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Efficiency is Not the Same as Judgement: AI in Real Estate - Boomerang Capital

Rob Jafek — Wed, 10 Jun 2026 14:36:33 GMT

By Rob Jafek, Principal | Boomerang Capital Partners, LLC

There is a growing narrative or concern that artificial intelligence will fundamentally displace real estate professionals, not just brokers, but pretty much everyone. The argument is straightforward. Real estate is described as a data business. Sales comparables, rental trends, demographic shifts, zoning overlays, school rankings, cap rates, credit scores. If those inputs can be aggregated and analyzed more efficiently by machines, then the human intermediary appears expendable. That framing is incomplete and faulty.

Real estate certainly contains a significant data component, and AI tools are already improving the speed and consistency with which that data can be gathered and processed. Comparable sales can be compiled in seconds. Docs can be generated automatically and reviewed efficiently. Marketing copy can be drafted and optimized with minimal effort (or copied from one website to the next). Portfolio-level delinquency risk can be scored across thousands of units. These efficiencies are real, and they will remain. And we love it for that.

However, the economic value in real estate has never resided solely in pattern recognition or data collection. It often resides in judgment applied to circumstances that do not conform neatly to the pattern.

Consider negotiation.

Transactions are not merely an optimization exercise around price. It is a negotiation that involves emotion, reputation, timing, and risk tolerance. A model can estimate the price with increasing accuracy, but it cannot read hesitation in a voice, detect when certainty is valued over absolute price, or calibrate tone in a way that preserves dignity and keeps a deal intact. Experienced operators understand that many transactions close not because the spreadsheet was precise, but because someone in the room exercised judgment.

Relationship-based deal flow.

The same is true for relationship-based deal flow. In commercial real estate, many of the most attractive opportunities never appear in broadly marketed channels. They move through networks built over years. Developers call lenders who have performed reliably through prior cycles. Brokers present transactions to investors who have closed before and who are known to perform. Artificial intelligence can simulate dialogue and organize contact lists, but it does not accumulate reputational capital. In a business where performance through one cycle influences opportunity in the next, credibility is not a dataset.

Physical nature of property.

There are also structural limits tied to the physical nature of property. The value of real estate is inseparable from its physical and local context. Walking a site conveys information that cannot be fully digitized. The condition of surrounding properties, traffic patterns at specific times of day, the presence of deferred maintenance, even the sensory cues of noise or moisture, all inform judgment about value and risk. Digital tools can approximate these inputs, but they cannot fully substitute for physical presence.

Risk Allocation

More fundamentally, real estate transactions allocate risk. Sorry, I’m going to geek out a bit here. Construction risk, lease-up risk, financing risk, regulatory risk, environmental risk. Decisions about who guarantees a loan, who absorbs cost overruns, who carries vacancy exposure, and who signs personally are governance decisions. They require assessments of incentives and character. An algorithm may suggest optimal capital structures based on historical data, but it cannot evaluate integrity or long-term alignment in the way that experienced principals attempt to do. Let alone negotiate it.

Liability also remains human.

If an AI-generated rent projection proves optimistic, the resulting loss is borne by investors, lenders, guarantors, and sponsors, not by the model. In a regulated industry where fiduciary duties and personal guarantees carry real consequences, advisory processes that diffuse accountability warrant caution.

Professional development.

Finally, there is the issue of professional development. Real estate has traditionally been learned through apprenticeship: walking properties, sitting in negotiations, observing how experienced practitioners handle complexity. If emerging professionals rely primarily on automated summaries and dashboards, the development of practical judgment may erode. An industry built on local knowledge and nuanced risk assessment should be careful not to produce operators who understand software interfaces better than they understand properties.

Artificial intelligence will remain a valuable tool in real estate. It will continue to improve efficiency, transparency, and data accessibility. But efficiency should not be confused with wisdom. Real estate is not simply an information problem to be optimized. It is a human system for allocating capital and risk within specific communities. In that context, judgment, credibility, connections, and accountability retain enduring value.

