News | AA Real Estate Group

PROJECT UPDATE: Residences at 324 Hanover St. Manchester

After a LOT of… well, let’s just call it what it is… dawdling…

We stopped construction designs in 2019 when we first were approached by an assisted living operator, who wanted to partner with us on the site. I was very intrigued and interested, as the numbers looked VERY promising for us and our investors. And after 1 iteration, and getting close to striking a deal – the dreaded COVID-19 happened. And then, all of a sudden, they had LOTS of worse problems to deal with.

And COVID-19 stalled us too. We were focused on longevity and seeing what we needed to do to survive (just in case ALL real estate activity STOPPED… which it didn’t…), and then, we looked for ways to THRIVE in the upcoming chaos that would ensue (see my other post on the theme for this year, “BE READY”, after 2020’s year of “CLARITY”).

SO – after pulling the plug on my long standing passion project in Billerica, I knew we had to get cracking on this guy!

We first rehashed the designs to attempt to make them modular friendly, and then had it bid out with our modular connections in the area. After the timing and pricing wasn’t coming in too favorably, we also had it bid out with some commercial stick builders in the area, and redesigned two last times to really make it nearly perfect. We’re happy to have awarded the project to Ridgeview Construction, with a friend and mutlifamily investor of mine, Shane Carter as the principal. So we’re finally at the point where we can do some last tweaking of value engineering, and then we can get to work on making this a reality for being placed into service early 2022!

Best part is? We’ve been honing our unique strategy in the Southern NH market all this time. By building a new asset, with efficient 2-bedroom units, we can appeal to a specific subset of professionals looking to work from home with the sound buffering they need, with access to public transportation and even zip car access on a major route, with a TREMENDOUS walk score to downtown or other amenities. That said – by offering the location and “class B+” building, we can charge higher rents as most of them are given a stipend from their work to relocate to our buildings. This is a new strategy we’ve been testing, and for a good amount of the units, this will be what helps drive the NOI and asset valuation to a point where we can refinance using agency debt. By using agency debt – we get into a long term EXCELLENT financing situation which drives cashflows high, and couple that with our cost segregation strategies – this is what most of our investors love, is the tremendous tax benefits that come along with a new development or fresh rebuild / large renovation project. By using our specialized national contacts, we can get as much as 25% of the hard assets and improvements of the building written off in taxes on YEAR 1… which benefits all equity owners in our buildings. While getting cashflow benefits quarterly, and WHILE getting their IRR upon refinance. So equity owners make money 3 ways – they can get some principal back at a liquidity event (like a refinance or sale), they get quarterly cashflows from the performance of the building (huge shout out to our in-house Peak Performance Property Management Team!), and they get TAX savings by being a part of the cost segregation and bonus depreciation plays.

And we haven’t even talked about solar yet! So in short – our update is that we’re finally rounding the bend on getting this one restarted, and should have all final plans and final figures in place soon for our equity investors – we will be sure to provide updates and picture updates as it goes! Be sure to LIKE and FOLLOW both my public page on Facebook as well as the AA Real Estate Group on Facebook and Instagram for the “from the ground” updates as we move forward on this one and some other big opportunities we’re working on!

April 14, 2021/by Nick Aalerud

News

Cutting Losses & Drawing Lines!

It was a very hard day for me. Over 2 years had passed since I initially saw this lot, which clearly wasn’t being used to its natural potential (was an auto shop and hobby store), sited on a highly trafficked corner lot, across from a McDonalds, across from wetlands… and on a gorgeous riverbank with great views.

For the video version of this day in December – Check out the Facebook live

I knew, in my heart, this project was destined to be ours. To give back to the community I grew up in, to make a landmark all travelers coming in from Lowell or commuting through to Burlington would see. AND – I could relocate my office to a beautiful new location with even a food establishment on site, that had a patio overlooking the waterfront. And on top of it all, I could clean up Billerica’s water by installing a filtration system to finally clean up all of the runoff generated by the oily, leaky cars, that was just flowing freely into the river (and the drinking water for the town)…

And as we went through the project and saw how pricey it was to really clean up the site the way we wanted to, and level out the access points, expand the green space and curbing, etc… we were introduced to the PUD and entertained condos to help offset this cost – but also to create more well priced housing units in this awesome new location. And the best part was – everything we designed at first, met ALL the bylaws, but still needed special permit approvals from the boards.

