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Regional Spotlight: Austin, Texas

The Silicon Hills are on a takeoff trajectory. When you think of Texas, the capital city of Austin probably isn’t the first metro area that springs to mind. Although Austin’s housing market would certainly claim top honors in many other states, it is often overshadowed by headline boomers such as Dallas-Fort Worth, San Antonio and Houston. That is likely to change in 2020. Austin’s real estate market is just taking off, thanks to reliable and steady appreciation, ongoing population growth and an extremely attractive, talented employment sector. “Austin enjoys a strong and diverse economy somewhat dominated by high-tech,” observed Mashvisor analysts in a 2020 report on the Texas city. Austin is home to operations centers belonging to Apple, Amazon, PayPal, eBay, Facebook, Samsung Group, Nintendo, 3M and many others. Not surprisingly, this high-tech cluster contributes to the nickname, Silicon Hills, and has attracted a great deal of highly skilled, highly educated talent to the area. According to the Austin Chamber of Commerce, the metro’s population topped 2 million fiveyears ago, due largely to its ability to attract migrating talent. Among the 50 largest U.S. metro areas, Austin ranked third based on net migration as a percent of total population in 2018. Nearly 7% of the population lived somewhere else just one year earlier. Not surprisingly, this has created an ideal real estate market for investors using both short- and longer-term strategies, though the long-term plays are likely to require less effort and be more rewarding in today’s market. “Austin is an excellent market for real estate investors who have an investing strategy that thrives with consistent growth,” said Daren Blomquist, vice president of market economics at Auction.com. “Home sales have increased annually an average of 6% [over the last eight years of the housing recovery] and home prices have increased annually an average of 7.3%. Blomquist noted that Austin’s real estate market “favors the buy-and-hold investor who purchases rentals” because of its reliable growth pattern: “The cash flow won’t be as eye-popping as in other parts of the country, but that buy-and-hold investor should be able to see solid equity growth over the longer term.” Marco Santarelli of Norada Real Estate Investments agreed. “Austin has a record of being one of the best long-term real estate investments in the U.S. over the last 10 years,” he said. “Investors who got involved early entered the market ahead of an influx of interest and capital. If the appreciation rate in Austin remains steady, the annualized appreciation rate will be over 10%. This could trigger additional strong interest in Austin’s real estate investment opportunities.” Best in the U.S. Austin tops myriad Top 10 and “Best of” lists when it comes to the metro-area housing market. And, like its appreciation rate, high performance is nothing new. U.S. News & World Report has named Austin “#1 Best Place to Live” for three years in a row . CompTIA labeled Austin the 2019 “Top City for Technology,” beating out Raleigh, North Carolina; San Jose, California; Seattle, Washington; and San Francisco, California. Austin ranked third on the list the year prior. From a lifestyle perspective, Austin also performs well. The city ranked in the top 10 for foodies (WalletHub), as a “top city” by Travel & Leisure and as “the best city in America” by Forbes. When asked to comment on the city’s economy and housing market forecasts for 2020, a Pulsenomics/Zillow survey of more than 100 economists and industry experts predicted en masse that Austin’s market growth would “outperform the national average” and is “the most likely [city] in the country to do so.” If those analysts are correct, then 2020 would be the 10th consecutive year that sales volume and median price “topped the previous year’s numbers,” observed the Austin Board of Realtors (ABR). This type of growth is often difficult to maintain in high-population metro areas, but Austin’s unique population, employment characteristics and incoming population create the ideal growth medium for 2020. “I don’t see anything getting in the way of another robust year for [the Austin] economy,” said Eldon Rude, principal of 360° Real Estate Analytics. ABR president Romeo Manzanilla agreed. “Austin’s unprecedented population growth during the past decade has heavily impacted the real estate market. That exponential growth has put enormous pressure on the market…[and] as we look forward to this year, the market is not showing signs of slowing down anytime soon,” Manzanilla said. Beware of Rose-Colored Glasses Despite all the positive expert commentary on the Austin real estate market, investors should take all predictions with a healthy grain of salt. After all, 2020 will mark a decade’s worth of expansion in Austin’s housing market, and the national economy is arguably teetering on the edge of a downturn. However, with the right strategies in place, investors can still invest in Austin despite Local Market Monitor’s president Ingo Winzer’s warning of as much as a 25% overvaluation in some parts of the metro area. “Austin home prices increased briskly in the past decade, to the point where