Falling Home Sales? No Need To Sound The Alarm. - Boomerang Capital

Linford West — Tue, 08 Jul 2025 10:24:38 GMT

By Rob Jafek, Principal | Boomerang Capital Partners, LLC

A recent New York Times article, “The Housing Market Was Supposed to Recover This Year. What Happened?”, sounded the alarm over falling home sales. The authors highlighted how housing activity, by April 2025, had slowed to its lowest pace since the mid-1990s—despite early-year optimism from economists. Mortgage rates had unexpectedly spiked. Buyer urgency faded. Transaction volume was down.

All true.

But much of the media reaction, including this article, has leaned heavily on sales volume as if it were a direct stand-in for home values. That assumption is not only flawed — it’s a recurring source of fearmongering in real estate journalism.

To make matters worse, this confusion isn’t limited to year-over-year sales comparisons. In another example, Scottsdale, Arizona was recently touted as a “better housing market” than Austin, Texas. The basis? Scottsdale posted a higher total dollar value of real estate transactions, thanks in large part to a few ultra-luxury sales. But again, this says little about actual price trends or accessibility in either market.

These are classic examples of a widespread issue, so let’s make a clear distinction: volume = how many homes are bought and sold and price = how much they’re being bought and sold for.

And falling volume doesn’t mean falling prices. In fact, today’s housing market – with fewer houses being sold – is defined by tight supply, rate lock-in, and risk aversion, not price erosion.

In April 2025, existing-home sales declined to levels not seen in decades. Yet prices were up for the 22nd straight month. Why? Because most homeowners are sitting on sub-4% mortgage rates and aren’t interested in listing unless absolutely necessary. Meanwhile, buyers are more selective, faced with rates nearing 7%. The result: a sluggish market in volumes, not in price!

This scenario—low activity, firm prices—is far from unprecedented.

We’ve Seen This Before. More than Once.

In the early 1980s, mortgage rates soared to 18%. Home sales fell sharply, but prices remained mostly stable. Few people could afford to buy, but just as few were willing to sell. During the first months of the COVID-19 pandemic in 2020, housing activity froze. Sales volume cratered and pundits warned of a price collapse. Instead, prices soon exploded upward as low rates and remote work policies reshaped buyer demand.

In contrast, the 2008 crisis involved a full collapse in both volume and prices. A flood of foreclosures and distressed inventory created forced selling pressure. That’s not what we’re seeing today. There’s no wave of underwater owners or sudden inventory surge.

A Local Example: Scottsdale vs. Austin

Nowhere is the volume vs. value confusion more apparent than in the recent media comparisons between Scottsdale, AZ and Austin, TX.

Reports have noted that Scottsdale is outperforming Austin—based on total dollar value of transactions. But this is a shallow measure. Scottsdale has seen a rise in luxury listings, with homes priced well over $5 million. Just a few such sales can dramatically boost total volume, even if unit sales are low and median prices are flat or declining. In fact: Scottsdale’s median home price is ~$849K and down ~0.8% year-over-year; Austin’s metro-wide median is $449K (in-city ~$595K), down ~1.6% YoY; and yet Austin’s pending sales are up 16%, and inventory is growing—suggesting a more dynamic, buyer-friendly market.

So which is “healthier”? The market with a few splashy deals? Or the one with improving affordability and rising inventory? Using total transaction volume as a proxy for market strength elevates outlier sales while masking real trends in affordability, supply, and demand.

What to Watch Instead

To truly understand housing market health, we need to look beyond sales volume. Instead, look at the same things you’ve always looked at:

Inventory levels: Are homes sitting longer or selling quickly?

Days on market: Are properties moving faster or stalling?

Price-to-list ratios: Are buyers bidding up or negotiating down?

Distressed sales: Are foreclosures rising, or still historically low?

Right now, most signs point to stasis, not collapse. There is less urgency, yes — but also no need to panic. The housing market isn’t crashing. It’s catching its breath.

TLDR: Don’t Let Volume Fool You

The housing market today is like a slow-moving chess game. Transactions are down, but values are holding. That’s not a sign of collapse—it’s a sign of tension. Most owners don’t need to sell. Most buyers can wait. And the result is a cautious standoff, not a downward spiral.

Scottsdale has been more consistent than Austin for a long time – what did you think was going to happen when a bunch of tech billionaires moved to a small market and all wanted big houses? A few luxury closings don’t mean the broader market is stronger, but it did drag the average up, and when those stop the average will move down. Likewise, falling unit sales nationwide don’t mean home prices are crashing, even if every realtor you know is unhappy.

