Abilene Data Center is canceled.... Or is it?

Hello and welcome to another episode of Multifamily Strategy Live. Today I'm talking about Abilene. Why am I talking about Abilene? Well, because Abilene has been all over the news lately, and a bunch of my investors have been asking me what's going on with the data center. Is it happening? Is it not? What does this mean for us as investors? And I'm going to share what this looks like and how this relates to other markets when you have similar situations. Also, I just realized as we're filming, uh, my light on the right side died. So you guys have this nice dramatic lighting with half of my face. Welcome to Multifamily Strategy. Now, guys, uh, Abilene, so this news article came out, it was about 4 days ago, came out saying, hey, the data center project is dead. There's been arguments between Oracle and OpenAI. They're going to go ahead and move to other markets. That's not exactly true. And Oracle actually got pretty pissed with Bloomberg for publishing that. So here's what's actually happening. The Stargate project in Abilene is still going to go through. In fact, they've already completed 2 of the 6 first buildings for the main campus. What is in question is it looks like they are likely— it's not official official, but they're likely not going to do a planned potential expansion. We're still getting the data center that we originally expected and that we made all of our investing decisions around. But here's the beautiful thing. If you are investing in a market based on speculative development, you are an idiot. Someone can clip that. That is a, that is just a fact. Uh, do not make speculative bets. Every deal that I purchased worked because it works day one and the future value is fantastic. Abilene is way underhoused. Uh, they actually just announced a state of emergency for housing. There are about 500 new housing starts and every year thousands of new jobs and thousands of new people moving into the market. Is becoming increasingly unaffordable, which is why I invest in affordable housing in Abilene. Now, if you want to like a secret play in Abilene, Texas, or the surrounding markets— RV parks. It's only because there's a ton of these, uh, workers for the next 3 years. Um, short-term or midterm rentals, so like furnished rentals and RV parks. There's going to be thousands of construction workers cycling in and out on midterm or year-long, sometimes multi-year leases. Uh, but RV parks for some of these builders, furnished renters, uh, rentals for some of these builders are going to be a massive play. Uh, the way I am playing the game is light tech properties. So we have rent-capped properties as everyone's kind of pushed out in the area, uh, just organically gentrifies because of the supply-demand curve. Uh, we have some rent-locked properties where we bought at prices where they cash flow day one. So we're going to cash flow, uh, we'll get all the added value and appreciation. But what happens in those rent-capped properties over time? The jobs in here, these construction jobs, are above the median income. So with all these jobs being reported in there, it will increase area median income, which increases our rent caps over time. And the permanent jobs, while there's not that many in data centers, is going to add hundreds and hundreds of jobs in the $150,000 to $300,000 range per year. So as we start taking these on, uh, it's going to be really, really good. But when you're making these decisions, if it was only the data center for why we invested, you know, on the same street as the data center. If that was the only reason we invest in the area, that would be a stupid thing. I would never— I'd be so pissed if I was one of my investors, be like, we put all of our eggs in the data center basket. It is a cool thing that happens to be happening next to us that is driving the market, that already had tons of moving in, tons of expansion to their power grid. They're having military base expansion, and with everything going on in the world, having a giant Air Force base that's responsible for some of our bombers Not a terrible time to be invested in a market that has that. We have 3 colleges that are going up in value and are sorry, up in enrollment, which is increasing the value of the market. But you basically just have a ton of people and a ton of jobs and income expansion in a market that is really struggling to build enough housing. So what actually happened with all the drama though? They just cannot expand the power grid fast enough for what OpenAI and Oracle want. To do. So they're looking at markets like Phoenix, Arizona. They are looking in other areas around DFW, especially north of Fort Worth, which conveniently is like right where I live. Um, but they're looking at areas potentially— I've been doing some research into this. I haven't posted any articles on this, so this is kind of insider knowledge, but they're looking potentially Wichita Falls area, north Fort Worth, maybe just a little bit north of Denton, Texas. Are areas that are being considered for the project. It is by no need, by no means a done deal, but there'll be a phase 2 and 3 and 4 expansion of this. AI is not going anywhere and it's going to expand all over the country, and our technology around these data centers is rapidly expanding as well. So what I love about the Abilene campus is they're experimenting with modular nuclear, and nuclear used to have a stigma around it for ever, but they have these thorium reactors. And if you're a dork like me, this is super exciting and I would invest in any area that is doing this. The thorium reactors, it's super renewable energy, it's super clean energy, it's super inexpensive energy. In fact, it is the— to our current standards, it is the cheapest, cleanest power that we can develop now because of the stigma around nuclear. We tried a bunch of dumb ideas in this country like solar powers, which are solar panels, are horrible for the environment, but we got a whole bunch of tax credits incentivizing people to put these on your