10 items found for ""
- Next Project Pool!
We have launched our next project pool capital raise! These projects are located in Ohio and will help address the workforce housing challenges in multiple smaller communities. Working with national builders and the local communities, they will create approximately 2,000 homes over the next 3-5 years for a range of workforce family sizes. We are always looking to selectively expand our investor base, footprint and capacities, while working with project partners (farmers, community leaders, local developers, national builders, and investors) to help create more “Highland Communities” of mid-priced, workforce homes. For more information
- An Update and Market Commentary
A quick update- Continued High Demand for Entitled "Construction-Ready" Farmland: We have recently signed two more land contracts with national builders for projects that we have completed (the pre-construction work- entitlements, design, zoning, approvals), and the pricing is consistent with project projections! We are seeing no slowdown in demand for entitled "construction ready" land from the national builders to build new mid-priced residential communities… Comments on National News Coverage: The national housing news coverage is often focused on large trends, and they love to spin a headline negative (more people read it). We agree that national and regional housing trends impact the overall economy, and is important, but we all know that housing is local, and not just about averages. Whether overall national average prices are going up or down, or building permits are going up or down, is not really important for the local young family looking for a mid-priced home. National builder can (and want) to build homes for that segment of the market, but do not have the inventory of projects that address that local demand. Many smaller towns want and need housing for its critical employer’s workforce. You rarely hear that story in the national news. Let’s focus on the local! To address that, we will start sharing local housing news, in the areas we are active, periodically. If you have stories, please share them with us too! Working together, we can address this specific housing demand, and support the “home ownership” way of life that has helped so many families improve their long-term financial security and independence.
- Housing Shortage Statistics- What do they mean?
Below is a link to a recent article (April 14, 2023) in the WSJ- The article is very good at explaining/showing that "summary' total numbers often hide a lot of meaning, based on how they were compiled. There is no question on their being a "shortage", it is just how we define "shortage" and calculate it can have a great impact on the totals, and really are often not actionable. What I find interesting is that it does highlight the local supply/demand of different price-point housing segments. That is where people live and try to buy a nicer home for themselves. The good news is that with data tools and hard work, it can be very well understood. It is more interesting to know how many local areas are experiencing a local shortage of different price-point homes. And that is where a local developer, working with us, the local community, and a national builder, can make a real difference, one community at a time. How Severe Is the Housing Shortage? It Depends on How You Define ‘Shortage’ Counting the homes we have is straightforward, yet counting the number we need is anything but https://www.wsj.com/articles/how-severe-is-the-housing-shortage-it-depends-on-how-you-define-shortage-89cdbee7
- CNN Report on Housing- Shortage Growing (3/8/23)
Below (attached link) is a good CNN report on housing shortage issues. I found it interesting how they break out multi-family and single family. Many families who are living in multi-family units (whether rental or own-occupied), would prefer a single family home- especially in the regions where we are currently focused. "The gap between single-family home constructions and household formations grew to 6.5 million homes between 2012 and 2022. However, this figure overstates the housing shortage, since new multi-family homes offer options both to buyers and renters. If multi-family construction is included — which is predominantly rental units — this gap is cut to 2.3 million homes" "Looking only at single-family homes, the rate of housing starts would need to triple to keep up with demand and close the existing 6.5 million home gap in 3 to 4 years." These are compelling, and a bit shocking, numbers (yes, the press always wants to get the 'shock' reaction with everything these days...). The real numbers that are actionable are local numbers- as we all know home ownership/real estate is local. This report does confirm to us that there are quite a few local areas where the housing shortage (single family homes specifically) is severe and not getting better. Demand for nice mid-priced homes is not being met. By picking the right "local" locations we can help address the broader housing issue, one community at a time, and have some fun and make some money at the same time. Read the full article it HERE Go to our Resource Page for more articles HERE John Loy
- How We Create Value and Reduce Risks- the Upfront "Hard Work" steps.
Below is a video conversation between Scott Mallory and John Loy discussing some of the processes HCF goes through when determining locations and sites for our project investments. This is just part one of a two part series covering the first steps we follow upfront before moving forward with a project. In Part 2 we will go over the land due deligence steps that we follow. We have learned that you always need to follow this "hard work" two-step approach.