Price and volume move independently. The moment we forget that, we risk falling for the same cycle of misinterpretation that’s plagued real estate coverage for decades. What should you do? Focus on your markets and your trade. If you’ve been in this for any period of time, you’ve seen these cycles. Focus on the fundamentals and we’ll see you at the next peak or valley.

Rediscovering Joy: How to Enjoy What You Once Loved Again - Boomerang Capital

Linford West — Wed, 11 Jun 2025 08:00:00 GMT

By Rob Jafek, Principal | Boomerang Capital Partners

It’s a common experience: something that once brought joy and excitement turns into a chore when it becomes a job. What was once a passion becomes tied to deadlines, expectations, and financial necessity, draining the joy from the very thing that used to bring happiness. However, it is possible to rekindle the love for an old passion like diving into a new project property. By approaching it with a sense of wonder, appreciating the progress made, and seeking a fresh perspective, it is possible to enjoy what was once loved again.

Approaching with a Sense of Wonder

One of the most powerful ways to rediscover enjoyment is to cultivate a sense of wonder intentionally. Over time, familiarity breeds routine, and routine can dull the excitement that once existed. Stepping back and seeing the activity with fresh eyes—like a beginner would—can help reignite curiosity. Instead of focusing on obligations, consider exploring new aspects of the field or approaching it in a completely different way. If you once loved painting but lost interest when it became a commission-based career, try experimenting with styles or techniques you never used before, simply for the fun of it.

Appreciating Your Growth and Progress

Another way to rediscover joy is to recognize and appreciate how far you’ve come. When you first started, you were likely in awe of those who were ahead of you. Now, you are the experienced one. Take a moment to appreciate the skills and knowledge you’ve gained over time. Instead of seeing your experience as a burden that takes the fun away, try to reframe it as a privilege—you have mastered something you once struggled with. Reflect on the journey and recognize that the struggles and challenges were part of what made it enjoyable in the first place.

Returning to the Root of the Passion

To reignite enthusiasm, it helps to revisit what made the activity fun in the first place. What aspects of it originally captivated you? Was it the feeling of creative expression, the sense of accomplishment, or the excitement of learning something new? Try to engage with the activity in a way that strips away the work-related pressures and brings back the original joy. If writing became a draining career, try writing something purely for yourself—without an audience, without a deadline, and without expectations.

Seeing Through a Newcomer’s Eyes

A great way to regain perspective is by seeing the activity through the eyes of someone new to the field. Beginners bring enthusiasm, fresh questions, and an appreciation for the small joys that experts may overlook. One of the best ways to do this is through mentorship. Teaching someone who is just starting out can remind you why you fell in love with the activity in the first place. Their excitement can be contagious, and their curiosity can rekindle your own. Mentoring not only helps others grow, but it can also help you reconnect with your passion on a deeper level.

Things to Consider

We’ve frequently commented on how much we appreciate and admire people in real estate redevelopment. Even some of our competitors. Real estate redevelopment is more than just a career—it is a passion that transforms neighborhoods, revitalizes communities, and creates spaces where people can thrive. For those who take on the role of a redeveloper, the rewards go far beyond financial gain. Seeing a neglected property evolve into a valuable asset for the neighborhood is good for all, and that satisfaction of breathing new life into neglected properties, improving the quality of life for residents, and playing a crucial role in community development makes this field deeply fulfilling. What you do is awesome and helps many others, but since you’ll rarely hear appreciation, hear it from us: thank you.

Final Thoughts

Losing joy in something once loved is natural when it turns into work, but it doesn’t have to be permanent. By approaching the activity with fresh eyes, appreciating your progress, revisiting the roots of your passion, and mentoring others, you can rekindle the excitement that once made it so fulfilling. Passion isn’t lost forever—it just needs a new perspective to bring it back to life.

