294: Bill Ness, Neighborhoods.com and 55places.com

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It's my pleasure to welcome Bill Ness. He is the CEO and founder of Neighborhoods.com and 55places.com. You know, real estate is an imperfect and rather messy game and it's great to see services, websites, technologies out there that are trying to organize it and make it a little more neat. And as we know, the three cardinal rules of real estate since the beginning of time have always been location, location, location. And what if you could look at different neighborhoods around the country from your desktop? It's a real handy feature. Bill, welcome. How are you?

Good. Thank you for having me.

Yeah, it's good to have you. So you're trying to make this neater and more organized and I really appreciate that because neighborhoods really do vary. How do you go about getting your data and organizing? I mean, that's just got to be a monumental task, you know, because a neighborhood does not follow a zip code. It doesn't follow certainly not a city or an MSA boundary. Define neighborhood.

Yeah, I mean, for us, a neighborhood is a location that shares people of common interests and similar type homes in a particular location. And that may be anything from an urban neighborhood, like where I live in Lincoln park in Chicago, all the way to a subdivision in Naperville, Illinois or a master planned community. It might even be something like a high rise, for example, where you've got a certain subset of people who live there that are of similar nature, maybe similar age or similar type lifestyle. Maybe they're retirees, perhaps they're just out of college, perhaps they're first time home buyers or newlyweds. But anything that, you know, the people of that neighborhood share some kind of common bond.

Okay, so it's sort of, I'll guess I'll say easy to do that when it's a 55 plus neighborhood. Which by the way, maybe some of the listeners watched my video I did about the crystal lagoons and talking about the now they call it politically correct age targeted community. This is the only area in real estate where you're actually allowed to, you know, discriminate and define that like it's 55 plus or it's not. It's kind of interesting. Now those are kind of easy to define, but when you move out of that category, it's all over the board, isn't it?

It really is. You know, I used to work for a home builder, Pulte Homes, and they used to try to divide up their communities into different targeted consumer groups. And so they would, when they went into a particular market and they would do a study and they'd say, hey, you know, this area really needs community targeted at first time home buyers or move up buyers or luxury buyers. And so it's very hard to, you know, determine exactly what a certain market needs. But oftentimes home builders will try to build a community targeting a specific consumer group that's in need of a product in that particular market.

Right, right. So a little more on defining neighborhood. Anything else you want to say on what is a neighborhood and taking out the age thing, you know, they vary a lot. I mean, you know, you can go three blocks in one direction or the other and the complexion completely changes, doesn't it?

Oh, very much so. You know, I mean, for us, you know, one of the things we always say here is that we feel the neighborhood somebody lives in is just as important, if not more important, than the home they live in. A home is four walls. And you know, whether your home is in one neighborhood or another, you know, what happens within your home, it probably isn't going to vary a whole lot. But when you think about a neighborhood, you think about, you know, the people that you're surrounded with, who you are friends with, who you go to neighborhood barbecues with, who your kids might be playing with at the playground. And that's really what defines a neighborhood, is everything that happens outside of your four walls. And we think that that's a really important consideration. You know, when you. Location, location, location, you know, what you're really saying is you want to find the right area to be in. That's going to help you live your best life beyond just the time you spend within your home. And for us, that's really what a neighborhood or community is all about is it's surrounding yourself with people who you feel like you can, you know, assimilate with and that you feel the neighborhood is a place where you can live your best life.

So how can you sort, what types of neighborhoods can you sort? I mean, I've had the founder of Walk Score on the show and you know, walkable community. Some people want those Some people want other things. Like what are some of the features that we, you know, someone might look for? And of course, most of our listeners are investors, but you got to think about this stuff as an investor as well. It's a great thing to get, you know, when you're investing halfway across the country, not in the place you live. It's a great way to sort of get a feel as to the neighborhood where you're buying these properties. What are some of the ways people can sort.

