Helen Brown Group

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The Real Estate Quagmire

by: Melissa Bank Stepno, President & CEO

Real Estate is often the easiest asset for us, as prospect researchers, to identify.  After all, more people in the United States own a home than have any other type of clearly identifiable (and quantifiable) asset.  However, using real estate as an asset to estimate household wealth or capacity is not as simple as it seems.

The list of reasons is long and varied.  For example:

  • When was the property purchased?
  • How are you determining the “value” of the property, and which “value” are you using?
  • Is there an outstanding mortgage? If so, how much and what type of mortgage is it?
  • Where is the property located geographically?
  • Does the property have any special features such as a boat dock, ski-in-ski-out, sits on a private golf course, etc.?
  • How many properties does the prospect own? If there are multiple properties, are they personal/private residences, investment properties, rental properties, etc.?
  • Is the property owned solely by the individual or spouse/partner pair, or are their other listed owners, or is the property held in trust?
  • Generationally, how old is your prospect?
  • What else can you learn about the prospect that is not related to real estate holdings but may inform your interpretation of those properties?
  • And, if there are no identifiable real estate holdings, what else can you learn about their place of residence? Is it in a ‘high rent’ or exclusive building?  Do they appear to be living with relatives?  Are there any other pertinent details?

Each one of these questions could produce its own blog post.  For the purposes of today, we will focus on just two – when was the property purchased and generationally, how old is your prospect.

Now, it might seem obvious that someone in Gen Y could not have purchased a home in 1991 – they might not have even been born yet!  However, the situation could be significantly more subtle than that.

I fully admit that this is not a common scenario but I do know of at least one Gen Yer who did inherit his grandparents’ home via their family trust.  At first, he wasn’t very much interested in owning a home where it happened to be located.  But then he realized the financial implication of it and understood that it would set him up for a very different financial future than he had anticipated.  He decided that relocation wouldn’t be so bad after all.

In another scenario, this time a younger Gen X couple where the female partner  was gifted a condo in a large city upon college graduation from her wealthy parents and the male partner  inherited his grandmother’s rural estate in another region of the country.  As the couple started to grow their family, they sold both properties and used some of the proceeds to purchase an incredible family home in the suburbs.

While a rarity, in both of these instances, while still in their 20s, these two households owned their homes outright without any personal financial outlay and no mortgage!  Think about how much further their household dollars would go than their peers, whose largest monthly expense is likely their rent or mortgage.

Now of course, there is the age old (no pun intended) question in both cases is whether additional financial stability and a significant amount of discretionary income will translate into charitable dollars, but that is not the purpose of this blog post.

I also realize that both of these examples are outliers.

So instead, let’s look at home affordability over time for those in a more normal, or traditional, circumstance.

Colloquially, we probably all know that home prices have been on the rise in recent years.  In fact, the Federal Housing Finance Agency report for Q2 2024 stated that nationally, home prices have appreciated in value every year since 2012.  Quantitatively, home prices have risen 319% since 1991 and 58% just in the most recent 5-years.

This may sound great for homeowners!  And, some might say that it helps to create wealth in the country.  However, everyone needs a place to live so we must add one additional layer to provide context.  That layer is home affordability.

To put it simply, the rate that household income is increasing over time is not keeping pace with the rise in home prices.

To be more specific, in that same time period since 1991 where home prices have risen a median of 319%, Median Household Income has only risen 167.5%.  So to use rough math, home prices have increased twice as much as household income.

The same is true over the most recent 5-year period when comparing the 58% increase in home prices to the 27.5% increase in household income.

Historically, home prices are rising roughly 2x faster than income.

Yes, for some, the rise in home prices might be creating wealth.  But, more commonly, the rise in home prices is creating an affordability challenge.

From a housing affordability perspective, a common metric is that a household should not spend more than 30% of their income on housing costs.  Typically, this doesn’t just include mortgage (or rent) but also includes things like property taxes and utilities.

A 2023 study reported that nearly 1 in 4 homeowners are “house poor,” meaning they are spending more than this 30% benchmark on housing costs.

Unfortunately, while impacting every generation, this phenomenon typically impacts younger generations more heavily than older generations, such as the Baby Boomers.  It’s also one of the many socio-economic reasons why the rate of homeownership is lower in younger generations.

So, what’s a researcher to do?