Community Builders, Not Just Flippers: Part of the Puzzle - Boomerang Capital

Linford West — Wed, 04 Jun 2025 08:00:00 GMT

By Rob Jafek | Boomerang Capital, Principal

It’s puzzling—while those enhancing commercial spaces are praised for “revitalizing,” “restoring,” or “rejuvenating” business districts, those improving residential properties don’t always receive the same level of appreciation. The positive impact they create is just as profound and deserves equal recognition. We’ve made it one of our missions to work to change the perception of “flippers”, because their contributions to our community is underrated and misunderstood.

One reason for this disparity may lie in the language we use. Residential investors are often labeled as “fix-and-flippers,” while their commercial counterparts enjoy the more prestigious title of “value-add investors.” Similarly, financial partners in residential projects are referred to as “hard money lenders,” whereas in commercial real estate, they are known as “bridge lenders.” These distinctions subtly influence perceptions, and it’s time for a shift—one that truly honors the value brought to communities by all types of property investors. These dedicated individuals breathe new life into communities, yet their contributions often go unrecognized

We see the tremendous impact that real estate investors have in the neighborhoods they serve. These professionals dedicate their time, expertise, and resources to transforming outdated properties into thriving homes and businesses. They deserve recognition for their role in community improvement, and we advocate for a reimagining of their image—one that aligns with the respect afforded to commercial developers.

A Shared Mission: Enhancing Communities The work done in residential and commercial real estate shares the same core objective: adding value and fostering growth. Here are just a few of the ways these efforts align:

Strengthening Neighborhoods: Whether residential or commercial, revitalization efforts turn neglected properties into vibrant, functional spaces. While aesthetics are an important aspect, much of the work involves addressing long-overdue maintenance issues that improve safety, efficiency, and livability. These upgrades enhance property values and attract new residents and businesses, contributing to a thriving community.

Swift Transformation: Speed is essential in these projects. While property owners might have the ability to renovate on their own, the disruption can be overwhelming. Investors streamline this process, ensuring that properties are upgraded efficiently and quickly, minimizing inconvenience and maximizing the benefits to the neighborhood.

Creating Value for All: Every stakeholder benefits from these improvements. Sellers receive a fair price without having to undertake major renovations themselves. Buyers gain a fully updated property, ready for immediate use at a cost lower than if they had taken on the work themselves. And the broader community enjoys the renewed energy and increased appeal of the improved spaces.

Sustainability in Property Development In the commercial sector, eco-friendly development is widely embraced, with recognition given to sustainable practices. The same trend is taking hold in residential investment, with many renovators prioritizing energy efficiency, sustainable materials, and green certifications. These efforts not only reduce environmental impact but also enhance long-term affordability and livability. The fix-and-flippers who integrate these forward-thinking practices deserve just as much admiration as their commercial counterparts.

Elevating Perception, Elevating Communities It’s time to redefine the way we view residential property investors. These individuals are more than “fix-and-flippers”—they are dedicated professionals investing in the heart of our communities. Their work revitalizes homes, uplifts neighborhoods, and creates opportunities for residents to thrive.

One could easily be tempted to compare value-add to new-build and while these are related, they are quite different in some important ways. Start by looking at where the majority of new build is happening – it’s either high-density infill (check out Tempe or Gilbert) or low-density and far out (see the west side and 303 loop). There is great work and development going on in both types of developments, but if a buyer is looking for the combination of space and move-in condition, they are likely going to be talking to a redeveloper (aka a fix-and-flipper). Why a redeveloper? The average age of a home in the US is 40 years old, and just about 30 years old in the Phoenix MSA. Not only are the aesthetics in need of updating, but the major systems probably need looking at too (the roof, plumbing, electrical, etc.). This is where value-adders shine: take an aged, existing home, in a good spot, close to work and amenities, and update it, all at a comparable to possibly even better price than a new build (new builds are over a 20% premium).

We proudly stand in support of these investors and their invaluable contributions. Let’s recognize them for what they truly are—community builders, visionaries, and agents of positive change.

Getting It All Together: How Organized Are You? - Boomerang Capital

Rob Jafek — Wed, 28 May 2025 08:00:00 GMT

By Rob Jafek | Boomerang Capital

You’ve thought about New Year’s resolutions. Perhaps considering a resolution that will bear long-term benefits and improve your investment portfolio? Here’s a no-brainer that will indubitably bear some positive results to your bottom-line, and perhaps your sanity – improve your business recordkeeping! There are some very simple, practical things you can do to improve your business practices which in turn can reap some real financial benefits.

