Pearse Realty Group's Blog

Hotel to Rise Near RBC Center

pearserealtygroup — Wed, 10 Feb 2010 20:30:49 +0000

Talk to most veteran hotel developers these days and they’ll express hesitance about moving ahead with new projects.

With leisure and business travel crippled by the recession and lenders demanding up to 50 percent equity, many developers are content to wait until both the economy and the capital markets improve.

Pradeep Sharma isn’t waiting. The part-time hotel developer broke ground two weeks ago on a 99-room Wingate Inn & Suites in West Raleigh that is scheduled to open in October.

The project is small by hotel standards, and the brand doesn’t have much luxury cachet. But it is a step in the right direction for a part of the city that has struggled to live up to expectations since the RBC Center opened in 1999.

Sharma, 43, is not a typical hotel developer. He describes himself as a man with two passions – education software and real estate – and he has formed separate companies to pursue both.

Sharma’s only hotel project before Wingate was the purchase in 2004 of a Fairfield Inn in Durham, which he still owns and has rebranded as a Quality Inn. Sharma stayed at the hotel as a guest for a week before deciding it was a solid investment.

This latest project is Sharma’s first attempt to build a hotel from scratch.

In 2007, he formed a real estate company, CHD Investments, that is financed mostly with his own money. The company paid $2.7 million for 14 acres that other developers had passed over because the land lacked water and sewer service and had drainage and access problems.

Undaunted, Sharma spent nearly $2 million over three years to make the property suitable for development, including $500,000 to install a sewage-pumping station on the site.

“It had everything you can think of wrong with it,” Sharma says of the property.

To help him make sense of the widely different estimates he got from contractors for the work, Sharma hired interns from N.C. State to research how much the city of Raleigh paid to do similar work.

“I use them in every facet,” he says of the interns.

Sharma’s grand plan is to develop the site in phases, with later phases to include a McDonald’s, a Sheetz gas station and possibly office space. McDonald’s has already filed site plans with the city.

As for financing, Sharma says developing the entire site will cost $40 million to $50 million.

CHD paid most of the land costs, and BB&T is financing the $10 million hotel project. Sharma wouldn’t say how much equity CHD had to put into the hotel project, but he said it was less than 50 percent.

Sharma’s willingness to persevere on the project stems from his belief in the hotel’s location near the N.C. 54 exit from Interstate 40.

“I’m just so excited about West Raleigh,” he said. “I think it’s one of these untapped exits off Interstate 40.”

Sharma isn’t the only one to see potential in the area. Two other hotel projects have been proposed nearby, a 133-room Hyatt Place and a 368-room hotel that has yet to find a flagship brand.

The Hyatt Place is to be built across Chapel Hill Road from Sharma’s hotel. The project’s developer is the Atlanta firm Southern States Management, which owns the North Raleigh Hilton.

Bob Ray, one of Southern States’ owners, said the company was attracted to the location because of the number of weekend activities at the State Fairgrounds, the RBC Center, SAS Soccer Park and Carter-Finley Stadium.

“What we like about that market is the weekend business,” Ray said.

“Then you’ve got to fight for the Monday through Thursday traffic; that will be the challenge for that location.”

But Ray said Southern States, which has received site plan approval from the city, is waiting until demand picks up and the financing picture improves.

“The market is not there to support a new hotel today,” Ray said.

Hotel occupancy in the Triangle was 55.6 percent for 2009, down from 60.8 percent the previous year. Revenue per available room in the Triangle decreased 16 percent compared with the previous year, according to Smith Travel Research, a Tennessee company that tracks the lodging industry.

Despite those numbers, Sharma said, now is a great time to build for a small company like his.

He’s able to hire large, established contractors, such as Barnhill Contracting Co., for reasonable prices. “Barnhill would probably not talk to us during the good times,” Sharma said.

David Bracken, News & Observer

February 4, 2010

Home Sales Limp to a Finish

pearserealtygroup — Fri, 29 Jan 2010 19:18:34 +0000

After a dismal start to 2009, the Triangle housing market ended the year with four consecutive months in which sales rose compared with the same period in 2008.

There were 1,234 homes sold during December in Durham, Johnston, Orange and Wake counties, up 4 percent from December 2008, Triangle Multiple Listing Services data show.

The modest increase in December came after year-over-year sales jumped 26 percent and 71 percent in October and November, respectively. Those jumps were largely attributed to people rushing to take advantage of the first-time home buyer tax credit, which was set to expire Dec. 1 until the government extended it into 2010.

For the second consecutive month, many would-be buyers appeared to take a break from looking. The number of home showings in December was flat compared with the same period last year, while the number of sales pending decreased 3 percent.

For the year, Triangle home sales were down 12 percent from 2008. The average price of the homes sold was $231,400, down 6 percent from 2008. The average number of days on the market increased from 89 to 96.

John Wood, a past president of the Raleigh Regional Association of Realtors and a Re/Max United agent in Cary, said it’s important that the Triangle carry its streak of monthly gains into 2010.

“We need to continue to match and exceed last year’s numbers,” Wood said, “because we had a rough start to 2009.”

Wood said he’s hoping the looming expiration of the tax credits will give the housing market momentum through the first half of the year.