Most simply stated: we must look beyond a simple real estate “value” to determine capacity.   Refer to the top of this blog post to see the checklist of questions I propose you ask yourself.  And, stay tuned to the Intelligent Edge as I plan to dig into some of these in future blog posts!

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Image Credit: “Houses on dollar bills” by Images_of_Money is licensed under CC BY 2.0. 

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Digging Deeper into Real Estate

We spend a lot of time learning about the finer points of real estate information in this job, and this week my colleague, Chelsea Morin, shares some great tips and resources to help you confirm the information you have, and perhaps find even more! ~Helen

Chelsea Morin

                 Chelsea Morin

Imagine this scenario: You’re asked to research a couple and you easily come across multiple properties all in both spouses’ names (think a primary property and a secondary property, or two, or three). Sounds nice right?

But it doesn’t always, or even often, happen.

Next week, Melissa Bank Stepno (HBG’s Vice President of Data Insight & Business Development and Managing Director of DAFinitive®) will discuss that real estate holdings are not always the most reliable indicator of wealth and capacity in her webinar R-Cubed: Residential Real Estate Review for the California Advancement Researchers Association (CARA) on May 16th.

But they are often the most visible. And when real estate holdings are considered in the appropriate context, they can provide a fuller view of your prospects. If you feel like you have been hitting dead ends in your real estate research recently, read on!

First things first – confirm what you have

Always try to use multiple resources to confirm information. There are several free resources that I use often in my research. The town or county property/tax assessor’s office where you suspect your prospect owns property usually has lots of local level information.

If you’re researching in the New York City area, using ACRIS and StreetEasy together can help provide a more comprehensive picture of tricky real estate holdings like co-ops.

And finally, OpenCorporates can be used to search for any LLCs you might come across and will show you who the registered agent is for an LLC. You can also search by agent name and find any LLCs they are associated with.

If you have paid resources available to you like LexisNexis for Development Professionals and iWave, they can be used in tandem to confirm information as well. I personally like to start in LexisNexis to view a prospect’s “Real Property” holdings and “Current” and “Prior” addresses (I’ve found that “Prior” addresses can sometimes reveal current holdings too). I’ll then head to iWave to try to confirm what’s in LexisNexis and/or find additional properties by searching on different terms. Some search queries I like to use are:

  • a couple’s names together,
  • each person’s name individually,
  • common name misspellings,
  • reverse searching addresses from LexisNexis, and
  • any P.O. boxes associated with the household.

Moving on to find new surprises

In iWave, always look at the “Additional Properties” tab when viewing a real estate record – but don’t assume that that includes all affiliated properties! Something as common as a name misspelling can prevent properties from being properly connected in iWave.

Another great paid resource is Property Shark, which can be useful for viewing sale documents and finding finer details like signatures on paperwork. These can be useful in situations where you suspect that your prospect owns a property that is held in an LLC. Finding your prospect’s name and signature on the paperwork can help confirm the connection.

Be curious and look for patterns!

Real estate research can often be like putting the pieces of a puzzle together. I try to keep track not just of owned property addresses, but also the mailing addresses those properties are registered to, any LLCs, and registered agents for LLCs. You may find that the same agent manages multiple LLCs that seem related to your prospect. Or you may start to notice a pattern like I did when I researched a group of properties recently: they were all held in LLCs and had a similar naming convention based on the type of locale of the property.

To help put your new findings in context, you can use a resource like the Federal Housing Finance Agency’s House Price Index (FHFA HPI®) that my colleague Christine Bariahtaris recently shared with our team to better understand the local real estate market.

Being able to learn more about properties and locales across the United States (and sometimes across the world!), is one of my favorite parts of this work. I hope these tips help to make real estate research more efficient and enjoyable for you too!

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Real Estate, 1031 Exchanges, and your nonprofit

This week our resident real estate expert, Josh Ostroski, shares some great background on a real estate trade called a 1031 Exchange. If someone wants to defer capital gains taxes on an investment property, a 1031 Exchange is a great way to do it, and it can mean opportunities for nonprofits, too. How? Read on! ~Helen

     Josh Ostroski

In my research (and in my previous work as a real estate agent) I’ve come across a particular real estate exchange a few times and wanted to share what I’ve learned and how it can be used for prospect research purposes.

What is a 1031 Exchange?