Well, after months and months of lunches, attracting local restaurateurs that I had handpicked, politicking, gathering zoning board approval, anti-development politicians and residents gathering and spreading lies and hatred to feel important and protect their political bases, my house getting egged, and the while getting LOTS of love and support on Facebook and other social engines from people who were just too afraid to show their face due to the intimidation they were receiving… (there were really only 6 very loud opponents, but I learned that opponents will always be louder the supporters, it’s the nature of the game!)

I then started the planning board hearings, and worked with them to:

– Reduce the height

– Increase parking (and removing our office and retail component)

– Lower the unit count from 30 to 23 (which effectively eliminated any “profit” that our lenders wanted to see in the project)

– Add affordable units which then brought unit count back up to 26

– Expand the curbing further and sidewalk improvements

– Shore up and clean up the waterfront and add many new plantings

…. But it apparently wasn’t enough. The final night of the Planning Board hearings, the anti-development group won the battle over OUR project, as well as the Billerica Mall redevelopment – we were both denied the same night.

Then the attorneys and even some powerful people in town spoke with me – and let me know I would absolutely win a legal battle if we appealed the case. Attorneys came in at an estimated $50K to battle, and they said we’d win, but most likely the court would kick it back to the board for reconsideration… costing me another 12 months and so much more frustration…

I tried working with the new sellers (the seller I had a close relationship with had passed away during this ordeal) for some relief on the price or payments to help cover these extra legal fees and elongated time period, and got no luck there – they were not yet even aware of what I had just been through.

But would I really just let $50K bring this whole thing to an end?

And I started thinking. Did I want to go through this yet again? Yes, this was my passion project – but at what COST? And not even the $250K I had already sunk into it – what COST to my time? What opportunities was I NOT acting on because this was taking all my effort and energy? Finally my soulmate looked me right in the eyes and said

“I miss the old version of you, before this project. I’m so exhausted watching you burn through everything you have to appease everyone, and meanwhile, it’s sucking all your cash, time, and energy you COULD be investing into other things. What COULD you be doing if you ended this?”

That’s all I needed to hear.

So we made the fateful decision that day in December, to pull the plug. And shake off the feelings that the “anti-development groups had won,” or that “I wasn’t strong enough to weather the storm,” or that “I would never have an opportunity like this again…”

Because all that, is just false.

As SOON as I shifted my energy, we finally had traction and movement on some of the other development projects we were working on. We all of a sudden had deals coming in to us via marketing channels that had gone dormant for years. Even our coaching business, which we had not worked in for a couple years, it had new life breathed into it and new minds and branding…

And we are on track for 2021 to be our BEST. YEAR. EVER.

Knowing where to DRAW THE LINE on projects, relationships, commitments, etc, is so incredibly important.

Sometimes you have to know when to cut the cord.

And while you don’t know if you’ll free fall….

Chances are, with a little Faith, you’ll land on a trampoline and spring back, way further than where you let go. See you at the top, friends.

PS – Be sure to connect with my new Page on Facebook, as it’s where I’m posting most of our new content!

April 13, 2021/by Nick Aalerud

News

The Inevitable Grenade Being Kicked Down the Road

As Joe Biden took office, we wish him luck in his efforts to unite a very divided country.

I love and welcome all of the different mindsets that make up this great country, politically and otherwise.

There are also some things, that I consider as cause any fact, being a student economist.

He immediately extended the eviction moratorium to end of March, and we anticipate he’ll do so until end of August, which definitely makes people “Feel good” that he’s doing something for Americans who have been hurt as a result of the Covid pandemic.

But this is just kicking an inevitable grenade down the road.

In the article it says that one in five homeowners were behind on their mortgage as of December.

This is a result of businesses adapting and learning they can do more with less, and they’ve reduced their overhead and salaries as a necessary adaptation, to survive with all the strict regulations placed on them during this pandemic.

That said, people are not just going to get all their jobs back at their same income levels… And therefore, there will be floods and floods of people unable to pay their mortgages, when these moratoriums finally lift.

You can be ready. As an agent or an investor, be sure to bring someone on your team that will specialize in distressed sales and short sales, and aligned with an excellent third party short sale negotiator.

If you are a landlord, Make sure you are up to speed on every single application and portal for your residence to seek assistance, so that you also don’t fall behind, since most landlords with commercial loans do not have the same relief as homeowners will.

And be sure to get your liquidity ready, because there will be some tremendous buying opportunities, once all of the unemployment and government relief finally lets up. And it will let up, else the American dollar is slowly becoming worthless.

Crazy times…. I’m anticipating that the result of this, the more it gets kicked down the road, is going to be much worse than the financial crisis of 2008.

Let’s #beready. Connect with me if you want to jump on our train.

January 21, 2021/by Nick Aalerud

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