing an artist live/work-style mixed-use commercial building on South Henderson Street at the Rainier Beach Light Rail Station in Seattle. This is scheduled to open in early 2016. We will have a display board and will be handing out flyers on this project at the Leschi Art Walk.

In addition, we will have opportunities for Leschi homeowners to get a free on-line market evaluation of their property, and enter their business cards for a chance to win a $25 Starbucks coffee card.

The day's activities will feature live musical performances, children's activities, arts and crafts, and artist booths. The Seattle SAKE Dragon Boat Club (for which I am vice-president) will also be manning a booth at the Leschi Art Walk. The Art Walk will be located in the Leschi business district on Lakeside Avenue between Lake Washington Blvd and E Yesler Way. The Leschi Art Walk is sponsred by the Leschi Community Council, Leschi Business Association, City of Seattle Parks & Recreation, Leschi Mart, Starbucks, BluWater Bistro and others.

Come out and meet a few of the creative entrepreneurs in the Leschi neighborhood of Seattle tomorrow June 14.

Happy Investing!

Thursday, May 1, 2014

ProForma Budget Numbers

Today my Van Gogh business partner and I met with Joel Andersen, the owner of Andersen Construction Company, our builder for Van Gogh Lofts on South Henderson Street in Seattle. The purpose of the meeting was to go over the construction bid on the project. Construction costs are estimated to be anywhere between $4.1 to $4.8 million dollars. Andersen is trying to get those costs reduced, whether that is by providing structural support other than with pilings, or shortening corridors, or just getting better bids from sub-contractors.

Joel Andersen also suggested an option to keep the Seller in the deal as an equity partner. This has benefits when it comes to getting bank financing. We are assuming a bank loan at 65% LTV, and a loan from the community development fund at 25% LTV. That leaves us 10% to raise, but we also receive credit for the cost of the land.

Joel Andersen has literally developed or seen hundreds of proforma budgets in the course of his work. His company was hired by Vulcan to do the redevelopment of Yesler Terrace, and they have been doing projects in both Portland and Seattle for the past sixty years. He seemed surprised that I was using the rental figure of $1.50/sf for rental rates on our project. He felt confident that new construction in Rainier Beach should be able to pull in at least $2/sf. He quickly calculated the numbers on a proforma budget for our 34-unit 28,500sf building.

He estimated operating costs at $500/unit/month, but recognized that property tax exemption would be a big benefit in reducing our costs on this project. He included a 5% development fee for Van Gogh Development Corporation, and 5% estimated cost for architectural fees. He calculated the cash-on-cash return for investors to be around 18%. With our projected net operating income and a conservative cap rate of 6.5% for Rainier Beach, he estimated that the value of our completed building would be somewhere in the neighborhood of $9 million. That represents a significant upside to our project.

He will be sending us an updated proforma budget, and much can change during the course of development. But numbers look pretty good now for a profitable project. Stay tuned!

Happy Investing!

Thursday, April 17, 2014

Encroachment Issues

Our survey at Van Gogh Lofts development project on South Henderson Street revealed an encroachment by the neighboring property. Owners there had erected a walkway that projected over our property line.

1. What is an encroachment?
An encroachment is a situation in real estate where a property owner violates the property rights of his neighbor by building something on the neighbor's land or by allowing something to hang over onto the neighbor's property. Encroachment can be a problem along property lines when a property owner is not aware of his property boundaries or intentionally chooses to violate his neighbor's boundaries. This is also known as structural encroachment.

In some cases, when the encroachment exists before you purchase your property, the owner that has the encroachment is not required to remove it, particularly in the case of a house eave or addition that extends the original property into an encroachment situation. When you have an encroachment situation where an agreement cannot be reached, it will be necessary to take the matter to court and let a judge make an official ruling.

We do not want to grant the neighboring property an easement for this encroachment, as it will negatively impact our project development.

2. What is an Easement?
An easement allows the usage of a pathway between adjacent properties. An easement may involve a pathway to reach a common play area, yard or even a fish pond. The legal terminology of easement allows someone the legal right to use something not belonging to them. Easement refers to real property and allows a legal right of usage. An affirmative easement is the official permission and right to use another's property for a specific reason. A negative easement disallows the right for someone to use another's property.

a. Easement and Common Law
Easements are ruled and followed by real estate law, yet common law procedures enforce certain types of easements. There are four types of easements that are typically, over time, enforced by the common law courts.
The most common easement is called the Right of Way in which people can pass through an area. Easement of support refers to excavations of property. Less common are Easements of light and air and rights regarding artificial waterways. The four types of easements are usually for very specialized scenarios. The most used easement is the Right of Way easement. The letter carrier, water meter reader and UPS delivery person all have the right to step on your property by easement of right of way.

b. Creation of Easement
Easements are mostly created by a binding written document. Most courts in the United States favor a written explicit easement. Verbal and implied easements are complex. Courts base the allowance to have an easement on intention of the original parties in each situation. Courts take into account customs, habits and practices for the property in question for usage of easements. Courts prefer having written intentions, although courts will allow implied easement after researching intent of the parties.