In a nutshell, a 1031 exchange is an IRS rule that allows real estate investors to defer capital gains taxes to some point in the future by swapping an investment property for another property of equal or higher value. For example, you could sell a single-family rental, apartment complex, etc. and purchase a similar or upgraded investment property and defer paying property gains tax. You are allowed to continue exchanging properties as many times as you want and for as long as you are alive.

Benefits of a 1031 Exchange

Deferring property gains tax allows the investor to have more buying power by having more money to put down on the next property. The investor could also sell their current property for one with a better return on investment.

The investor could diversify their portfolio by adding properties in a different market that may be hot, since there are no restrictions on where the new property is located. They could also improve their portfolio by either consolidating properties, or investing in multiple properties, which would create more potential for wealth. You could also increase your cash flow.

Rental properties are considered depreciating assets, and you can deduct a percentage of the cost of the rental property from your taxable income each year. If you exhaust the amount that can be depreciated, you could do a 1031 exchange, which would allow you to recapture your investment properties depreciation.

You can gift the investment properties to your heirs, and they won’t have to pay the accumulated capital gains. The heirs will inherit the properties in a step-up basis, meaning they will inherit the properties at the current fair-market price of the asset.

Downfalls of a 1031 Exchange

When you sell the property, you need to put the entire initial amount – including the downpayment on the property being sold – back into the new investment, so there is no liquidity event with a 1031 exchange.

When you sell the investment properties you will need to pay the capital gains realized on those investments, which could accumulate to large amount.

There are strict timelines: you have 45 days to identify a new property (or properties).

The process can be complicated and confusing, so some people may not want to deal with the rules and structure. It becomes even more complicated if there are multiple investors.

How it Relates to Prospect Research

A property owner could turn a vacation home that they don’t use into a rental property, then either exchange it for another rental or keep it and gift it to their children or a nonprofit.

If a prospect has investment properties, it could be advantageous for them to gift the properties, so they don’t have to pay the realized capital gains while also accomplishing their philanthropic goals. It can be akin to donating stock or crypto.

There are many factors that would affect if donating a property would make sense for your organization:

  • does your organization accept gifts of real estate?;
  • how much equity is in the property;
  • is the property marketable;
  • are there any additional associated costs with the property?

These are all things to consider.

To find the estimated value of the investment property, there are a couple of simple ways:

  • If it’s a commercial property, LoopNet is a good resource to find comparative values (“comps”).
  • If the prospect has single-family home that is used as a rental, you can see what the normal resale value of the home is by checking Zillow. In addition, Zillow will often list what the last asking rent price was on its listing for that property. If the rental price isn’t listed, I recommend doing a search on the property address to see if anything comes up for that property.

If a prospect has either a vacation home or what appears to be investment properties, let that be known in the profile you create and/or let the gift officer or planned giving officer know so they can talk about options with the prospect.

Here is a link to the IRS Fact Sheet about 1031’s. As always, if you have questions about the legalities of 1031’s seek out a tax attorney for information.

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Expanding our view on HNWI and their real estate holdings

The year 2020 was weird all around. A global pandemic raged across the globe like the wildfires in California. The stock market blithely ignored it and soared.

The supply chain was MacGyvered on the fly with duct tape and dental floss by businesses scrambling to get products out of warehouses and into peoples’ houses. Meanwhile, the technology industry Zoomed ahead.

Also, global wealth rose 7.6%. An additional 6% more people in the world moved up a rung to become official high net worth individuals (HNWIs). Six percent more people wondering where on Earth to put all that extra cash.

Places we go to find that out

[Read more…]

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Real estate and the wealthy right now

When the pandemic struck last year, (those who could) moved into their summer homes or took long rentals outside of whatever city they lived in. Since that time, there has been a reshuffling of thinking about what it means to be employed full-time and if employers will maintain offices, move to a hybrid office/work from home (WFH) situation, or just close their offices permanently.

That means that in vacation areas especially the real estate market is booming. Houses are selling within hours, some sight-unseen, for cash – and well above asking price. It’s a good time to be a real estate agent, especially if you like working 20/7. It’s also a great time to be a seller (as long as you have somewhere else to live lined up). It’s not great to be someone who is looking for a primary – or first-rung-on-the-ladder home.