the market is now overpriced,” Winzer said. “This will create problems down the line, but right now the local economy is still doing well and home prices have been up steadily.” Winzer’s numbers put annual appreciation around 6%, which means he said that demand is good for both single-family homes and rentals. He recommended that cautious investors “subdivide properties or put their money into apartments as a safer bet [than single-family residences].” Austin benefits from its relative affordability when compared to other tech-driven markets like Seattle, San Francisco and Boston. Likely, the problems to which Winzer refers will hold off aslong as the comparison remains favorable. According to Yardi Matrix associate editor Anca Gagiuc, the city has a plan to keep affordable units in its active inventory. “The city has approved a plan to build 60,000 affordable units by 2027,” she said. “In October [2019], 3,163 units in 16 affordable communities were underway in the metro.” Yardi and Moody’s Analytics Data indicate that both

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Playing Bigger, Buying Better

Entera.ai Cracks the Code to Control and Scale in Real Estate When you hear words like “machine learning” and “artificial intelligence,” you might think more about algorithms and search bots than you do about real estate. Prepare to rethink that after you learn what the leadership team at Entera is doing. To Entera, the future of real estate revolves around investor access to information—and that means combining AI, machine learning, one of the nation’s biggest residential real estate databases and the human element into one comprehensive buyers’ platform that ultimately serves everyone involved in any real estate investment. Martin Kay, co-founder and CEO of Entera, described the platform as a backbone that pulls all the strategic components of real estate investing together. “We…provide our clients in residential real estate with an AI-powered buyers platform that helps them scale their capabilities, control their outcomes and drive returns all in one place,” Kay said. Kay and Entera’s other two co-founders, Gregory Morrison (CTO) and Robert Salmons (vice president of brokerage), work primarily with institutional and midsize professional investors and real estate funds that buy between 100 and 10,000 or more homes each year. These investors are already dedicated to adopting the innovative technology necessary to find and buy more properties, make better decisions and become more competitive in the increasingly tight real estate market. “Our clients want to find and buy the best homes, scale their capabilities, control their outcomes and drive returns,” Kay said. “We apply technology, real-time data and an on-demand network to the investing process to create a platform that accomplishes this allin one place.” Because efficiency is integral to ongoing growth and success in real estate, that element of consolidation is key, Kay believes, to a successful scaling process for investors. However, those investors are not “cookie-cutter” in nature by any means. Each client leverages the Entera platform in unique ways to accomplish their specific goals. “We present a powerful combination to our clients, and they leverage these tools in highly specific ways that could not take place if they were not able to access all of these resources and data in one place,” Kay said. Profitability and Scale According to Kay, Entera excels in the real-estate platform space because the company’s three co-founders integrated three distinct and vitally important components into the fabric of the platform at founding: Property source aggregation and automated discovery. The platform aggregates real estate from dozens of unique on- and off-market sources and matches the right properties to the buyer’s unique investment thesis. Comprehensive market information and analysis fueled by AI and machine learning. Kay said Entera may be explained simply as the “Bloomberg of Real Estate,” meaning it offers professional-grade decision tools and local on-demand real estate experts to determine the right home and offer for each client. Full-service transaction services. In addition to AI and machine learning, Entera’s human element is dedicated to making sure transactions move smoothly from beginning to end. On-demand local and centralized transactional services “make investors more capable,” Kay said. Harnessing Data and Details Thanks to powerful data integration technology, Entera’s discovery engine has access to roughly 215,000 on- and off-market properties available for purchase across the 14 markets it serves. That number might seem overwhelming, even to an institutional investor. But Entera’s machine-learning technology can customize “short lists” of properties optimized for individual investors’ requirements and already vetted for a high likelihood of success based on the investor’s past actions as well as the market data available. “We have been successful at quantifying qualitative investment criteria like ‘family-friendly,’ ‘millennial-friendly’ or ‘crime-ridden,’ and combining that with information about construction costs, renovation risks, tenant demand and geographic appeal, both present and future,” Kay said. “Then, we consolidate