- Great Article Housing Shortages/Prices
This is a very good article/research paper by the NAHB on showing how price changes in homes can affect affordability- at a local level. Too often we hear about real estate prices and affordability in "average" terms across the country- but real estate, and home ownership, is a local issue. link to article here Other industry-related articles here In the article there is an additional link to a listing of data by metro area- showing what the impact to families in a specific area would be as prices go up. For example, in Columbus Ohio, when prices go up 1,000 for an average or "median" home, over 1,050 families in the Columbus area can not longer afford, comfortably, a new home priced at the median/average price. Even more crazy is that there are over 600k families in that group (making less than $135k per year in the Columbus area) that currently can not afford an 'average' home. We help create new developments that target those families and others that are being stretched financially/can not afford a new "median" priced home in the LOCAL communities- of smaller towns and cities in the Midwest. Local data like this, along with job growth and other data, shows us where to focus our resources and develop the right size, walkable, community focused residential developments- while creating value, and minimizing risks, for everyone. John Loy Co-founder
- Structural Changes in Residential Development over the last 25 years
Below is a video discussion by the Founders of Highland Capital Partners regarding how changes in residential development over the last 25 years have created a need for a new way to approach developing, and raising capital- specifically for mid-priced workforce home communities. Below is a short overview/summary: What has changed in Residential Development that helped create this shortage of mid-pricing homes (also sometimes referred to as starter homes or workforce/essential worker homes)? There are three trends/changes which really caused this perfect storm over the last 25 years- you have probably heard about two of the changes, but maybe not the third. First, building costs have gone up: There has been a lot done with building design, materials, and construction techniques, and buying strategies, that are addressing this challenge. But it is hard to do, especially if you are a smaller builder……and you want to stay as environmentally sound as possible. Second, “Entitlement” (approval) processes have become more difficult in many local communities: The NIMBY vocal groups have created a lot of friction to getting projects approved locally that do not meet "their" very narrow category/type- a look and feel that they believe is best for them. Or they believe "no growth" is best. Education at the local and regional levels is helping (including the realization that there can be a big difference between different types/styles of lower cost communities). There is the growing realization that limiting housing types can cause bigger issues for the greater community. This is slowly taking root in many communities- but some are still lagging. Lastly, the providers of risk capital/funding for projects (banks and developers) are more selective in residential development projects. In the past, local banks would lend local developers/builders funds to purchase and "entitle" the land (first step- design/approved/zone), improve the land with roads and utilities (second step), and then typically build the homes -or sell the lots to other local builders to build the homes (third step). This can create a long, uncertain timeline for the capital providers/banks. Over time (with multiple large financial market swings), homebuying slowed, and the local banks/sources needed repayment- and suffered losses or/and look to the developer/builder for repayment- forcing many out of business. These local banks now either do not exist, or are much more selective. And the developers that remain are also much more selective in what they ‘sign up’ for….. How did the real estate development participants react to these changes/trends? The simple answer is that the remaining local developer/builders acted rational- minimized risk, and maximized profits- at the local level. Since local builder/developers typically cannot take advantages of all the new building cost reduction strategies (based on volume, etc..), they started focusing more on higher-end houses, with higher profit margins, to offset the additional costs and restrictions on capital.. They built in communities with typically larger homes, creating communities that are similar to the existing homes around them, to appease the neighbors (speed up the first step). This also minimized their challenges working with banks/capital providers who wanted shorter term, more profitable projects where they can get repaid quicker…. The result of fewer mid-priced homes being built, and a lot of beautiful bigger homes being built. In many markets that created challenges for many homeowners, with too much of their net worth and cashflow tied up in their home. They did not have a good, less costly, alternative to choose from. But the Good news……How we approach it….. Over the same time period, however, larger regional and national builder became a larger part of the industry. They are builders first, and really focused on building cost efficiency strategies that they can bring to the market. For competitive reasons, and to keep growing, they also started focusing on smaller homes, and they started targeting regions with smaller metropolitan areas. They are good at building, and good at targeting locations/regions with unmet demand. As they grew, however, they needed more product to build, and realized that the local “developer” role of getting projects zoned/entitled/approved was difficult for