Pension and private equity firms are changing the market

Institutional money pockets are as deep as the Mariana Trench right now, and those investors have to diversify their portfolios. Real estate is a great way for them to do that. What that means is that they are becoming some of the largest real estate owners in the country and are driving up prices up so that the average home seeker is getting shut out of the process.

With medium-sized investors refurbishing medium-sized homes to flip to institutional investors, it means that monthly rental fees are going up, too, for those homes that are left.

According to real estate research and investment firm John Burns Real Estate Consulting, one in five homes in the US is owned by someone who will never live in it. In Houston, investors currently account for nearly a quarter of all recent home sales. Investors aren’t just buying houses and apartment buildings, either – they’re buying whole neighborhoods.

UHNWIs

Moving down the food chain ever so slightly, what about ultra-high net worth individuals (UHNWIs) – those with a mere $30 million and more? What does real estate look like for them? How did the pandemic change their attitudes toward where they want to live?

Respected real estate firm Knight Frank publishes their Wealth Report annually, and this year’s version had fascinating insights. Just over a quarter of UHNWIs expect to buy a new primary residence this year in a coastal or rural location. Their primary goal is to have access to open spaces near their main dwelling, and their plan is to have this upgraded residence also serve as their office (or be very close to their work-place).

90% of those surveyed said that international travel would be significantly curtailed due to ongoing concerns about COVID-19, so that makes the home-as-getaway even more important.

In terms of holdings, primary and secondary homes make up about a quarter of UHNWIs investment portfolios. Their interest in investing in commercial property is way down (imagine that!) but – just like pension and private equity firms – their interest is way up for owning rental properties.

So what does this mean for prospect research and fundraising?

Well, a lot. This real estate financing situation is a whole separate world that is important for those of us in fundraising to read about to understand what’s going on with money moving around. Here are 3 specific things to consider:

  • Your nonprofit’s UHNW donors may be on the move, so keeping in touch will be even more important this year.
  • While it’s true that a donor will never* give an organization their residence(s), real estate can be an important indicator of wealth. Use the ratios and percentages in reports like the Knight Frank Wealth Report and the Capgemini World Wealth Report to help you get a sense of your prospect’s capacity when you are creating ratings.
  • This is a real estate bubble. Bubbles always burst, and we won’t know the size of it until it happens. Historically, people and institutions that are heavily invested in certain types of real estate (commercial real estate, for example) may struggle if they put too many eggs in that basket. If the top of your donor pyramid has a lot of people in this category, now would be a good time to make some asks and to think about diversifying your prospect portfolios soon.

What else? If you share this on your social channels, I’d be interested to hear your thoughts about this. I’m at @AskHelenBrown on Twitter.

*this is not actually a true statement. See planned giving.

 

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Real Estate in the Age of Coronavirus

COVID-19 has impacted every single industry, usually for better or worse. But with real estate, the impact of the pandemic has been both better *and* worse, depending on the area of real estate you’re looking at. In today’s article, my colleague Josh Ostroski brings his deep knowledge of real estate to help us understand how our prospects who work in real estate (or who own well-placed properties) may be impacted now. ~Helen

There has been a lot of talk about real estate trends during the coronavirus pandemic. We have all heard about the urban exodus, housing prices increasing, and people working from home. I wanted to dig a little deeper to see if what we’re hearing is true or merely anecdotal and the reasons why.

The Urban Exodus

We have all heard that families are leaving cities to find more space in the suburbs. As the country was in lockdown, many people began to re-think what was important to them. With restaurants, bars closed, and shops closed, along with food delivery service expanding to more rural areas, there was less of need to be able to walk to amenities. However, according to a recent report by Zillow’s Economic Research team, they found that in most areas of the country “suburban housing markets have not strengthened at a disproportionately rapid pace compared to urban markets.”

There are some outliers, such as the Northeast, where new pending listings in urban zip codes re-accelerating more slowly than in the suburbs. “Some regions saw stronger evidence for a suburban-urban diverging trend than others. For example, in the New York City metro, home values in urban ZIP codes were decelerating in June relative to pre-COVID trends ( -0.2 pp) while suburban ZIP codes were accelerating (0.2 pp).

The same trend holds in Boston with urban home values down 0.5 percentage points and suburban homes values up 1.3 percentage points. However, this deceleration was already a trend (comparing February YoY to January YoY) in the Northeast Region overall, and the New York City metro.