The first-time tax credit allows buyers to reduce their federal income taxes by 10 percent of the price of a home, up to a maximum of $8,000. It includes a tax credit of up to $6,500 for repeat buyers who have lived in their houses at least five years. The deadline is April 30 to put a home under contract, June 30 to close.

David Bracken – News & Observer

January 21, 2010

First-Time Homebuyer Tax Credit Overview

pearserealtygroup — Wed, 27 Jan 2010 03:27:28 +0000

Time is running out. There is a little bit over 3 months left to go under contract. Check out this overview of the First-Time Homebuyer Tax Credit. And please call us with any questions.

IRS defines a first-time homebuyer as someone who has not owned a principal residence during the three-year period prior to purchase
Tax credit does NOT have to be repaid
Only applies to homes priced at $800,000 or less
Tax Credit applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. In cases where a binding sale contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify
For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit

Cary Ranked Among 20 Safest U.S. Cities

pearserealtygroup — Wed, 25 Nov 2009 03:07:01 +0000

A new study finds that Raleigh and Durham experience more crime than average, with the Bull City placing among among the 100 worst offenders nationwide.

Cary, meanwhile, can boast of being among the 20 safest cities in the United States.

Those conclusions are drawn from data compiled by Washington, D.C.-based publisher CQ Press, which examined FBI statistics for murder, rape, robbery, aggravated assault, burglary and motor vehicle theft to determine “crime scores” for 393 cities nationwide. The company’s annual rankings have rankled public officials for 16 years.

Camden, N.J., ranks No. 1 for the most crime, St. Louis is No. 2 and Oakland, Calif., is No. 3.

Durham ranks No. 98 on the list, just ahead of Richmond, Va. The Bull City was the fifth highest North Carolina city on the list, trailing No. 70 Charlotte, No. 73 Winston-Salem, No. 74, Greensboro and No. 87 Wilmington.

Raleigh posted the third best ranking among North Carolina cities at No. 195 overall. The city’s crime score of 19.18 indicates a crime rate slightly above the national average, which is represented by a crime score of zero in the CQ Press system. In comparison, Durham posted a score of 78.1.

Cary’s score of negative 68.71 was the 19th best score in this year’s rankings.

Jeff Drew, Triangle Business Journal (Nov 23,2009)

6 Reasons Why Now is a Great Time to Buy a Home

pearserealtygroup — Wed, 18 Nov 2009 22:38:43 +0000

With the housing market looking better each day here is 6 reasons why now would be a great time to buy a home.

1. Uncle Sam is willing to help. First-time home buyers (defined as anyone who hasn’t owned a home in the last three years) are entitled to a maximum of $8,000 tax credit. Repeat home buyers are entitle up to $6,500 tax credit. Interest rates are at a record low, and the Federal Reserve is doing its best to make mortgage loans available.

2. People have to live somewhere. About 800,000 new households are formed each year in this country ensuring that the housing market will tighten, even if the economy doesn’t soar.

3. Borrowers leverage their investments. If you put $10,000 into the stock market and it earns 10 percent, you’ve earned $1,000. If you put $10,000 down on a home and its values increase 10 percent, you’ve made $10,000.

4. When prices come back up, you’ll have instant equity. In parts of the country where foreclosures have driven down prices, better times will mean the price of the home you buy will rise rapidly.

5. Mortgage costs stay the same. If you get a fixed rate mortgage, the monthly payment stays the same – while everything else, including rent, goes upwards.

6. You own it. There is something comforting in the notion that your home is your own. You can paint it in any color you want, let the dog run in the back yard and hang a swing for the kids in the front.

We are in the midst of what could be the best buyers market we could see for a while. Never before have interests rates been this low prices keep dropping everyday. We might not see it again in the shape it is in right now.

The Wall Street Journal, June Fletcher

Tax Credit Details

pearserealtygroup — Tue, 17 Nov 2009 18:50:15 +0000

As most of you know Friday, Nov 6, 2009 the Tax credit Bill was signed. There has been some confusion to what it means and what is on it. So let us clear some of it up for you with some key provisions.

First for the first time home buyer. The tax credit has been extended until April 30, 2010. It is still the amount of $8,000. First time home buyers must be under contract by that day and will have 60 days to close. That is a little different as before they had to close by a certain day now they just have to be under contract.

The new addition to the bill is the “Repeat Home Buyers” who can now get up to $6,500 in tax credit. There are some provisions for this tax credit. First you must have lived in your home for 5 of the last 8 years. Second, you must be buying the new home as your primary residence. Now some people are asking do I have to sell my home or do I have to buy a bigger home. The answer to both is no. I think the label of these buyer should be “Repeat Loan Borrowers” cause you do not have to sell your hame that you are in now. Yes you can rent it out. And you do not have to buy bigger. It can be used for a downsize. The income limits have also been raised to $125,00 a year if single and $250,000 a year if married. The sales price of the home has been also raised to $800,000. Which means you can by a home up to that sales price and still qualify for the tax credit.

All these new provisions seem to be good from the feedback that we have been getting. Hopefully this will jump start the housing market. Every market is different and here in Cary, North Carolina though we have not seen a dramatic drop and problems like in other parts of the country. We have seen a slow down and are ready to turn it around. If you are wanting to buy another home and fall in the provisions give us a call. We are more than ready to help you get the process started.

Regards,

Pearse Realty Group, Robert Pearse & Judy Pearse