Yeah, I mean, everybody's got a different way of searching for, you know, a neighborhood that's going to suit their best interests. And for different people, that's different things. For some, some people, the school may be very important. They might want to find the right elementary school or middle school. Other people, that may be transportation options. Is it close to public transportation or train or what is the commute time to their work? For others, it might be walkability or perhaps are there restaurants, grocery stores, fitness centers in their particular area? A lot of these are tools that we offer on our website where people, when they're looking at a particular neighborhood, they can sort through that and see what schools are offered in that neighborhood, or they can filter to try to find neighborhoods that offer a specific school rating. Once you're on a neighborhood, you can also see what other amenities surround you, whether it be parks or dog parks or, you know, fitness centers and restaurants. These are all tools we offer on the site.

Okay, good. What else do you want people to know?

You know, I think again, what I mentioned before is that the neighborhood you live in is just as important, if not more important, than the home you live in. And so I think it's important that people spend more time trying to investigate and finding the right neighborhood, as opposed to just going to a real estate search site and plugging in, you know, price criteria and a number of bedrooms. That's going to show you the 20 or 50 homes that might meet your criteria in that particular zip code or that particular city. But what you really got to ask yourself is what is the neighborhood going to be like? You know, once you live there, how are you going to actually live there? You know, what do you do on a daily basis? You know, what happens when you walk outside of your house and you go walking down the street with your dog or you take your kids to the park? Who are you going to be surrounded with? Are you going to be safe? Are you going to be comfortable? Are you going to enjoy it? You know, that's a question that people really need to spend a lot more time trying to figure out as they decide which home they're going to live in is which neighborhood does that home reside in.

But how about investors speaking to investors and the way they would think of this?

Well, I think it's the same thing if you're looking to invest in a particular property. I mean, there's a lot of different criteria you're looking at, but obviously you got to keep in mind that people who are going to reside in that home are also looking for the same things. Even though there might just be renters, they are still looking for the same things. They want the right location, they want safety, they want amenities that surround it. It's very important for an investor to find the home in the right community as well, because obviously that's going to help them get a ren it out or if they, you know, look to flip it and sell it one day. Having a home in the right location, certainly very important. You know, paying attention to the neighborhood is a very important criteria for that.

Sure, sure. 55 plus communities. We've got the graying of America. Aging baby boomers, really aging millennials. Millennials aren't that young anymore either. Time is passing for everybody. Talk to us about the 55 plus communities and these age targeted communities and kind of what's going on in that marketplace and you know, what's behind the site and how it could be used.

I got my start with active adult communities back when I left College back in 2003, I actually worked for a Del Webb community in the Chicagoland area, Sun City community. And you know, after working there for about five years is where I got the idea for 55 places. And you know, the whole concept was that there was a lot of people who were looking for active adult communities or age targeted communities, but there wasn't a great online research to find and research to compare those different options. And so that's why, you know, I started 55 Place back in 2007, is to allow people a one stop shop to find and research and compare a community that would meet their needs and their lifestyle. And you've seen the popularity of active adult communities and age targeted communities has exploded in recent decades, especially as the baby boomer population has reached retirement age. And so more and more people are looking for their empty nesters. Their kids are moving out, they look around, they see a four or five bedroom house that's 30 or 40 years old that they've been maintaining and they think, you know, I want to focus on other things, I want to Enjoy life not having to make maintain this big home. And so they're looking for low maintenance homes. They're looking for communities that offer great amenities and lifestyle options. And in many cases that means an active adult community or an age targeted community is really going to be their best bet. And so the popularity of these has really exploded as of recently. It's really exciting to watch. I think one important statistic is that last year 38% of all buyers in the United States were people over the age of 55. And granted a vast majority of those are not buying in active adult communities, but a lot of those people are looking for things that you might find in an active adult community, like a ranch home, a low maintenance home, amenities and things like that.

How much of any investment activity have you seen in those communities where people are buying properties to rent?