Conversely, the Chicago metro area experienced the exact opposite trend with growth, decelerating in suburban areas while urban areas accelerated. And areas like Philadelphia and Miami saw accelerated growth in both regions, but more so in urban ZIP Codes.”

San Francisco is seeing a trend to becoming a buyers’ market, as inventory and days on market are up. According to Zillow’s report, “in San Francisco, list prices have fallen 4.9% year over year and inventory has risen 96% with a flood of new listings. Higher levels of inventory, up 96% year-over-year following a flood of new listings during the pandemic, are sitting on the market in the city proper, a significantly larger jump than the surrounding suburbs. In San Francisco, though, the softening is clear as sellers flood the market with their listings and buyers have not changed their pace to match.”

The markets where the largest share of renters in the center city would gain the power to buy if they looked outside city limits are San Francisco, Seattle, Washington, D.C., and Boston.

Check Out These Market Trends

Zillow: 12 mid-sized markets to watch

Realtor.com: Hottest Zip Codes

Insurify: Cities with the greatest pandemic real estate booms

Housing Price Increases

Normally in an economic crisis, housing prices drop. However, in this pandemic, prices in many locations have increased. Part of the reason is the drop in demand was matched with a drop in supply at the same time, protecting prices. Then when people began to look to move, the lack of supply has created a seller’s market, increasing prices.

Historically Low Interest Rates

Interest rates are still at an all-time low, so buying a home is more affordable. There has also been an increase in homeowners refinancing, putting themselves in a better economic situation.

Lender Standards

During the housing crisis of 2008, the use of subprime mortgages and lenient qualifications caused homeowners that were not really qualified to purchase homes out of their price range. When prices plummeted, they owed more than the house was worth (became “upside-down” or “under water” on their mortgages). Since then, the government and mortgage lenders have become much stricter in their lending qualifications. That means more homeowners are qualified now. According to CoreLogic, lenders have tightened credit requirements or increased payment requirements, making riskier loans less common. This helps to protect homeowners in a down market.

Home Wealth Gains

According to the Federal Reserve, housing wealth is a major component of total household wealth in the United States. According to the National Association of Realtors, “as of 2018, a homeowner who purchased a typical existing home five years ago (2013) gained $79,488 in wealth (equity), of which $64,200, or 81 percent was from the home price appreciation ($197,400 in 2013 to $261,600 in 2018).”

Home equity is at an all-time high in the U.S., which has not only helped weather the economic downturn, but has allowed homeowners to use that equity to their advantage by having flexibility to be able to sell their home for something that works better for them, like investing in another property (which can generate rental income), home renovation (which further increases the home value), a child’s college education, emergency or major life events, or expenses in retirement. National Association of Realtors has calculated equity reports on 181 metropolitan areas.

Default rates have also remained low during the pandemic. According to ATTOM Data Solutions, “Equity-Rich Properties Continue to Outnumber Those Seriously Under Water by Four-to-One Margin; Portion of U.S. Homes Considered Equity-Rich Ticks Up to 27.5 Percent; Seriously Under Water Properties Down to 6 Percent.”

Second Homes

Another trend that we are seeing is people are moving into their second home and using it as their primary residences. According to an article in the Colorado Sun, schools in Aspen, Vail, and Crested Butte reported record interest in enrollment as part-time resident relocated to their second homes. At the same time, the market has seen increased home sales in these resort towns as people are wanted to get away from cities.

This is also happening in New York City, which was one of the hardest hit cities by COVID-19, where people are moving into their upstate NY, Hamptons, and CT homes.

Real estate agents are also seeing an increase in people that live in cities, but are renters, buying second homes outside of the city.

As researchers, we should keep an eye on surrounding communities outside of cities that were historically vacation areas to see if there is an increase in sale prices. This could also trigger people to sell a home in a vacation area to take advantage of the increased demand.

Commercial Real Estate

One industry that is struggling is commercial real estate. As many businesses struggle to stay afloat, they have not been able to pay rent and commercial real estate companies are feeling the effects. Also, since many companies are having their employees work remotely, they are finding out they don’t need all the space they have and once their lease is up, they are either looking for smaller space or going fully remote.

Physical distancing is also changing the physical layout needed in office areas, meaning that potential tenants are going to demand less open spacing (can this mean we can finally put a nail in the open workspace concept?), updated HVAC systems, and improved amenities.

