HOW ALLEN STANFORD MADE THOSE FIRST HUNDRED MILLIONS The chairman of Stanford Financial Group — whose operations have recently caught the attention of the SEC, FBI, and IRS — romped in the wreckage of early 1980s Houston real estate: “Stanford and his father went around to the presidents of various banks, offering those seeking liquidity an easy out: ‘For a period of 28 months we were probably the only people in Harris County buying real estate.’ They ended up owning dozens of properties, including a 256-unit apartment complex they bought from a pension fund for $970,000, or $3,800 per unit–this at a time when the median home price in Houston was $68,900. Over the next ten years, as the economy and real estate began to recover, Stanford and his father made what he describes as several hundred million (aftertax) dollars.” [Forbes]
Sign up for the Newsletter
Tag: Real Estate Investing
MORE SHOPPING CENTERS LIE IN WAIT FOR THE GRAND PARKWAY Under previous owners it was going to go residential, but now all the site at the southeast corner of Kuykendahl and Spring Stuebner in Spring needs is an offramp: “Steve Gregory, president of Hopkins Commercial, said the site is a long-term investment for a retail center that will be built, possibly in one to three years. The site is attractive to the company because a leg of the Grand Parkway that will start construction in late 2010 will go by the 56 acres. The site is just north of a big collection of retailers at FM 2920 and Kuykendahl, including Wal-Mart SuperCenter, Lowe’s Home Improvement, Kroger, Palais Royal and 24 Hour Fitness.” [Houston Business Journal]
THE MICHAEL B. SMUCK APARTMENT FLIPS BEGIN Triumph Land & Capital Management, the company that bought two other former Smucked apartment complexes, has already flipped a third: “‘The seller had bought the loan on Village at Loch Katrine, then foreclosed on it, then sold the property,’ says Russell D. Jones, vice president of Apartment Realty Advisors in Houston. He says Andrew Chong had signed the purchase agreement before Triumph Land & Capital foreclosed on the loan. Although Jones kept mum about the price, area sources believe the Village at Loch Katrine, situated at 16545 Loch Katrine Lane, sold for $6.5 million to $7 million.” [Globe St.; previously]
Another apartment complex rescued from the clutches of famed real-estate investor and apartment-maintenance whiz Michael B. Smuck! This time it’s the Lodge at Baybrook, a 12-building, 322-unit compound on 13.7 acres just behind Baybrook Mall in Friendswood. Globe St.‘s Amy Wolff Sorter reports that Chicago-based Adams LaSalle Realty has bought the complex from Smuck’s bankrupt MBS Properties for “well below” the $28.6 million it first listed for back in 2006.
The Lodge at Baybrook was built just 9 years ago, but apparently there’s plenty of deferred maintenance for the new owners to take care of. No word of any impending name change.
- Adams LaSalle Picks Up 322 Units From MBS [Globe St.]
- The Lodge at Baybrook [CBRE]
- The Lodge at Baybrook [Adams LaSalle Realty]
- Help for the Huntwick [Swamplot]
Photo: CBRE
How did Lakewood Church pastor Joel Osteen and his wife Victoria come by their fancy French home? Osteen explains it all in his first book, Your Best Life Now: 7 Steps to Living at Your Full Potential:
Early in our marriage, Victoria and I were out walking through our neighborhood one day when we came upon a beautiful new home in the final stages of construction. The doors were open, so we stepped inside and looked around. It was a fabulous home, much prettier than any of the other homes in that community. Most of the other homes around us were one-story, ranch-style homes that were forty to fifty years old, but this house was a large two-story home, with high ceilings and oversized windows providing an appealing view of the backyard. It was a lovely, inspiring place.
When we came out of the house, Victoria was excited. She turned around, looked back at the home, and said, “Joel, one day we’re going to live in a beautiful home just like that!” At the time, we were living in an extremely old house that had experienced some foundation problems, preventing all of our doors on the inside from closing properly. We had stretched our faith and spent everything we had just to buy that home and get into that neighborhood. Thinking of our bank account, and my income at the time, it seemed impossible to me that we’d ever work our way up to a home like the one we had toured.
Joel and Victoria Osteen: clearly fans of new construction. But did they get their dreamhouse?
It seems son-of-a-son-of-a-guv Paul Hobby wasn’t quite clear at first what to do with a huge industrial site he bought in the First Ward:
Over the years, Hobby says, there was interest in turning it into an indoor soccer facility. There was also talk of growing lettuce inside the large warehouse. But a year ago, Hobby came up with the idea to create a data center in the space.