If you’re already good at it, you know the benefits. For the rest of us, here’s a quick review of the benefits of good recordkeeping:

Benefits to Solid Recordkeeping

Staying on Budget – Peter Drucker, the classic philosopher of all things business, famously stated: “You cannot manage what you do not measure.” Record-keeping is the way you ‘keep score’ on your project. This should track along two metrics: time (use a calendar) and money (see below for ideas). And this is not only for your use: keeping track of all the subs and contractors can help keep them accountable with proof of agreements, quotes, and contracts, and in the event of a problem, you will be all set with evidence in case of disputes over work quality or scope.

Easier sales – Yes, easier sales. Having proof of work done will give prospective buyers comfort in the type and magnitude of work done. It’s one thing to say the roof was replaced, but another level entirely to show proof with receipts. A buyer would have to be impressed when manuals and warranties were on top of the new appliances. Documentation of improvements can be valuable when selling the property, as it proves the quality and scope of work completed and well-kept records demonstrate professionalism and attention-to-detail to potential buyers. All of this may help you sell faster and at a higher price, or at least close a bit of the gap between new homes and those that have had value added.

Ensures Compliance – buyers may not be the only ones interested in what you’ve done. Receipts are frequently required when major work is done and you are going for your certificate of occupancy; this is certainly the case with most electrical. Proof will make tax calculations easier and any other investors, including banks, will either require it, or be deeply comforted by it (i.e. want to participate in your next project).

Tips for Successful Recordkeeping

How do you get this done? You really don’t have to over-complicate it. Categorize expenses by room, stage of the project, or contractor, but start by creating categories. Store it all in a dedicated file box or some other way so it is all in one place – the dashboard of your truck doesn’t count. You can use physical files with labeled folders or binders with dividers for each category. Or you can use digital files and store electronic copies of all documents in well-organized folders. Then, don’t forget to keep consistent naming conventions, which will make finding documents easier (e.g., “Invoice_Plumber_01-15-2025”).

A simple spreadsheet can help too: track expenses (dates, amounts, vendors, and descriptions); task completion (start and finish dates for each phase) and notes (any issues or decisions made along the way). Using a spreadsheet can also allow you to track budget versus actuals.

There are, of course, specialized project management apps which are easy to pick up (some have a free version) such as Trello, Asana and Monday.com. These all take slightly different approaches, but they all help track and coordinate tasks. Whereas Google Drive, Dropbox, or OneDrive can help store scanned documents, photos, and plans. Receipt tracking not your thing? There’s software for that too, such as Bill.com, Expensify, CamScanner and Shoeboxed. And there are some great all-in-one packages being developed for this application such as emendo.ai .

If nothing else, keeping track of things will help you. Organized records reduce the likelihood of surprises or forgotten details and your confidence will increase with a clear picture of the project, leading to better decision-making.

Tariffs and Rates: What impact are they having? - Boomerang Capital

Linford West — Tue, 20 May 2025 11:06:56 GMT

By Rob Jafek, Principal with Boomerang Capital

There has been some volatility in the markets lately, and real estate is no exception. But the impacts are more subtle, and examination offers some fascinating – and useful – insights.

Let’s start with the big-one: rates. Everyone looks at the 30-year mortgage rate, as well they should, since most homes are financed that way, and things there are undoubtedly interesting, and even hopeful.

The 30-year fixed mortgage rate (dotted blue line in the chart below)^[1] is holding steady in the upper 6% range, which is still pretty high by historical standards. Meanwhile, the 10-year Treasury yield (solid blue line) has come down a bit. The orange line on the graph shows the spread between the two, essentially the margin banks use to price in risk and profit (and bank profits have been very high). Currently, that spread is around 238 basis points. That’s a full standard deviation above the historical average, which suggests there’s room for some downward movement. If that spread narrows back to its long-term average, and there are many ways it could, mortgage rates could fall by just over 50 basis points, bringing us below the 6% threshold. And that’s a big deal.