There is an increased demand for warehouse and storage space, as e-commerce has surged. Biotech companies are also seeing increased demand for lab space.

I think it would be smart to look at a commercial real estate firm’s portfolio and see what types of companies are in their portfolio. Consider using the HBG Whitepaper on who is doing well to help you determine if the RE firm has any of those clients or companies in industries that are doing well. At the same time, if the portfolio is full of restaurants or retail it could mean lean times for the commercial real estate firm.

Also, be on the lookout for commercial real estate firms to take advantage of opportunities to acquire properties at a good price and build their portfolio. Here is a good place to keep an eye on commercial real estate transactions and news.

Working Remotely

Due to the pandemic, many people were forced to work remotely. According to Business Insider, following the pandemic more than half of Americans want to continue working remotely while two-thirds of companies may render their current work-from-home policies permanent. A few major companies have announced they will continue to have employees work remotely, including Google, American Express, Uber, and Airbnb. REI plans to have its employees work remotely indefinitely and recently sold its brand new headquarters in Bellevue, WA to Facebook for $368M.

The National Association of Realtors created a Work From Home Score that studied “3,142 counties that are best poised to provide a supportive environment for working remotely, mainly, working from home.” They used nine factors to calculate the score. The top 30 work from home counties represent the top 1%. The top five counties include:

  • Forsyth County, Georgia

Part of the Atlanta-Sandy Springs-Alpharetta metropolitan area, 11.3% of the workforce already works from home and 99% of the population is served by three or more broadband internet service providers (ISPs). It’s a fast-growing area, and the population rose nearly 21% over the last five years.

  • Douglas County, Colorado

Part of the Denver-Aurora-Lakewood metropolitan area, 11.7% percent already work from home and 98% of the population is served by three or more broadband providers.

  • Los Alamos County, New Mexico

Part of the Los Alamos micropolitan area and the Albuquerque-Santa Fe-Las Vegas combined statistical area, less than 3% work from home but what stands out is that 68% of the workforce work in office-using industries. Homes are very affordable and only 11% of homeowners pay  30% or more of their income on their mortgage.

  • Collin County, Texas

Part of the Dallas-Fort Worth-Arlington metropolitan area, 8.6% of the workforce work from home, and its population expanded 17% from 2014 to 2019, indicating it is a fast-growing county.

  • Loudoun County, Virginia

Part of the Washington-Arlington-Alexandria metropolitan area, 7.5% of residents work from home, with 44% working in office-using industries. 100% of the population is served by three or more ISPs.

These areas could also be a good place to keep an eye on if you have prospects living there as they could see an increase in their property value. It is also going to change the type of home people want to purchase, which may now include two office spaces and an area that can act as a home school.

What trends are you seeing in your area?

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How GIS mapping can improve your real estate searching

This week I’m delighted to welcome Senior Researcher Josh Ostroski back to The Intelligent Edge. If you’re a long-time reader, you’ll know that Josh is our go-to guy on real estate research here at HBG, and this week he has a great article to share on a very clever way to find property information. Take it away, Josh! ~Helen

I had planned to write a blog post about some of the things I’ve learned in my 15 years as a Prospect Researcher since all I ever seem to write about is real estate. However, I’ve been noticing a new trend while researching properties that I think would be helpful for everyone – Assessor GIS Mapping – so I decided to go for a real estate theme for a blog post again.

Geographic Information System, or GIS mapping for short, is not necessarily a new technology, but I’ve noticed that it has popped up on most of the assessor sites now. I’ve found it so helpful that I wanted to share it so that more in the prospect development world are aware of it.

What is GIS Mapping?

GIS Mapping allows you to search for a property by address or by location and you will be able to see the property lines and, in most cases at least, who owns it and basic information about the property. Like all assessor sites, not all counties in the country share the same information and some are more robust than others.

Each site has its unique features and allows you to see different information, so be patient and play with each county (or sometimes state) sites. Even if it doesn’t give you all the information you need, you can at least have a visual of what the property looks like. Then you can use what you know and other resources to find out more specific information about the property. Often times the traditional assessor site will have more robust information on its site about the property.

Here is an example of what the map looks like. Each separate lot is outlined and you can simply click on the lot (be aware that some GIS Maps require you click on a tool in order for the assessor information to pop up), and the information will come up.

