I was out of town all day Wednesday. From 5 AM til 11 PM. Destination: Richfield, Cedar City, Hurricane, and St. George, Utah.
We left (my business partner and I) at 5 AM with a meeting in Richfield between 9 and 10 AM. We have been looking for building lots and builders in areas we feel are able to support good returns for our investors. We had a contact in Richfield who reported that he had 16 lots that will be ready for building by the middle of August. So we went to look and do the meet & greet thing. We met at a place called "Good Chance Cafe" for breakfast with the fellow who owns the lots and would like to get them sold. We went in and sat down at a booth, at which point we were greeted with two waitresses slinging glasses of water, coffee, and menus.
At this point in the event I looked around at the place and its patrons. In the next booth over from us there were two dudes who looked like the were on their way either to, or from, the fields where they were either a) sheering sheep, b) throwing hay, c) herding 1000 head of cattle, or d) repairing the barbed-wire fence out on the south 40. They had the obligatory straw cowboy hat, tattered and sweat-stained, the wrangler jeans from about 7 years ago, and the boots that looked so beaten that you would think they would disintegrate if they were pulled on too forcefully. The dude facing me had a gnarly mullet, and a stunning fu-manchu (ie. dirty sanchez) down to where his jaw made a 90 degree turn to the neck. It was thin, stringy, and brutally overgrown. He was eating eggs and toast, and as he chewed, he looked like he was munching on about a dozen distressed daddy-long-legs spiders. I couldn't help watching, like one does at a bad car accident.
I was interupted by one of our waitresses, the pudgy one wearing the apron tied too tight, as if to restrain some unseen violation. She wanted to know what we wanted to eat. I asked to eggs and bacon, sunny side up. I realized I had made a serious mistake when she wrote on her pad, "snotty" rather than "sunny". I now had the fear of God in me.
So my breakfast arrived with runny eggs and petrified bacon. Apparently the cook knew what "snotty" eggs were.
Interestingly, speaking of snot, earlier in the morning, we stopped at the Krispy Kreme store in Provo for a quick coffee and a donut, to get us going. We drove up to the place at about 5:55 AM, and the place didn't open til 6 AM. I guess people in Provo don't need coffee before 6 AM.
Anyway, as we were loitering in the parking lot, pressing our noses up against the glass, we watched our little donut friends go by in their own hot oil whirlpool bath, wondering which ones would eventually be ours. As we did this, a small truck drove up, and out jumped a little hispanic fellow, slammed the door, and immiediately grabbed two giant bags of garbage out of the bed of the truck and walked the 20 yards over to the dumpster and tossed them in. On his way back he performed what I call the "traditional cowboy's kleenex." You know how it goes: thumb to nostril, BLOW, scrape residuals off chin/shirt/pants/shoes with sleeve, rinse, repeat on other side/sleeve. Then he opened the door, walked in, and walked to the back to put his apron on. We watched this through the window, looked at each other, and without a word, shuddered in silent revulsion.
Needless to say, I asked for donuts that were already under the glass when we went in five minutes later.
So back to the trip. Richfield was very promising. In case you don't know, the biggest oil find in the US in the last 25 years was recently discovered in the area, and now there are oil companies chomping at the bit to get in there. As we drove around we saw lots of construction, nothing for sale. We drove a multi-family complex and the sign read, "First two phases sold out, now taking reservations for phase three." We may have a good opportunity here, as lot prices are still in the $40,000 range.
On to Cedar City. The person we were meeting there was 90 minutes late and we drove around there as well. We saw LOTS of homes for sale, and not cheap. What would sell for 150,000 in Salt Lake County was listed at 239,900 here. But we did notice a TON of inventory on the market. We stopped in at a realtor office that was recommended by the person we were suppsed to meet, and they reported that there is a GLUT of homes in the 240,000 to 550,000 range. They noted that if we could do homes in the 219,000 range, they could sell them like hotcakes at a county fair breakfast. That's because land costs are still so high that somebody buying a lot can't afford to produce a home for a reasonable price, unless it is built by TuffShed. they did note however, that homes on the upper end of the scale were still selling as well.
So we looked at a set of 24 lots abutting the local golf course, and feel like there are good possibilities in the 650,000 - 800,000 range. More research will be required.
On then to St. George. We had a guy in our office about 2 weeks ago. He basically dropped a subdivision of about 45 lots on the desk, and reported that he was going to be building in there and now was too busy. So we went to look. The area won't be plat-approved til about a month from now, but they have already gated the community, done the concrete fence around it, landscaped the outside, graded the lots, etc.
This will take a certain kind of buyer, but we feel like there are still some good possibilities in St. George for that upper-upper end home in the area.
Incidentally, my eyeball kept falling out, because it was so HOT THAT MY FACE WAS MELTING! By the time I looked down at my feet they were stuck to the pavement, and were big a floppy like duck feet.
Then on to Hurricane, where we have been dealing with a set of 16 lots. We have started construction on about 5 of them, and they are taking shape. We noticed another builder with 2 lots on the same street and called him up, wanting to know what he was selling the homes for, as they would end up being comps on our final appraisal. He reported to us that the homes are not selling well at all, they're bigger than ours, and there is just no traffic. That means reduced prices. Not good. We have some work there to do.
We then started back to Salt Lake and got home at 11 PM... long day, but we looked at a lot of good things.