Fortunately, this encroachment on our property has been there for less than two years. The property owner was unaware of the encroachment, and did not allow it. Therefore, it should not qualify as adverse possession.

3. What is Adverse Possession?
Adverse possession is a method of gaining legal title to real property by the actual, open, hostile, and continuous possession of it to the exclusion of its true owner for the period prescribed by state law. Personal Property may also be acquired by adverse possession.

Adverse possession is similar to prescription, another way to acquire title to real property by occupying it for a period of time. Prescription is not the same, however, because title acquired under it is presumed to have resulted from a lost grant, as opposed to the expiration of the statutory time limit in adverse possession.

Title to land is acquired by adverse possession as a result of the lapse of the Statute of Limitations for Ejectment, which bars the commencement of a lawsuit by the true owner to recover possession of the land. Adverse possession depends upon the intent of the occupant to claim and hold real property in opposition to the entire world and the demonstration of this intention by visible and hostile possession of the land so that the owner is or should be aware that adverse claims are being made.

The legal theory underlying the vesting of title by adverse possession is that title to land must be certain. Since the owner has, by his or her own fault and neglect, failed to protect the land against the hostile actions of the adverse possessor, an adverse possessor who has treated the land as his or her own for a significant period of time is recognized as its owner.

Title by adverse possession may be acquired against any person or corporation not excepted by statute. Property held by the federal government, a state, or a Municipal Corporation cannot be taken by adverse possession. As long as the property has a public use, as with a highway or school property, its ownership cannot be lost through adverse possession.

It is the job of the Seller to deliver clean title, and in this case, Van Gogh Development Corporation expects the Seller to clear title on this property, prior to our closing in July.

Happy investing!

Thursday, April 3, 2014

FREE Commercial Real Estate Training Today!

My commercial real estate company Van Gogh Development Corporation will be offering coaching and mentoring on commercial real estate development this spring to interested investors. O.Thomas Harper who founded VGDC in 1994 will be offering these services, with assistance from some of the many commercial contractors with whom he has worked.

If you want to know more, please attend our FREE general orientation session this afternoon Thursday, April 3 from 4-5p in North Seattle. The meeting will be held at Evergreen Home Loans located at 9709 3rd Avenue NE, Ste 115, Seattle. There is free 2 hour parking available as well.

O. Thomas Harper graduated from West Bremerton High School, and from Seattle University with a BA in Economics. He was a Small Business Administration loan officer for five years, and then Principal and Project Manager for Directions Development Design Corporation. His responsibilities there included Pre Purchase Site Analysis, Site Acquisition, Selection of Development Team ( architectural, engineering, scientific, contractor, lenders, permitting process, marketing, etc) for the following types of real estate projects: Single family housing, apartments, condominiums, mixed use and small office development.

He founded Van Gogh Development Corporation in 1994, for the purpose of acquiring and developing real estate. In 1995, Van Gogh Development Corporation purchased a site in the Beacon Hill neighborhood,located on N.W. Corner of 15th Avenue South and South Lucille Street. Environmental testing revealed the site had a hydrocarbon remediation issue because of its former use as a Chevron Gas Station. With the assistance of the Chevron Oil Company of California VGDC was able to mitigate the hydrocarbon issue and attain approval from the State of Washington, Department of Ecology to proceed to site development. VGDC attained a Master Use Permit for 25 Apartments and 3,000 square feet of retail commercial space from the City of Seattle, and then sold the land and Master Use Permit to an investment group.

In 2000, VGDC purchased another site in the Beacon Hill neighborhood of Seattle. The subject site had two sensitive area environmental issues, wetlands and a steep hillside. Van Gogh Development mitigated both environmental issues, and attained Master Use Permits from the City of Seattle for two buildings with a total of 150 apartment units, before selling the site along with the Master Use Permits to a investor/developer in August 2012.

Wendy Ceccherelli joined as a principal in 2013, to explore new opportunities in south Seattle. Our current project, Van Gogh Lofts, is a 40,000sf mixed use commercial development 1/2 block east of the Rainier Beach Light Rail Station in Seattle. There will be approximately 34 units of residential live-work units for artists and other creative entrepreneurs, and 2000sf of ground floor commercial retail space.