But that’s just the start of it. The site is the former Budweiser distribution plant Silver Eagle Distributors left behind when it built its new bunker further west on Washington Ave. Hobby bought the First Ward facility quietly from Silver Eagle in 2004 and leased it back to the company for a while before it left. The site stretches along Edwards St. from Sawyer to Silver, a few blocks north of Washington.
Indoor farm . . . server farm . . . why not? The possibilities are endless! But then, there’s always . . . townhomes!
A row of eight to 10 townhomes are slated to be built along Edwards Street. And an undetermined number of units are being considered for the eastern-most part of the property.
Of course! But it gets better . . .
From a profile of Lakewood Church pastor Joel Osteen by Karl Taro Greenfeld in next month’s Portfolio magazine:
The Osteens, like so many American families during the recent real estate boom, spent the better part of the past decade buying, renovating, and selling homes, and became so proficient in the process that Osteen and his wife were able to skip hiring a contractor for their last renovation and go directly to the subcontractors to complete their mansion. Coming off the boom, during which the average American dwelling doubled in size, the Osteens’ digs are more modest than one might guess. The house is decorated in a rococo style that Victoria has called “French†and Osteen calls “fancy.â€
- God Wants Me to Be Rich [Portfolio, via Houston’s Clear Thinkers]
- Previously in Swamplot: Joel Osteen Townhome Sales Technique: Give and Ye Shall Receive Full Asking Price and Joel Osteen, Deed Restrictions, and the House Flip from Heaven
Photo of Joel and Victoria Osteen at home: Randal Ford, Portfolio
A Dallas real-estate firm is ready to rescue the Huntwick Apartments on FM 1960 near Wunderlich Rd. from receivership — and also from its management, before that, by Louisiana real-estate investor Michael B. Smuck.
As of last year, just as it prepared to file for bankruptcy, Smuck’s Louisiana-based MBS Companies owned 65 apartment buildings in Texas — 33 of them in the Houston area. Even prior to that, the company’s property-maintenance skills had reached legendary status. The president and executive vice president of the Houston Apartment Association relayed complaints from residents and neighbors of MBS apartments to the Wall Street Journal last year, and reported that the griping had only increased after the influx of residents fleeing Hurricane Katrina in late 2005.
Here’s a commenter on the Houston Politics blog back in April (quoted in Swamplot), describing the scene at the 288-unit Huntwick:
Balconies have collapsed, lots of overgrown vegetation, the paint is peeling, there is obviously a total lack of maintenance. A large tree split in half on their property adjacent to Coral Gables Dr., and after the dead half lay on the ground (in plain view) for over 6 months, a crew finally cut it into smaller pieces, which then lay in the same spot for another 6 months.
After the jump: What’s happening to the Huntwick, plus the complete Michael B. Smuck Houston apartment roster!
A story by Paul Knight in this week’s Houston Press adds a little color to the Houston foreclosure map:
Houston’s 77449 ZIP code, on the northwest side, made the top 100 in the nation for 2007. The area saw rapid growth in the early part of the decade, with retail strip centers and a sea of new homes popping up almost overnight.
“They started developing that area really aggressively,” says Erion Shehaj, a Houston realtor who specializes in foreclosed homes. “Like clockwork…[foreclosures] have been popping up one after another, because they were pushing them to people that couldn’t really afford them in the first place.”
Large signs are now planted along the roadside, advertising housing deals such as “Inventory Clearance!” and “Closeout Specials.”
One subdivision in the area that was hit particularly hard is Bear Creek Meadows. The neighborhood was developed about five years ago, with houses priced in the $120,000 range and marketed to first-time buyers.
Below the fold: More on Bear Creek Meadows, plus a few photos to illustrate Knight’s reporting on foreclosure cleanups.
Chronicle reporter Matt Stiles has found two more properties owned by State Rep. Hubert Vo: The Northpoint Apartments, at 74 Lyerly St., just north of the Northpoint Mall; and the Capewood Apartments, at 4335 Aldine Mail Rd., outside city limits.
And, uh, they’re not in great shape:
Tomasa Compean, 58, has lived for 18 years in her one-bedroom unit, where she pays $450 a month and has never received new carpet or paint. White powder bug poison outlines her baseboards, and a leaky faucet has left a large patch of rust and mildew in her tub, which apartment officials have covered only with paint.