Why does 6% matter so much? It turns out to be a psychological and financial tipping point for both buyers and sellers. The so-called “mortgage lock-in effect” has kept many would-be sellers on the sidelines because they are holding onto ultra-low interest rates. But 6% seems to be the (current) magic number where things start to move. Buyers begin to feel like homes are affordable again, and sellers feel a little more willing to trade up, even factoring in their existing low rates.

According to Bankrate^[2], 52% of potential buyers say they need mortgage rates below 6% to seriously consider purchasing a home this year. On the flip side, 35% of homeowners say they’d consider selling if rates dropped below that same threshold. (For context, the only larger group—42%—said no interest rate would get them to sell.)

In speaking of volumes, Matt Vernon, head of consumer lending at Bank of America, summed it up well: “Below 6% we would see very meaningful pickup from a rate perspective.”^[3]

Tariffs are also topical, and while they’ve added some friction and uncertainty across the board, they play out a bit differently in our space. Specifically, they give a bit of an edge to rehabbed homes over new construction. Why? Simply put, rehabs generally require fewer new materials—fewer inputs—so they’re less exposed to those cost increases. Back in late 2021, the price gap between new builds and resales was over 25%. Today, it’s dropped below 15% as builders adjust to shifting buyer preferences^[4]. But that gap is still getting squeezed, and input costs will likely keep the pressure on.

The volatility in other markets has led to price declines, in some case quite significant. The impact on housing, so far, has been been limited to decreased volumes, with little to no impact on prices. And price movement is expected to remain muted. Given that the footnotes are already pretty long, you can look that up yourself, or look at one of the more accurate predictors, the Housing Futures that trade on the CME.

So, tariffs favor rehabs over new builds. The mortgage rate offers real signs of life for increasing volumes across the entire market, and mortgage spreads may be all it takes to make that difference without much of a heavy lift. And, regardless, home prices look to be stable for quite some time, so if you are looking for volatility, look somewhere other than real estate.

^[1] https://fred.stlouisfed.org/graph/fredgraph.png?g=1IcHp&height=490

^[2] https://www.bankrate.com/mortgages/mortgage-rates-sentiment-survey/

^[3]https://www.reuters.com/markets/us/bank-america-mortgage-applications-jumped-80-q1-executive-says-2025-03-27/

^[4] https://www.realtor.com/research/new-construction-insights-2024q4/

Interview With a First-Time Flipper - Boomerang Capital

Linford West — Wed, 14 May 2025 08:51:11 GMT

Boomerang’s very own Vanessa Montoya, a loan officer covering Arizona and Colorado, recently completed her own first real estate flip. We sat down with her to pick-her brain about the whole experience.

I understand you just completed your first flip – congratulations!

Thanks. It was actually a great experience.

Tell me about the project in general.

Yeah, so I picked it up from a wholesaler. It had been on their list for Scottsdale 85257 for a bit. The house is off Thomas and Scottsdale Rd. A prime location, you know older neighborhood, but a really sought-after area.

I ended up meeting a contractor at the property. They were investors as well, that were looking to buy the property. We both walked in at the same time to look at it. I was listening to them talk about the construction portion of it, because that’s not my strength, and I was looking for ideas. I can run numbers and all, but for my first hands-on deal I wanted to partner with a contractor. I could be a part of it, but they would have some other expertise behind it.

This was a father and son GC who’ve been around the valley for years, and he’s a vet, and he’s been working with other investors for a long time, but this was going to be their first flip as well. I’m listening to their ideas for the property and things. I jumped into their conversation, and we started talking and came up with a deal to just partner up, so that’s what we did.

We picked it up in December 2023, right around Christmas time and got started. It was supposed to be done like March/April-ish, but it always takes longer than it’s supposed to, you know? We had issues with permits and the city of Scottsdale was taking a long time. We found out that the garage used to be a carport and was never permitted, and that red tape took us about a month, month and half to clear up.

It was supposed to be on the market like I said around April, we kind of missed the golden window of opportunity that we were trying to hit. But we did get it done! Now, it’s been on the market for two months and we actually just got it locked up today!

Congratulations!

Thanks. An all-cash offer! I just talked to my broker and we’re getting everything taken care of.

Do you have any idea of the profile of the buyer?

Not yet. I haven’t seen the contract yet. It was going to be a primary for a couple, but I think the mother-in-law saw it and I’m thinking they’re gonna rent it out, like an Airbnb is what I’m assuming.