all our information about the properties in our system with our information about the investor’s wants, needs and capabilities. At that point, it is just a question of making a match between properties and investors.” For example, in Atlanta, Georgia, Entera has about 38,000 on- and off-market properties available for purchase. Kay said that on any given day, Entera can find the 10 properties that fit the exact ‘buybox’ (yield, tenant profile, location, home characteristics) of any potential client in a manner of seconds. “Our system runs 24/7, and it is smart,” Kay said. “The platform uses advanced machine-learning technology to interpret how the client interacts with real estate and refine recommendations for future deals.” This means that a client who has a history of loving certain types of neighborhoods, fighting certain types of comp values or finding rehab budgets to be “too high” for them to buy will soon find that the lists of properties they receive factor these preferences and behaviors into the equation. “At that point, it is just a question of making a match between properties and investors,” Kay said. The Entera philosophy places heavy emphasis on matching the right investor to the right property in order to create a living environment that is conducive to long-term residence. The co-founders believe that optimizing investors’ ability to give residents “the home they want” is integral to long-term, large-scale investing. “At the end of the day, what we care about most are the residents living in the home,” Kay said. “The place you call home really matters. When investors give residents the home they want, residents love where they live, stay for a long time and pay their rent.” The co-founders designed Entera to point investors to the right neighborhoods and propertiesthat exhibit growing demand compatible with their investment strategies. This means helping clients understand how to rehab; how to charge competitive, profitable rents; and what amenities and other home features will attract the residents who are the best fit for an investment property. Releasing and Realizing Hidden Potential Entera’s focus on the individual components that make up the biggest and largest-scale real estate strategies in the sector is the key to its clients’ successes. Those successes often come in areas that most investors would likely overlook

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Q&A With Strategy Investment Group

Mike Jordan takes a practical approach to profitable investing, focusing on strategy and diversification.  When Mike Jordan, founder and president of Detroit-based Strategy Investment Group thinks about his greatest successes, the first thing that springs to mind has nothing to do with real estate. It has to do with kidneys. “My father is still around at 83 because I donated my kidney to him in 2011,” Jordan said. “Idid it for myself. I love having him around.” That type of practical, forthright action is typical of Jordan, who has been active in real estate since 1999. He started Strategy Investment Group, a private investment company specializing in the purchase, renovation and resale of single-family residential (SFR) homes in Detroit and the surrounding suburbs, in 2001. During that time, he has had plenty of chances to apply his no-nonsense approach to the industry and to develop a real estate investment philosophy that stresses diversification. “I love real estate, but I know you have to diversify in order to really have the stability and security in your portfolio that most real estate investors are seeking,” Jordan said. “Fortunately, there are a lot of ways to diversify within this industry and keep the advantages that come with owning and optimizing real estate and real estate-related assets.” REI-INK sat down with Jordan to talk about his investment strategy, his business philosophy and his longtime dedication to doing business in his hometown of Detroit, Michigan. How have you diversified your own investments and those of your clients while staying in the real estate sector? A lot of my clients are passive investors, so they really rely on Strategy Investment Group to present them with good investments that are reliable, predictable and will generate good returns. For that reason, we focus on acquiring properties at deep discounts, identifying the right strategy for that property during the acquisition process, and then immediately deploying the strategy to create a good asset for our investors. This is a diverse process in itself, since we might renovate a property and then place a tenant, “wholetail” the property—which means fixing some very basic things and then reselling at a discount once again—or renovate the property for a long-term strategic hold of some other nature. While we are known for our work on the SFR side of the business, we also purchase and renovate multifamily properties, purchase nonperforming mortgage notes and work with private lenders to help them deploy their capital in a very secure, predictable environment. To my way of thinking, you can have an extremely diverse, economically insulated portfolio without ever diverging significantly from this industry. In my case, Strategy Investment Group has also diversified by expanding, at our clients’ request, into property management as well via Strategy Properties. As both a borrower and a lender, what do you think is the most important quality of a borrower in this industry? I tend to think along the lines of “The 5 C’s of Lending.” If a borrower meets all five of these requirements to my satisfaction, then I would expect to qualify for the loan. My 5 C’s of lending are: Character. Will the borrower pay? Capacity. Is the borrower able to pay? Cash Flow. Does the borrower have (or will the borrower have) cash flow to pay principal and interest when the project is done? Creditworthiness. Does the borrower have a history of paying? Collateral. How viable is the asset being used to secure the loan? When I make loans, I also ask the sometimes uncomfortable, but very important, question: If the borrower gets hit by a bus, what happens to my capital? If the answer is unclear or unacceptable to me, then I don’t make the loan. What do you wish every real estate investor knew before getting into a passive real estate investment? I wish that more passive investors had a better understanding of the importance of capacity. Most real estate investing companies like mine have a certain amount of bandwidth. When that capacity is reached, we cannot do any more deals until we finish the ones we started. A company that will admit it has a waiting list and tell you what types of properties it absolutely must acquire in order to make investors’ capital work as promised is a far better bet for a passive real estate investor than one that operates on the premise that the sky is the limit. In most cases, the limit is much lower than the company has indicated, and the passive investors pay the price when that too-ambitious attempt to scale backfires. For example, if I tell you that I have just purchased 4,000 houses and that I plan to do so every month from here on out, you probably should not invest with me. There is not a solid reason to believe I have the capacity to handle that rate of acquisition because last month, and the month before that, and the month before that, and so on, I was doing between 20 and 50 deals a month. On the other hand, if I tell you I need a loan so I can acquire 25 more houses, then you absolutely can feel confident making that loan because you already know I have the capacity. What is your strategy going into the next 12-18 months? We are going to continue to concentrate on the city of Detroit and the suburban areas around Detroit. We have been in this market for years, and we expect it to keep expanding. This area of the country is extremely downturn resistant, especially in the rental sector, so we buy “defensively” by purchasing homes at steep discounts and then either wholetailing them or renovating them and placing tenants in them. These properties are in areas where people want to live, with good schools, low crime and high rental demand, so we feel confident that our strategy of persistent growth and having about 60 purchase agreements in the pipeline at any given time is

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Risk Mitigation Isn’t Just For “Risk Managers”

Risk mitigation starts with originations, continues through relationship management and lending, and merely “plays out” if a loan starts going sideways. By then it can be too late … It’s often been said, “The time between economic recessions in the United States is like a baseball game, one inning for each year.” Whether you agree or not, it’s hard to argue the current economic recovery has gone into “extra innings” since the Great Recession technically ended in late 2009. That said, despite not just one but two yield curve inversions in 2019 (the classic “canary in the coal mine” for an impending recession), there are many key barometers indicating that the next recession—even if it’s just over the horizon—is not imminent. We continue to enjoy record low unemployment, positive wage and GDP growth, generally modest inflation (occasional spikes driven mostly by higher energy costs), strong housing demand and a record stock market. So why should we be more vigilant than ever about managing and mitigating risk? Shouldn’t we all be making hay while the sun shines? Yes, the last 10 years have been great for real estate investors—possibly the best ever. This, in turn, has attracted a lot of smart, innovative capital and new, tech-driven ways of delivering it, making this very much a “borrower’s market” today. The space has also witnessed a lot of new “efficiencies” that make underwriting, funding and servicing loans easier and more “customer friendly” than ever before. As a result, borrowers—especially those with experience, strong net worth and liquidity—enjoy a variety of attractive, convenient financing options. The problem is, it’s getting harder to find good deals with viable exit strategies. And no matter how efficient capital markets have become (we’ve already seen several unrated securitizations for REI loans in recent years), demand—and therefore loan liquidity—will always outpace the supply of quality deal flow. The U.S. housing shortage, driven by historically low interest rates coupled with a limited and therefore rising labor and material costs, has been well-publicized. Despite this, other than large “build-to-rent” master-planned