This coaching/mentoring opportunity is not a solicitation for funding, partnership nor equity in the Van Gogh Lofts project. However, we will certainly be using this project as an example of commercial development for our clients wanting to learn more about commercial real estate development in general through the training, coaching and mentoring we will offer. Additional speakers and trainers will come from the professionals with whom we work.

For more information, please email wendy@vangoghdev.com, 425-270-7292.

Happy investing!

Monday, March 24, 2014

Andersen Construction Selected as Van Gogh Builders

We have selected Andersen Construction Company as our builders! Here is the schedule for construction on our mixed use commercial development project, Van Gogh Lofts, located at 4354 S. Henderson Street:

1. Project Kickoff (April 2014) - To start, we would typically have a meeting between Van Gogh, SMR, and Andersen. We'd establish what the extent is of the services that the architect is providing to you so that we can coordinate our personnel and time accordingly. We'd basically establish a road map for Van Gogh, SMR, and Andersen to successfully get the project moving in the right direction. I would be your Pre-Construction Manager for Andersen, and one of our Estimators and Senior Project Managers would be involved in this phase.

2. Schematic Design and Budget Phase (May 2014) - This is where you are currently in design. Our services would include a few coordination meetings with our staff, a preliminary high level schedule, a project budget estimate based off of your current design with any changes discussed at coordination meetings, and some financing strategy coordination. I do not think that Andersen can help with direct financing on this one. We can help with fundraising efforts and attending meetings in the community, however, if that is a part of your strategy. We can also do a few pricing exorcizes based on initial project estimates to try and get an appropriate budget for the job.

3. Design-Development Phase (March 2014 - January 2015) - This phase would occur after we had a better idea of whether financing is getting secured, simply because this is probably when you'll be paying most of the architect fees which would mean a larger financial investment. We would work alongside you guys and the architect to go from a conceptual design to a more complete design that is ready for bidding and construction. This can be condensed into about a month if necessary, but would be good to get started on as early as you are comfortable paying for this level of architectural services.

4. Construction Document Phase (January 2015 - February 2015) - This phase entails working together with all parties to issue a "bid set" of documents. It is after nearly all design is complete, and basically creates the legal document set that will tie Andersen or another contractor to a price to actually sign a contract on.

5. Bidding/GMP Phase (February 2015 - March 2015) - We'll provide a final bid, and assuming everything is in line we will sign contracts and start the construction phases of the project.

Anyone interested in learning more about commercial real estate, please follow me here at this blog, or email me privately at wendy@vangoghdev.com

Happy Investing!

Tuesday, March 4, 2014

Seattle Department of Planning and Development

Due to an unusually large number of applications, we are running behind on our reviews by up to 4 weeks for Initial Plan Reviews and 2 - 4 weeks for Corrected Plan Reviews. Your project will be assigned a reviewer as soon as possible. Instead of calling us for your project status, please use Permit & Complaint Status or get real-time status updates through the DPD Project Portal. We appreciate your patience and understanding while we work through this spike in applications. 

This is the message that accompanied the submittal this week by our commercial real estate company Van Gogh Development Corporation to the City of Seattle Department of Planning and Development (DPD) for a development in the Rainier Beach community.

Wow! Four weeks!?

What is "Initial Plan Review?" I am having a hard time finding a definition of what this involves from the DPD website. I am hoping that this does not mean it will take FOUR WEEKS for a City staff person to make a site visit to our property.

DPD's Design Review Program reviews multiple aspects of a building and its site, including some of the following:
The overall appearance of the building
How the proposal relates to adjacent sites and the overall street frontage
How the proposal relates to unusual aspects of the site, like views or slopes
Pedestrian and vehicular access to the site
Quality of materials, open space, and landscaping

DPD holds public meetings for full Design Review that includes review by City staff and the Design Review Boards. Their review process includes an opportunity for public comment and involvement.


But why the big delay?

According to City of Seattle stats, there were 440 building permits issued in the month of January 2014 alone, valued at almost $87million. This compares to 306 building permits issued in January 2013 for a total value of roughly $55million.

U.S. builders broke ground on homes at the fastest pace in more than five years, strong evidence that the housing recovery is accelerating despite higher mortgage rates. Construction of single-family homes jumped 21 percent to an annual pace of 727,000, also the highest in more than five years. Apartment construction soared 26 percent to a 354,000 annual pace. Though new homes represent only a fraction of the housing market, they have an outsized impact on the economy. Each home built creates an average of three jobs for a year. For more information, please see:

http://www.seattlepi.com/news/article/US-home-construction-hits-highest-pace-in-5-years-5074701.php


Happy Investing!

Wednesday, February 19, 2014

Raising Private Capital

How does a developer go about financing a project from the ground up? Many use their personal wealth, but that is not always possible - and it is not the way that we intend to go with our artist live work development on South Henderson Street near the Rainier Beach light rail station.