So, what were your overall impressions of the flipping experience?

Well, it took longer than expected and took more money than expected, but it was such a learning experience with the whole thing. I mean, we made money, which of course was the goal.

But I got to see it from the contractor’s eyes, and I got to see it from our borrowers’ eyes. Sitting on the other side of the table, as an actual borrower, I got to see what kind of emails we get, what kind of notifications we get, how to do a draw. Really the experience as an investor was so valuable. I saw what they go through, to see what all that entails.

How was it being on the other side? Being the investor rather than doing the finance?

It went really smoothly. Like the draw: my brother took care of most of the draws and talking with Latisha. We needed to get more detail in the pictures, but she got back super quick, and we got it all taken care of.

It definitely brings a different feel from just the lending side of a deal. I could talk all day about numbers, but going through things from the other side was eye-opening. It all takes longer than I was expecting; the permits and how long the city of Scottsdale takes to do permits, you know what little hiccups come around. Yeah, it’s been a learning experience, but a good one.

How close was your original plan to the final product?

The carport/garage thing was a curveball for sure. We had to go in and do some extra stabilization on the carport to get it up to code. And then we actually took out a whole wall and that meant a structural beam needed to come out. It was in the plan, but it took longer than expected. We planned for that from the beginning because it literally opened the whole thing when you walk in.

However, I think the process and how long it was gonna take was a little bit more than we expected. But as far as the plan, it went to plan as far as what the outcome looked like, but the cost and time frame was a whole other story.

But it ended up all working out, right?

Yeah, we’re not disappointed.

Any other hints?

This really isn’t for everyone. It took a lot more work than expected. And I wish I’d have communicated a lot more with my GC. They did a great job, but I would have really liked to have been involved in a few more of the decisions.

You really need to check in on the budget a lot and I wish we’d have done more there. Like you really can’t communicate too much! With better communication I think we could have saved some money and maybe some time too. The finishes ended up looking great and definitely “Scottsdale” – which has a specific degree-of-finish that is needed to fit the area. In fact, I think we may have gone a little overboard there, and I really didn’t find out about it until the end when it was too late. I was glad we had good contracts, but I know a few more things I’d put in there now. Nothing horrible and my partner was great, but it would have been nice to have a plan for some of those issues.

Would you do it again?

Absolutely.

The Importance of Having a Contingency Plan! Expect the Unexpected. - Boomerang Capital

Megan Marohn — Wed, 07 May 2025 15:26:47 GMT

By Rob Jafek, Principal | Boomerang Capital Partners

Contingency reserves are for everyone. A contingency reserve in budgeting for a building project refers to an additional allocation of funds designed to address unexpected costs and uncertainties. This reserve serves a critical purpose: to keep the project on track and enhance the likelihood of successful completion. If you are not very experienced, you should use a contingency reserve to accommodate your unknown unknowns. And if you are experienced, while you know what many of those unknowns are, you won’t know which specific ones will show up on this project – but you know they will come – so you should also be using a contingency reserve.

A few of the ‘knowns’ an experienced investor is familiar with include design changes, permitting expenses, unforeseen site conditions, weather delays, and fluctuations in material prices. In such situations, options for addressing budget shortfalls are limited and can lead to difficult decisions, such as cutting costs elsewhere or seeking additional financing. While these approaches can compromise project integrity and success, you can effectively mitigate these risks by establishing a contingency reserve from the outset.

Moreover, having a contingency reserve minimizes the potential for delays. Insufficient funds can halt a project, so setting aside resources for unforeseen issues helps maintain momentum.

Determining the appropriate amount for a contingency reserve involves several factors, including the complexity of the project, your level of experience, and the likelihood of unexpected variances. More complex projects typically warrant a larger reserve, as does a lack of experience. If certain expenses are highly probable, they should be included in the budget rather than classified as contingency. Avoid the temptation to oversimplify; accurately categorize likely events within your budget.

Once the groundwork for your budget is laid, calculating the contingency reserve is straightforward. While it can be beneficial to analyze specific line items for potential variance, a common approach is to apply a percentage—typically ranging from 5% to 20% of the overall budget, with 10% being standard. If your contingency reserve exceeds 20%, consider refining your budget details or reassessing potential variances.