communities and other portfolio or “consolidating” transactions, investors and lenders are naturally compelled to take more risk just to generate the same or even lower returns. All that indicates we’re in a market at or near its peak. The challenges investors face finding good deals combined with an abundance of aggressive (or, shall we say “less than acceptably risk-adjusted”) borrowing options is creating a perfect storm of narrowly profitable deals using higher leverage. All this is a recipe for “significant near-term dislocation.” Risk and reward will always find a way to rebalance, sometimes painfully so. Risk management (i.e., evaluating and forecasting risk) and developing tactics and strategies to mitigate risk must be everyone’s responsibility. Now more than ever, an ideal risk management culture starts further upstream during general marketing and originations and merely continues through underwriting and the end of the loan lifecycle. Marketing Actively manage solicitations and marketing/advertising (human, digital and everything in between) toward the most desirable regions, products or borrower types based on your long-term credit risk strategy. Do not focus on the highest potential immediate volume, lest you’re left “holding the bag” when the music stops. For example, if you want seasoned borrowers, don’t troll through “expert forums” and platforms where new(er) or lesser experienced investors are more prevalent. Make it clear you value client experience and financial wherewithal., Discourage riskier, less seasoned leads. This sounds easier than it is, for the lure of volume and what appear to be attractive gross yields often result in adverse selection—this is a time-tested truism. Originations Despite all that hard work generating new leads, don’t become so committed to “closing the deal” that you avoid red flags or spend too much time trying to fit the proverbial square peg into the round hole. If a deal doesn’t work (i.e., a borrower clearly isn’t qualified, property values look questionable or debt serviceability and recoverability/exit look challenging), it’s better to give a quick “no.” In that case, either introduce them to another suitable borrower or decline the opportunity outright.  Encourage them to keep looking for a better deal and to come back next time. No one likes to waste time and, rest assured, your erstwhile borrower will appreciate your candor and refer you to others who may be a better fit. Being thoughtful and direct “pays it forward” in numerous ways. Underwriting Stick to your underwriting standards. Don’t find ways to bend criteria or make exceptions just because you can sell them to your credit committee or financing partners. For example, if you’re traditionally a fix-and-flip lender who lends up to 90% of cost (or 75% of after-repair value) to borrowers with at least three successful transactions at 12% and 2 points, stick with that and focus on delivering a superior, consistent customer experience. Be responsive and collaborative, suggesting ways borrowers can become more profitable, better project managers or more efficient builders. Really dig into construction budgets to help ensure projects are viable and you are not otherwise funding into a default. Treat the borrower’s precious resources as if they are your own, and help position them for mutual success, even if that means less leverage or occasionally passing on an opportunity. All of this mitigates risk in the long run. Servicing Don’t give borrowers a reason—legitimate or not!—to blame you for projects going sideways. Poor loan servicing can often create an unrecoverable downward momentum that will only increase the risk of loss, let alone profits. Rather, help borrowers by promptly responding to requests or funding draws or simply “working with them” as unforeseen circumstances arise. Don’t burden them with artificial constraints (e.g., sticking to hard-and-fast construction completion dates even in the face of unexpected but understandable delays such as bad contractors and permitting challenges) when sensible flexibility can yield a much better outcome for everyone. Put differently, don’t be a source of frustration for good, honest, proactive borrowers working hard to harvest their investments and pay you back … they’ve

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Avoiding the Money Pit

Assessing and maintaining investment properties in growing portfolios In the classic 1980s movie “The Money Pit,” Walter (Tom Hanks) and Anna (Shelley Long) are house-sitting a New York City apartment owned by Anna’s ex-husband. When he suddenly evicts them, they decide to purchase a home and think they are getting a great deal on an estate outside the city. It soon becomes apparent that the purchase was too good to be true as the house falls apart, drains their wallets and, ultimately, destroys their relationship. What Walter and Anna failed to perform was proper due diligence before agreeing to purchase the estate. They did not assess the property’s condition and paid in more ways than one. While Walter and Anna bought the property to make it their own home, real estate investors also need to do their homework when purchasing properties for their portfolios and then continue to manage them throughout