How is GIS Mapping Helpful?

I always use this feature when I’m looking at a property that has multiple lots; that way I can see what the property actually looks like. I’ve also found it helpful when someone may have multiple lots, but they are owned by different LLC’s or by family members.

Another way it is useful is when a mailing address and a property address don’t match. Sometimes that could be because the property is split between different streets or the owners bought an adjacent lot at a later date and use that mailing address.

Below is a screenshot from the San Miguel County, Colorado, GIS Mapping site. The property in question was located at 115 Francisco, Telluride, CO, which is Tom Cruise’s estate. It has been on the market for $59M.

What this shows us is that the property is owned by Client 2177 Living Trust, which if you run the property report shows an address in Los Angeles, CA, that is home to Chapman Bird Grey & Tessler, a Hollywood business management firm that Tom Cruise has been associated with. The other thing it shows is the properties adjacent to the main home that are owned by the same entity.

 

 

 

 

 

 

 

 

 

 

In this example, the adjacent properties are owned by the same name, but I have often found the names can be different but have the same mailing address. One example I came across just the other day was a home in New Jersey that consisted of six separate lots; each lot owned by a different limited liability company (LLC) (ex: 123 Briar Lane Acquisiton LLC, 129 Briar Lane Acquisiton LLC).

I always use a satellite view when using the GIS Mapping tool (I actually always use satellite view in life); that way you can really see what the home and property look like. You can also sometimes tell if a home was recently renovated or differs from what the assessment records indicate, which could be due to a delay in new information being uploaded.

Another example of how this has been very useful was a request from a gift officer after a meeting with a prospect. The prospect had mentioned in passing that he was selling some land he had accumulated over the years to a developer. It turned out he owned dozens of separate lots, all under different LLC’s and many with different mailing addresses. By using the GIS Map, I was able to click on all the lots in the area and determine if they were his or not.

He was indeed selling them off and to a developer that was building a new golf course community. We were also able to tell which lots he had recently sold and for how much. With traditional resources, it would have taken me much much longer to do and I don’t think it would have been as accurate.

How to Find GIS Mapping Tools

NETROnline.com is a great resource for individual assessor sites, including listing GIS Mapping links. The assessor sites are under the Public Records Online tab.

You can also do a search for “[County Name] Assessor GIS Map” and you will probably have luck. I’ve rarely found a county that does not have this capability. There are some outliers: Massachusetts, for example, does not do it by county, but the entire state has one map you can search.

Let me know what you think of GIS mapping tools, and what other interesting tools you use to find real estate information.

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Ski resort real estate

It may be the end of ski season for another year, but we’re always trying to figure out what factors impact the value of real estate in those wealthy areas. This week, Colorado-based HBG Researcher Josh Ostroski shares his insider information on three things he knows really well: skiing, real estate, and prospect research! ~Helen

Josh and his daughter hit the slopes

I grew up in a skiing family in New England and it has been a passion of mine since I can remember. One day a colleague at HBG was researching someone that had a house in Lake Tahoe which had a market value drastically lower than what they paid for it. My colleague asked what some of the factors could be that might cause this, outside the obvious decline due to the housing crisis that hit California especially badly. The more we discussed it, the more it became obvious that there were more things at play in these specialized locations than elsewhere. I decided to look more deeply into the factors that impact housing costs in resort towns, and I thought you might be interested to know what I found. [Read more…]

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Don’t make the real estate mistake

          “home yellow” Photo by nikcname (Own work) [CC BY-SA 4.0], via Flickr

Should we – or shouldn’t we – include real estate as one of the factors we use to determine a prospective donor’s gift capacity? It’s a conversation we had just this week in our HBG group chat room.

Everyone commiserated with one HBGer’s lament that some development offices don’t include primary residence – or even any real estate – in their capacity ratings.

And I’ve heard people say on multiple occasions, “Our prospective major donor is never going to give us their house (or sell their house and give us the money), therefore we shouldn’t include it in our ratings.”

Which is true. The donor is probably never going to give your nonprofit the deed to the house they’re currently living in. (<stage whisper>: I won’t mention “planned gift” at this point, okay?)