If you are confident in your project management skills and experience, it remains prudent to establish a contingency reserve. This reserve can be returned to stakeholders at the project’s conclusion, enhancing your overall financial return without the complications of seeking additional funds mid-project.

Bottomline, the contingency reserve is an essential element of effective project budgeting, ensuring that building projects are completed on time and within budget despite inherent uncertainties and they can help ease the stress around successfully completing your project.

A Quick Dive Into Pools - are they worth it? - Boomerang Capital

Megan Marohn — Tue, 23 Jul 2024 09:50:10 GMT

By Rob Jafek, Principal | Boomerang Capital Partners

Which state has the most pools per person? You might guess Florida and you’d be right about the greatest number of pools, but Arizona has the most per person, and when you’re hot, that may be what matters most. And, just to rub it in, if we need a tiebreaker we can choose the average pool size, where Arizona’s are much larger. (Pools may be smaller in Florida because in Arizona we don’t need to fence the whole thing to keep the alligators out.) So, if your home doesn’t have a pool – should it? And why does this topic catch our eye? Yes, probably because it’s hot. But also, because things are changing.

“Top 10 States with the Smallest Ratio of People to Pools in the US.” Created using data from Pool Research and In The Swim. ” 4

Talk to people with pools and you will likely hear one of two extremes: love it or hate it, there really is not much indifference. And while your local pool installer may tell you the water is fine and you should jump right in, POOLCORP, the world’s largest wholesale distributor of swimming pools and related products, had a very different take on their most recent earnings release and discussion, stating: “We now believe that new pool units could be down 15% to 20% in 2024, and remodeling activity for 2024 may be down as much as 15% compared to our previous estimate of flat to down 10% compared to 2023.” ^[1] This means that in the entire nation, just 60,000 residential in-ground pools are expected to be constructed this year, which is almost ½ of what was built in 2021 and not too far above the 54,000 that were constructed in the Great Recession year of 2009, the year following the spectacular nationwide housing bust.

Why? There are a few reasons, but the first and most obvious is the expense. Pools are getting more expensive to build and maintain. The average build cost was $74,000 in 2023 vs $43,000 in 2019^[2]. This is especially relevant in the face of affordability being an issue with any marginal cost that can be avoided being avoided, especially among lower-priced homes. Since maintenance costs also matter, a pool can actually decrease the value of a low-priced home as it adds extra monthly costs for the homeowner. Of course, in the luxury market, the reverse is true. For homes in the $700,000-$1,000,000 price range, the affordability issues of pool maintenance costs become negligible, and the pool then adds to the price of a home.

What is the return on investment for putting in a pool? With the investment of $74,000 to build a pool, how much does the house price go up? Here we have some bad news, and then some worse news. Most realtors say the premium that a pool adds to the value of a home is between 6-8%, so with the price of an average home near $400,000 we would expect a home with a pool to sell for an additional $24,000 to $32,000; so not enough to cover the price of the install. The worse news is that the premium in Phoenix is lower than in other locations, with Redfin estimating it at $11,590.71, the lowest of the 19 metro areas they looked at^[3]. Putting out $74,000 (plus maintenance expenses) to get back $11,590.71 when you sell your home doesn’t make much financial sense.

Adding a pool to an existing home, in terms of a return on investment, seems to be an easy call with the evidence firmly in favor of it being a poor investment, especially for a less expensive home. The good news in Phoenix is that your neighbor will likely let you swim in theirs.

^[1] https://ir.poolcorp.com/pool-corporation-provides-swimming-pool-season-update-and-revises-2024-guidance/

^[2] https://ir.poolcorp.com/presentations/ Pool Corporation Second Quarter 2024 Fireside Chat Presentation

^[3] https://www.redfin.com/news/does-a-pool-add-value-to-home/

⁴ Pool Research. “101+ Swimming Pool Statistics for 2024.” Accessed July 2024. Pool Research

In The Swim. “U.S. Swimming Pool Facts.” Accessed July 2024. In The Swim

Mis En Place and Your Investment Property: The perfect recipe for success - Boomerang Capital

Megan Marohn — Fri, 28 Jun 2024 15:56:02 GMT