the leasing cycle. Managing rental or investment properties takes a lot of work. From getting the property rented by qualified tenants to executing the lease and collecting rent, it can become very time-consuming. Often real estate investors hire property managers or management companies to coordinate these day-to-day tasks. Equally important is ensuring the property itself is a profitable asset and subsequently maintained so it remains in marketable condition. Whether you own a large portfolio of investment properties spread across the country or a few local ones, properly maintaining those real estate assets is key to maximizing their value and your potential bottom line. You may want to consider a third-party property services company that can accommodate all your inspections and maintenance needs throughout the purchasing and leasing processes. Property Service Firms When engaging a third-party property services firm, determine whether it has flexibility and can handle any size portfolio—from one property to a large portfolio. And if you own assets in different areas of the country, a national property services firm with a trusted reputation for quality and consistent results is your best bet. Many real estate investors seek opportunities to expand their portfolios to outside markets and often buy properties in bulk. Having a property services company in place can help put your mind at ease. You’ll know the proper services will be completed to ensure you have made the right investment. This includes inspecting properties before purchase and completing due diligence assessments. Due Diligence Assessments The biggest risk in attaining an investment or rental property is current damage as well as susceptibility to additional damages. Issues like vandalism, tenant neglect or natural occurrences can affect not only the property’s profitability, but also be expensive for you to remedy. Investing in real estate can be a big risk. Mitigating those risks can be very difficult for growing investment firms. Performing due diligence will help you determine the profitability of the property you plan on purchasing. A comprehensive property inspection or assessment from a trusted third-party service provider is necessary to determine if the purchase makes good business sense and fits within the parameters of your current needs and portfolio. Knowing if the property is a good investment from the beginning and completing reoccurring assessments, to managing tenants and turnovers, you have to ensure you are getting the proper services to protect your investment. To keep the properties in your expanding portfolio in compliance, some of the key routine assessments and maintenance services you should employ include required landlord inspections once a dwelling is occupied and turnover services between tenant occupancy. Routine Inspections Services It is important to continue to keep an eye on your properties while they are leased and occupied by tenants. This is something that often can be overlooked, but your property services company can ensure you stay on top of it through routine service options. These inspection services are helpful for tenant turnovers, move-outs, lease renewals or monthly check-ins when the tenant owns a pet or has any other custom parameters in their lease that require regular assessments. The property services company will send a qualified field inspector to your property, document exterior and interior conditions, inform you of any damages and, if necessary, provide bids to remediate any damages in order to restore the property to a livable condition. These results include a written report on the condition of the interior and exterior of the property and detailed photo documentation. It also includes reporting on issues such as occupant neglect, infestation risks, roof damages, water intrusion and the presence of mold. Your property services company also should perform a listing inspection to check on a property that is for lease or sale. Be sure to get documentation of your agent’s or property manager’s services, including placement of signage and marketing materials. A qualified field inspector will do an on-site assessment of a property to verify it is in marketable condition. For an interior inspection, the inspector can either schedule a showing or attend an open house to also document the interior condition and cleanliness of your property. Operational Efficiencies Employing a property services company with national reach will aid in your operational efficiencies overall. Results will be consistent, and properties will be maintained in a uniform manner by qualified, local professionals. For example, a property services firm can help create processes for streamlined turnovers and non-emergency maintenance services. They also can be effective for completing eviction services and junk removal at properties that need cleaned out. To ensure you do not get trapped in a “money pit” and bogged down with unexpected expenses like Walter and Anna, creating these operational efficiencies will maximize the value of your real estate assets and safeguard your bottom line. Due diligence inspections and regular assessments and maintenance will keep the property profitable and minimize losses within your portfolio.