“There are a lot of defects in the apartment,” said Compean, speaking in Spanish. She also complained about a lack of security at the complex. “The worst things are the roaches and mice. That’s just too much.”
Carmen Aguilar, whose two-bedroom apartment faces a dusty courtyard next to a swimming pool filled with opaque green water, pointed to a buckled wall and a large, moldy hole above her bathtub.
The Chronicle also found other potential violations at the complex, including an entry gate bent to a 45-degree angle, discarded furniture, masonry damage and busted breezeway lights. Workers could be seen Wednesday making some repairs, a day after the Chronicle asked the city about the property. . . .
Among other potential city violations at three complexes were overflowing Dumpsters, damaged parking lots and an algae-filled swimming pool — all conditions that could prompt criminal fines.
Vo, who has owned the properties for years, took blame for the problems Wednesday, saying he had not done enough to ensure the complexes were maintained. He said he would improve the conditions, pledging personal inspections of individual units, cooperation with city officials and outreach to residents to encourage them to report concerns.
One thing that will help: Vo is apparently a quick study with repair estimates. A year ago, Houston Press reporter Ruth Samuelson spoke to him at Thai Xuan Village near Glenwood Valley, just north of Hobby Airport, after it was threatened with demolition. Mayor White had asked Vo to serve as a liaison between residents of the complex and the mayor’s office:
. . . Vo thinks the community can’t tackle this project; it’s far too big. Vo, who owns several apartment complexes, says he walked the perimeter of Thai Xuan Village when he was there mid-March.
“I believe the structure could be okay, maybe some railings need to be fixed,” he says. “But the face-lift of the property needs to be done.” After a quick examination, he said the project would cost well over $100,000.
- Lawmaker Vo takes blame for substandard apartments [Houston Chronicle]
- A closer look at Vo-owned apartments (slide show) [Houston Chronicle]
- Thai Xuan Village [Houston Press]
- More Vo Real Estate for Sale: Memorial Mansion with Multiples [Swamplot]
- Hubert Vo’s East End Complex: For Sale! [Swamplot]
A resident of nearby Simms Woods sends us photos of an apartment complex off Wayside Dr. that’s received a number of citations recently . . . but not the good kind:
The citations to the Courtyard Apartments on Villa de Matel allege eight structural and electrical problems, including rotting wood, missing balcony railings, loose boards and broken windows, city officials said. . . .
Tenant Victoria Vargas said that when she moved in a year ago, the management refused to replace the tattered mini-blinds, outdated appliances and worn carpet.
Now, she said in Spanish, she also must contend with leaky ceilings, rats and high energy bills for her $400-a-month unit.
State Rep. Hubert Vo has owned the 241-unit complex at 950 Villa de Matel through a company called Newlink Investment since July of 2002, according to HCAD records.
The mess — and the neglect apparently visited on his tenants, who are clearly not in his district — doesn’t look healthy for Mr. Vo, a Democrat who’s running for re-election this year. But maybe someone can help him out!
A commenter on the Chronicle‘s Houston Politics blog passes on a report that Vo bought the Courtyard Apartments for $2.8 million, and notes that they are now available for sale . . . for just $20,332 a unit! That’s only $4.9 million for 7.6 acres of juicy East End Inner Loop property! From the listing brochure:
This property affords a buyer good upside potential thru a moderate/heavy rehab. This community is constructed in a classic garden style design and was built in 1972.
After the jump: more pix of this prime real estate, just steps away from the Gus Wortham Golf Course and ripe for that moderate/heavy rehab! Plus: more Vo East End apartment holdings!
The last of the Harold Farb apartment complexes has been sold. Cypress Real Estate Advisors, an Austin firm, bought the Nob Hill Apartments on North Braeswood and the West Point Apartments on Woodway last December. And Post Investment Group, an LLC out of LA with some NYC backing, just closed on Farb’s Broadway Square Apartments just north of Hobby Airport.
David Beebe, who’s just posted his own account of the southeast-side walking tour he took with John Lomax last month, has a few comments about his stroll along Broadway:
The [trees] throughout this neighborhood are mature and beautiful. They are, for the most part, oaks. This is a big difference between the Harold Farb pioneered Hobby Airport area and the Frank Sharp designed Sharpstown. If [Sharp] had been as pro-active about tree planting his nighborhood would look more like this. The architecture and age is about the same.