THE THING IS…

They are also never going to give you their salary (unless they’re Chris Long), sell their yacht, their plane share, or their horses to make a donation, either. They won’t liquidate their art collection, grandma’s diamonds, or that vintage Chanel worn to last week’s benefit. The privately-held company they own will remain unsold. Likewise the stock options that don’t convert for another 5 years.

If the argument is that they’re not going to sell their house, then we should disqualify those other assets, too, right? Because they are never going to give them to you, either.

You can’t pick and choose.

If you randomly take one non-liquid asset off the table, you should take all of them. And you’d never do that, right? It would be illogical.

Figuring out someone’s gift capacity is hard enough to begin with. Purposefully handicapping yourself makes absolutely no sense to me.

I UNDERSTAND

Real estate certainly isn’t the be-all-end-all, but like all of those other assets I mentioned, if nothing else, it’s an indicator of wealth. But I think there’s much more to real estate – even primary real estate – that should be considered.

To start with, it’s solid information. We’re already operating in a realm where anything concrete is in short enough supply. So why ignore a valuable, real, solid, asset?

Also:

Real estate is a green flag. When I’m trying to find new prospects in a sea of regular donors I may skip over someone who lives in a $850,000 home in San Francisco, but I’m definitely not going to ignore a donor who has a $850,000 condo in Aspen. I’m now going to search to find a separate primary residence.

Real estate is a red flag. I was once asked to research someone who had approached an organization out of the blue offering to make a multi-million-dollar gift. What I discovered – by just looking into the prospect’s primary residence – was the first red flag that probably saved the nonprofit from months of wasted time – or worse.

Further:

100% of the world’s high net worth individuals (HNWI) own real estate. And for the more privacy-aware among them, real estate is sometimes the only hard asset we can find for them. Knowing what kind of real estate they own gives you clues into the type of personality they are, how they may want to be cultivated, and what philanthropic investments may interest them. For example:

The billionaire who owns a 20-bedroom party house on Miami Beach is very different from the billionaire living in a three-bedroom ranch in Omaha. Their real estate choices can give you clues to their lifestyle and engagement preferences. One may be a better prospect for naming opportunities with big splashy events. The other may prefer funding boots-on-the-ground clinics for vaccine delivery and student scholarships.

In addition:

We can use real estate for estimates. According to the Capgemini World Wealth Report, real estate accounted for 17% on average of a HNWI’s total assets globally last year. (In the US, it’s 11% of total assets; in Europe it’s 18%). So if all you can find is someone’s real estate holdings, you can still come up with a decent guesstimate of their total assets using that one ratio if they’re in the HNW classification.

And finally:

Real estate is critical to planned giving. There, I’ve said it, and this is really important.

Let’s say you work at a small college and you’ve got childless husband-and-wife alumni couple with a ski resort condo, a vacation home at Los Sueños in Costa Rica and a primary residence in Boston’s Back Bay. They’re consistent donors and lifelong volunteers to the college. There’s no question that the planned giving officer needs to know about them.

And in this case, it’s not only the real estate that’s interesting, but also what it tells us about these special people. Here is an active, outdoorsy couple who possibly enjoy golf, tennis and skiing. A pair that enjoys regular seasonal travel, but whose lifestyle may require extra cultivation time because they are probably not in town very often. What decisions do you need to make about how to engage them?

Look at all the information that just knowing about real estate gives us!

ONE LAST THING

In case you’re wondering, here at HBG we do include primary residence in our total visible wealth calculations on profiles.

We believe it’s a real asset. I think you should, too.

 

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Valuing Real Estate in the US West

Last week at the (sold out!) NEDRA conference, this week’s guest author Heather Willis spoke with her HBG colleague, Kelly Labrecque, on finding real estate values in the US west and east. “Country Mouse/City Mouse” was a big hit, and I asked Heather to share tidbits from her portion of the presentation with us today. (If you’d like to see the slides from their presentation, let us know!) And now, here’s Heather:

It’s that time of year again in the West; the snow is melting, tulips are flowering, calves are being born, and the birds are singing. It also means the year- end real estate market analyses, the new agriculture statistics reports, and the top ten landowners, have been published. Exciting right!?

Ok, you might not have the desire or the time to read through all of these reports when researching a prospect who owns a farm or ranch, so I will point out a few changes from last year and try to give you some insights into an extremely diverse and difficult group of prospects to research. [Read more…]

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