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Zoning Isn’t Your Problem

Looking at the potential issues a project may face and taking the steps to minimize them early will help keep you on budget and on schedule. When developers, investors or builders look at a new project, everyone knows to consider the zoning and the entitlements necessary for the project to happen. What often gets pushed down the priority list, or not thought of at all, are the corollary issues that may have a bigger impact on the project than the zoning itself. It is not enough to simply confirm that an appropriate zoning district is available and apply standard estimates for timing and costs for processing the applications for those entitlements. There is almost always a zoning district that will accommodate the desired use. But the zoning district itself is not what poses the greatest threat to the ultimate approval. Instead, it is often politics; neighborhood opposition; the property’s history; general, comprehensive or specific plans (where applicable); or even traffic concerns. Any one of these can derail your schedule, budget or both—and in a big way. You don’t haveto leave them up to chance though. Each one can be researched and planned for well before any money goes hard. Politics One of the first steps in considering the viability of any project is having a meeting or discussion with the local elected official of the district where the project is located. This may be either a councilperson or county supervisor—or the most influential—if the local elected officials serve at-large. This meeting isn’t about just giving a polite heads-up. Local elected officials must balance a complex and interwoven pile of issues, agendas, goals, stakeholders and problems, many of which were inherited, all while trying to responsibly reflect the desires of their constituents. Many factors that won’t turn up in any research but are within the elected official’s realm of responsibility can impact your project. For example, there may have been significant  community discussion about the property you are looking at, and plans laid for it despite it not being owned or even tied up by the jurisdiction or community. That is something you need to know before making an application for a project that may be completely different. Elected officials themselves may have plans for municipal projects that are not yet on paper but will impact your project. These kinds of projects may range from large open space plans to significant infrastructure upgrades or studies in progress for specific area plans. They may also have strong personal preferences on certain aspects of development that can be easily incorporated into a project early on. You must also consider the interrelation of the elected officials’ interests, concerns and agendas. The balancing act elected officials must perform and the fact they may be elected by different demographic groups can put them at odds on various issues. Analyzing how this will impact your project is a critical component of the research you should be conducting before committing to a project that will require city, town or county approvals. Neighborhood Opposition You’ve likely seen a project get absolutely destroyed by opposition from neighbors, neighborhood organizations, or other interested and organized parties in the community that may or may not be geographically close to the project. Of course, you believe your project will benefit the community. It very well might, but it is difficult to foresee how everyone in the community will view it when you cannot know what is tinting the lenses they are viewing it through. What may seem like an obvious and eminently appropriate change of zoning from a technical, professional and societal perspective may seem like the end of the world to neighbors or community groups. Often, such opposition is due to misconceptions, miscommunications or fears associated with past experiences. As the applicant for an entitlement, you are often unfairly greeted with distrust and skepticism rather than the benefit of the doubt when it comes to the quality of the project, true intent and willingness to communicate with the community. Likewise, the community often forgets that projects like yours are the only way cities and counties improve infrastructure, build roads, extend utilities, construct and maintain parks, and generally create progress and growth that is a critical component of a healthy city. With a good project, neighborhood opposition can almost always be overcome through communication and open dialogue. Most often, community outreach involves treating the community as one large group and hosting multiple public meetings, conducting focus groups, sending surveys and attempting to identify and solve problems. That may be appropriate in some cases, but there are rarely issues in a community that apply across the board. Embracing a multifaceted approach that includes research, required notification, meetings with key players and individuals and continuing communication is much more effective. At the earliest stage of your project research, you should investigate the history of neighborhood opposition to projects in the area. Your zoning consultant should have some idea of the larger issues in the area, but specific research should be done to identify projects in the immediate vicinity that have had significant neighborhood participation—both positive and negative—to identify key issues and players. City or countywide research can also be helpful if the project is more unique and there are comparable projects elsewhere in the city or county. This research does not need to take forever or blow out a budget. You can often find and identify issues quickly. The jurisdiction will typically have requirements for public notification and outreach that you must conduct. Follow up with all responses from this step. Either identify the issues and work to resolve them or thank the respondents for their support and request they voice that support in an email or letter to the jurisdiction, or better yet, attend a hearing. When someone supports a project they likely will not participate in the process unless they are asked. However, you can be sure that folks who aren’t happy will engage. It is important for everyone’s voice to be

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