. . . and on the Broadway Square Apartments, which Farb built in 1975:
His apartments here on Broadway are still the best looking of the entire area’s- French Victorian style, but without falling off shutters and with better built and ornate wrought iron railings and kempt landscaping.
There’s been no announcement about it, but the iconic signs along Broadway showing a silhouetted Farb wielding what appears to be a roll of blueprints are likely to be replaced. Globe St.‘s Amy Wolff Sorter reports that Post Investments is planning a $2.5-million renovation:
Work will begin in two months on the 182-building complex and take 1.5 years to complete, according to Jack R. Ehrman, Post’s acquisitions director. The lion’s share of the tab will be used to replace 90% of the roofs.
- Post Investment Snags 2,469-Unit Complex [Globe St.]
- Post Investment Eyeing More Units in Houston [Globe St.]
- Better late than never- Southpoint/Almeda Genoa/Broadway/Harrisburg/Downtown H-TOWN Part One [David Beebe’s take on music and more in Texas]
- Southpoint/Almeda Genoa/Broadway/Harrisburg. H-TOWN Part 2 [David Beebe’s take on music and more in Texas]
- L.A. firm buys Farb’s Broadway Square Apartments [Houston Chronicle]
- Southeast Side: A Tour of the Houston Heartland [Swamplot]
Photo of sign at Broadway Square Apartments: David Beebe
From Abc13’s Wayne Dolcefino:
To get the winning hand, it helps to have the luck of the draw. Maybe that’s what Michael Surface has.
In January of 2005, one of his corporations buys an old H-E-B store on Antoine. The appraised value — $1. 2 million.
Two months later, Harris County announces it’s looking for a big building to replace Commissioner Lee’s Annex A in the same neighborhood that Michael Surface now owned his old H-E-B.
Maybe it was just a lucky hand for Mr. Surface. But years earlier, he was the guy in charge of Harris County’s building department.
(Hey, isn’t this the same guy who brought in the proposal to redevelop the Astrodome into a hotel? Good thing he’s outta there, so that deal can go forward!)
. . . tax records show [Surface] sold the [H-E-B] building and land to a corporation called HC5815 for $2.2 million. That corporation, in turn, got the winning hand months later. The head of that corporation was David Blumhardt from Dallas, who we’ve learned got the winning hand in at least nine Harris County real estate deals. His local representative on the Antoine project was the guy whose name we found on a worn out real estate sign — Jason G. Hall, Weston Partners, Ltd.
Where have I heard that name before?
Jason Hall used to work for Michael Surface at Harris County. Now, his real estate operation is located in Michael Surface’s offices.
When Jason Hall worked for the county, one of the projects he evaluated was 2525 Murworth. It’s now the home of Children’s Protective Services, part of a $35 million county real estate deal developed by Michael Surface just months after he left county government.
After the jump: a longer view!
There’s more to the story of the Lakewood Church pastor’s amazing house flip: How were Joel and Victoria Osteen able to unload their townhouse in order to buy that house they made so much money on?
Readers of Joel Osteen’s previous book — Your Best Life Now: 7 Steps to Living at Your Full Potential — already know the answer. From page 265:
Victoria and I had been married a few years when we decided that we wanted to sell our townhome and buy a house. We put the townhome on the market for six or eight months, but we never had a serious offer. Hardly anybody looked at it, even though we were praying regularly, asking God to help us sell it.
We really wanted the other house, but we couldn’t afford it until we sold our townhome. Finally, we decided to do more than pray. We needed to sow a special seed in faith, believing for that townhome to sell.
There’s more!
Lakewood Church’s Joel Osteen, in Become a Better You: 7 Keys to Improving Your Life Everyday, p. 289:
I remember as a young couple, Victoria and I found a home that we really liked. It was a run-down house but on a nice piece of property. And we knew it was for us. In the natural, it didn’t make a lot of sense. We were leaving a beautiful townhome. Yet we knew that’s what God wanted us to do. So we took a step of faith and we bought the run-down house. The day we closed on it, we were standing in the front yard and a Realtor stopped by and offered us much more than we had paid. We thought, “What’s going on?” We didn’t understand it. Come to find out, they were in the process of changing the deed restrictions in the neighborhood. And several years later, we sold that property for twice as much as we paid for it. That was God causing us to be at the right place at the right time.
- Become a Better You [Amazon.com]