I wanted to explain our business model, which is different from the owner-occupant model which is more typically used in a property management screening and with which my readers may be more familiar. Van Gogh Development Corporation is not an owner-occupant, but rather a developer of the property on Henderson Street. 

We will be raising private capital through a private offering syndication, and will create a separate LLC to close on this transaction (to be named something like Van Gogh Lofts, LLC). We have met with a top-notch SEC attorney in Bellevue, Greg Russell of PRK, to begin this process. I personally have raised over $2 million in private funds for previous real estate deals, which is why I provided my personal credit history for review. My.
business partner O. Thomas Harper has used his own personal resources for previous developments, but does not plan to do this development that way.

We have hired architects, attorneys, and geotech consultants, all at our own expense, to begin this process. When we have preliminary plans and a pro forma budget, we will begin approaching private investors and equity partners to raise the funds we need.

We have not filed a tax return for the past few years, because there has been no recent activity in our corporate account. Our last project was a master plan for a 150-unit apartment development in South Seattle, which was scuttled as a result of the economic downturn. Because we had no activity, it did not make sense to keep funds in the corporate account. We have been financing the costs for the Henderson project out of personal resources, while we prepare for raising private capital.

I trust you understand how this business model differs from what you may be used to when screening a tenant for a commercial or residential property. What we are doing is quite different, but also quite typical for a development project. Talk with other builders and developers to verify this business approach.
 
We are willing to take a big gamble on a development in a part of town where few other developers have been willing to take this risk. We believe our proposal for artist live work space and ground floor commercial is the right one for this location, and one in which I think the community will be well-served. 

But if we were to fail, at the very worst, the seller would keep our $10,000 of earnest money, and have a more valuable property with architectural plans, permits and geotechnical report. Trust me, we have already raised the visibility of this site within the community, through our meetings with SE Effective Development, with the Rainier Valley Community Development Fund, and with various arts leaders. This should prove to be a big win-win for our seller as we move forward.
 
Happy Investing!

Monday, February 10, 2014

Seattle Artist Live/Work Development

Van Gogh Development Corporation is purchasing a 10,000 sf parcel near the Rainier Beach Light Rail Station to develop as Artist Housing in a mixed-use, transit-oriented commercial development on South Henderson Street in South Seattle. This transit station is the first stop located in the City of Seattle, on the light rail line coming from SeaTac International Airport. It is also strategically located close to the airports at Boeing Access Field and the Renton Municipal Airport.

The subject site is proposed for development with a four-story 33-unit midrise, mixed use transit oriented apartment complex. The project is planned to have a mix of studio and one-bedroom units on the upper three floors with about 1800 sq ft of ground floor commercial. The subject units are intended to house artists in market rate live/work rental units, with 20% of the 33 units (7 units) targeted as "affordable" units.

Building amenities planned include a community room, common laundry with bike storage and a rooftop deck with seating and landscaped areas.

Rental increases in South Seattle were the second highest (after Everett) in 2013 in the metro Seattle area, and the rental housing market is strong.

The subject parcel is located one-half block from the Rainier Beach Light Rail station, on South Henderson Street. It is near the Chief Sealth power line trail, and close to Rainier Beach High School, Rainier Beach library, and Rainier Beach Community Center. It is located on bus lines for the #8, #106 and is also close to the bus stop with bike lockers at S. Henderson and Martin Luther King Way S.

The near-by business district on Rainier Avenue includes Safeway grocery store, Payless shoe store, Bank of America, and other nearby businesses. Kubota Gardens and Lake Washington are  each located less than one mile from this development site.

Van Gogh Development Corporation has hired SMR Architects to design this project. They were the lead architects for all of the ArtSpace Projects in Washington, including the Tashiro-Kaplan Building, Hiawatha Lofts, Mt. Baker Lofts, as well as the artist live/work renovations at Youngstown Cultural Center in Seattle. Douglas Ito is the lead architect for this project.

Geotech Consultants have been hired to do the geotechnical work on the surface and subsurface soils.

Principals in Van Gogh Development Corporation include O. Thomas Harper and myself. The Corporation was founded in 1994 by O. Thomas Harper. Mr. Harper has spent the past thirty years as a developer, primarily in South Seattle.

I spent over thirty years as a government arts funder, coming to Seattle in 1992 as the Executive Director of the Seattle Arts Commission under Mayor Norm Rice. During my tenure, I organized an artists housing forum which led to the development of ArtSpace projects in Seattle including Hiawatha Lofts and the Tashiro-Kaplan building.

For more information on our development, please contact me at wendy@vangoghdev.com.

Happy Investing!