I haven't seen a whole lot of it, you know, and that goes back to my experience when I worked at Del Webb as well as, you know, helping people on the website on 55places search for real estate. You know, a vast majority of the who are buying in those types of communities are going to occupy the home for at least half the year or more. You do find some people that are purchasing there to offer it as a rental. And that's one of the things we've seen too is a lot more active adults are looking to rent versus buy. And so I know that there is a demand for people who are looking to rent in active adult communities. One thing you got to be aware of is most active adult communities have an hoa and in many cases they will restrict perhaps the number of rentals or the time of rentals. You typically wouldn't find an active adult community where you could do a week or month long rental. There typically have restrictions of several months or more that any particular renter must be in that home. And so it's tough to turn them into a short term rental. But long term rental, there's a lot of opportunity.

Yeah, talk to us, you know, share anything you want to share about demographics, the economy, the real estate market, the outlook, just any thoughts you have sitting in your chair. Of course, I'm sure you think about that quite a bit.

Yeah, absolutely. I mean first off, as it looks as it relates to 55 places calm, there's just, we see an incredible opportunity. You know, every day I think the number is 10,000 baby boomers are hitting the age of 65. And you know, that's sort of the sweet spot of when they are either becoming empty nesters or retiring and they're looking around their existing home and saying, you know, this is great. It served me for the last 30 or however many years of life. You know, we raised our family here, but now I'm ready for something different. And so they're really looking to find that what is that next home and that next community. And that might mean that they're moving a few miles away and they want to stay in the same location because they've got family and grandkids there. Or they might be moving halfway across the country to Arizona or Florida or wherever because they want to have a more simple, low maintenance lifestyle and be surrounded by other people of similar lifestyle who are looking for amenities and activities to keep them busy. And so the outlook is phenomenal for 55 places.

Yeah, but I'm talking about in general. Yeah. Not just, not just the 55 plus.

Yeah. And then in general, I think it's the same thing. Real estate is very hot right now and some people wonder how long that will continue. But at the end of the day, even in the downturn, fewer homes were selling, but there were still a lot of homes selling. And so that doesn't change the fact that when people are purchasing homes, they still need to take into consideration where that home is going to be. And is it a good investment. I mean, even more so if the economy isn't as good as it currently is, is you got make sure you're buying into an area that's going to be a sound investment. And so, you know, for us we see it as a great opportunity that as more people go online and do more research before making this huge purchase decision, you know, neighborhoods.com is just one more tool in their tool belt to ensure that they are buying into a good community and a good neighborhood that will be a good long term investment.

Good. Well, you've given out the websites many times here on the show, so I think people caught that. Let's just wrap it up with any closing thoughts you want to share about anything. You know, either the outlook for the economy, the demographic shifts. You know, I've been talking about the demographic shifts for the last 15 years, about how, you know, people just reaching retirement age, moving usually to the south and southeast to the better climates, nice lifestyle, low cost of living. And that trend has certainly occurred. It continues, no question about it. But any thoughts you want to wrap up with on things like that?

Yeah, I think you touched on it a little bit there with a lot of the people who are moving down south to Florida, Arizona or even the Carolinas, you know, we're seeing a huge shift in the population of especially baby boomers who are now reaching this retirement age. They're becoming empty nesters and they are looking to make a change in their life. And I think that, you know, builders or investors who are catering to that need are going to see a lot of success in the coming years. Whether that's building of active adult communities or even smaller age targeted communities that have some type of a low maintenance home, some type of amenities, even if it's something as simple as a small clubhouse or a pool or bocce ball courts, and most importantly, some type of a small lifestyle component, whether that might just be planned clubs and events like card club or, you know, weekly trips to a city center to partake in cultural activities. I think people who are catering to that demographic will see huge success in the coming years.

They certainly have the money and they don't have the college student loans loan debt problem, but many of those people have guaranteed those loans for the millennial kids. So it sort of affects both sides of the equation. Well, hey Bill, good having you on and thanks again.

Yes, thanks for having me, Jason.

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