them, for a number of reasons (including holding land on their balance sheet, and the fixed overheard of a development team). They realized that local developers can work though the local process of entitlement and approvals quickly, and efficiently, and know where to target- which towns/cities are truly supportive of the right type of workforce/mid-priced housing communities. This is the background to our strategy- play to each participants strengths to create thriving “Highland Communities”. We, with our local developer partner, take a vetted project through the entitlement process, keeping the builder involved, and then sell the project, prior to construction, to the builder. We and our investors enjoy the asset appreciation of the land, while the builder gets well designed lots/locations that have community support from the beginning. Each of our time horizons are shortened, and risks minimized. Our strategy has been proven.....creating value for everyone involved. Click Here (or call/text me 847-508-9984)to contact us about how you may be able to join us in the mission- have some fun, make some money, and help address this housing shortage, one community at a time- John Loy
- Welcome, continued
Welcome to our Blog! As mentioned in our first post, we are now ramping up our efforts, with quite a few more projects on the horizon. Ramping up also means we needed to update our website, and organize the industry information we have been collecting to date. We thought sharing some of this information we have been collecting would be helpful a for prospective partner. or project investor, to get a good overview of the industry and the current trends/challenges/opportunities. Please visit our Resource Page (here) This is where we will be keeping articles/information/links that we think would be helpful for others. We will keep it updated, as we find more relevant information to share. Our business is impacted by farmland trends, entitlement trends, and home building/housing trends (at the local levels). Our mission ties this together with a goal of creating thriving local communities- not just great homes at a good price. Over time we expect to have a nice library covering all of these topics. As we run across more interesting articles, we will post them on this blog as well (typically with comments from one of our founders as well). If you find/have any articles you feel would be good to share, please let us know! John Loy, Co-Founder
- Welcome to The "Fund Highland" Community!
Welcome! We are now ramping up our efforts as we build out this business- focusing on making a difference for workforce families and others, while creating very nice returns for our investors and all involved (builders, developers, local communities, young families...). How we got started: A lot has happened since Scott and I got together almost two years ago and discussed ways to expand his business in the “workforce homes” and community building space. He had a Vision/Mission, and we developed a strategy. The mission is as much to do about creating more home ownership opportunities for workforce families, and others, as it does about creating multi-generational, pedestrian and environmentally friendly communities that can flourish. One of the challenges in addressing this unmet housing demand was to attract the right type of capital at the right time in the development process. Our strategy had to create nice returns for investors, while controlling risks, in order to attract the amount and type of funding needed. I believe we have done that. While finalizing our structure, and to round out our expertise, we asked Mitch Kasper, an early project investor, to join as a co-founder. (John Loy, Scott Mallory, Mitch Kasper) See our bios here Our funding strategy focuses on private investors with a local interest in "Heartland" communities- who are also interested in getting very nice returns on a real estate project based investment that is unique in structure and collateral/protection- compared to most other real estate and early stage investments. We are expanding our strategy outside of Ohio to include other "Heartland" regions with smaller towns and cities that have the same un-met demand for mid-priced housing developments. As you hear more about us, you will understand why we focus on smaller towns and cities. As we expand, we will be working only with local vetted developers, and the same national/regional builders. Projects to date: Scott had developed a couple ‘Highland Communities” prior to us forming Highland Capital Funding, refining the development process. Last year we launched our business and refined the funding approach and strategy for these unique “assets”. We have now arranged investors (individual/family Office) for four more “highland” projects, using this revised project funding structure. We have seen some great success to date. We have one project completed and sold prior to construction -to a national builder (the strategy), which provided excellent returns for everyone (see our Case Study). This project, and the next two, are the templates we are using going forward. These next 2 projects are also expected to be sold this summer, and also expecting to provide great returns. In 2023 we will have another group of projects to fund as well (we like to fund them in small pools to create diversification for our investors), with more in the pipeline. Demand four our solutions is not the issue…….we are actually getting calls from communities and builders! Please join us in our Mission! And come back- going forward we will be using this blog to provide updates on our progress, as well as industry information/news. Please sign up, let us know what you think, and let us know if there are any specific topics you would like to have us cover. John Loy, Co-Founder www.fundhighland.com