buildings. Uh, when those like need to be retired, we don't really have a plan for where they go. That's actually gonna be a disaster. Uh, windmills, terrible for the environment, not that efficient, and they just take up a ton of land, and they're hideous. If you ever drive through these like windmill fields, uh, they look terrible, they ruin the environment, they're horrible for a whole bunch of different reasons. These reactors are compact. We have no lack of thorium. I mean, this, this type of technology is the type of stuff that can power humanity for like the next 10,000 years. And it's going on in Abilene, Texas, and it's getting installed in this project, active use. Super, super, super cool. So overall, a lot of the news and the press that we're getting on it is not alarming. It actually doesn't change as much as one would think, but it is some cool expansion that Abilene likely will not be getting, at least not in the near future. As a fun bonus, Meta and Nvidia have both expressed interest in picking up the project for building additional data center if it does in fact fall through, which it probably will for the phase 2. But other builders are looking to step in. But really, that's what they're looking for. They're just looking for consistent power. So what this does for a city like Abilene or any city that has this AI development with the data centers, they do have a big power draw. You usually see massive upgrades to the power grid, connectivity, tech, median income. All of these things do get pushed up. While you don't get a lot of jobs per building, you have huge building footprints. When you do massive, you know, multi-million square foot campuses, it takes some real estate techs and some computer techs and some, in this case, nuclear engineers to run these projects. So you're going to see some high-paid jobs and the construction of these brings in a lot of humans and a lot of revenue. So Great news for the tax base of Abilene. You'll see a lot of upgrades through there. Still see a bunch of people moving in. And if you've never gone, towns like that are a cool place to be. So that is my, that is my take on Abilene. And that's the truth of the news of everything that's going on over there. It's been a lot of drama. But about 24 hours ago, Oracle came out and was like, guys, this is, this is not accurate reporting. They cleared up a lot of stuff that Bloomberg was saying about the project being canceled. Misleading. Overall, we're getting everything we expected, just may not see some of the potential future pipeline go through Abilene. They might spread it out over the country, which is perfectly fine. So instead of doubling in population, Abilene may only be looking at, you know, maybe a 50% increase to their 180,000-person population over the next several years, which is still absolutely insane. And we have no way to house these people. So Uh, if you're a builder, look at Abilene, Texas. If you are, uh, interested in RV parks or you have the land for it, Abilene, Texas. Furnished rentals, number one city in America on Furnished Finder. So if you're a midterm rental person looking at how some of these workforce things— and this is going to go through 2029— clean up, absolutely, you would just clean up in rents if you added some of those. And I can't, I can't compete with you because I am on LIHTC. I have income restrictions. That is not a valid use case for either of my properties there. So I'm looking to buy more properties there specifically to take advantage of some of these other niches in Abilene, but take advantage of it. That's happening in those next 3 years. Now, if anyone has any questions, as always, you can always ask in the chat. We talk about real estate, we talk about business, we talk about hiring. This is a place where you can learn whatever you want in real estate or my experience in property management., for free. But if there are no questions, we always can go ahead and wrap because my goal today is to show, one, the investment mentality of like, hey, we invest in areas and we do make decisions off of good news and the investment pipeline, but it is not the deciding factor for buying real estate. It's really not. I am not buying a deal in Abilene, Texas because it's getting the largest data center in the United States or because of all the news. I'm looking at it holistically. It's a stable market with a huge housing need. It has increasing population, increasing job growth, and it has a development pipeline problem. Demand is going up, supply is stuck. At least it can't even kind of keep up with demand very publicly. It's also not getting the competitive investment that a Dallas is, or an Austin, or San Antonio, or Houston, which is currently the fastest growing market. In all of Texas, I believe possibly the country, though I need to check some of those Florida markets since New York's been doing New York things. One more piece of major news, uh, yesterday Washington passed its, uh, essentially another wealth tax. So more tax if you make over $150,000. We get all the details on this, um, but this— I left Washington before they passed this stuff for a reason. If you are a Washington state resident and you ever want to be rich, you can't afford to be a Washington State resident anymore. You have to either be a median income, like lower median income, or you need to go ahead and leave. Unfortunately, their cost of living requires high income. So if you and your spouse making $200,000 a year living in a, you know, 1,300 square foot 1955 house in the Seattle area, because that's about what that'll afford you, um, your government just gave you the middle finger. And said, hey, you know what, taking your money and we're gonna give it to more social programs. So have fun with that. Um, Florida and Texas are still going to keep getting a lot of people, a lot of people, and hopefully they leave those policies where they came from. But we will, we will see. Washington's, uh, not only, uh, copying a lot of what you see in California, I believe this— and someone can check me on this— but I believe this will make Washington State's the highest tax population in the United States. There's a lot of people who make over $150,000 there with a very high cost of living, whose cost of living just got a heck of a lot more expensive. For context, I left my 1,200-square-foot 1955 house in Renton, Washington, one city south of Seattle, almost a perfect one-to-one trade, $100,000 difference. To upgrade a single story in a not that great area of Renton to a 4,000-square-foot new build house that I custom built for myself here in one of the best areas in all of Dallas, Texas. I live in a phenomenal place with better weather. I pay way less taxes, uh, compared to Washington. I live in a mansion I don't think I'm the only person who has made money and built businesses in Washington State who are going to say, you know what, it's not worth it, I don't want to pay more tax, I'm out. Yes, GGs. Uh, that's my comment for today in the chat. So I don't have a whole lot, uh, I don't have a whole lot more on today's roster, but, uh, yeah, big change around the country, big changes in my portfolio being a Washington State and Texas investor, especially Abilene being the, uh becoming a cornerstone of my portfolio. Stephenville and Abilene are the two main markets that I'm in. Uh, big, big, big news for me and my investors, but fortunately, uh, no financial decisions that will negatively impact any of the projects that I have going on right now. Uh, but feeling grateful I don't live in Washington State anymore. Sorry for all those who still do. Uh, great news, we have a lot of land and a lot of room in Texas. You're welcome down, and, uh, very likely my companies have positions for you because we are also expanding down here very, very quickly. Uh, if you have questions on how to play this game, how to expand, choose your markets, uh, always feel free to ask questions. You can join our free school community on SKOOL School Multifamily Strategy Community. We just updated the calculator there as well, so you get a new, new calculator community, and we're rolling out a CRM on there where you can actually track your owner calls, your broker calls. All of this is completely free. As you know on this channel, I believe real estate information should be free. In fact, the only place you can spend money with me, if you so choose, is our mentorship group, which is fantastic. And if you want my time as a coach, you want me specifically looking at your deals, helping you streamline the process, reach out to the team. We're very selective on who we work with, but if it's a good fit for you, I want to make sure everyone in that program Buys real estate and buys it faster and smarter than they otherwise would have. Otherwise, if you're here to learn, that community is free. I'll never ask for any money from you ever. Calculators, community, deal flow, capital raising, bespoke CRM. Get a free login, check it out. But that's all on SKOOL. And as always, I'm going to be running a webinar here at the top of the hour on how to buy real estate with or without money. So regardless of who you are watching this, Check that out, multifamilystrategy.com/workshop. I am a national immigrant. This is actually a good point. We try not to get political on this channel, but you know what? I've already kind of ended the thing. So welcome to Multifamily Strategy Live After Dark. Yes, I am a— honestly, I'm a political refugee in Texas. My primary reason for leaving Washington State was one— I'm not kidding, this is a thing that happened. So in Renton School District during 2019, 2020, 2021, my wife's school she's a teacher at decided to start breaking the teachers into groups by color and telling the white teachers 'You need to— you guys need to write down every week all of your apologies to all of the teachers who don't look like you for all of your microaggressions.' And even worse, I would feel terrible in the other camp if you were a person of color in that district and you were on staff. You had to come up with all— you had to make up things in which you were a victim of microaggressions and then you had to submit that to your less melanated coworkers. That was around the time I decided this is not the state for me. I don't care how you vote. That's racist. So we said no, no to that. And then they started taxing the daylights out of everyone who wanted to make any money for their family ever. So for those reasons, yes, I am a political refugee in the United States. I came to Texas specifically because bad policy is bad policy and racism is unfortunately racism. So those are my two reasons for leaving. I was like, well, can't raise kids in this because that is, uh, that's, that's weird and horrible. So, uh, then, oh, by the way, the year my wife left teaching, uh, they introduced a new policy for, uh, there were— I'm not kidding, this is in Washington state— they had, uh, Black classes, Asian classes, and white classes because of the theory that kids learn better from teachers and the students who look like them. Yeah, so I guess we're going back to the 1950s in Washington. Uh, as for myself, Texas and homeschooling my kiddos. Sorry to get political on you guys, but, um, it's Washington politics. I'm not talking about anyone else's politics anywhere else. I'm just saying like King County, Washington problems specifically. So if that's too political for you, uh, you may, uh, you may need to find a new channel because that's, that's I think that's a pretty safe political stance of like, we shouldn't segregate by color and we shouldn't tax every single person who employs people until they can't make any money or pay people. That just seems like good policy. From Brian here, what type of rental management software do you recommend for a small landlord, 10 to 20 doors? I would recommend Bildium. I really like it. Their support is fantastic. I really, really, really like them. I'll actually— I'm gonna start doing this. I've used them before several times. I'll add a link on my channel. If you're starting, you should use Bildium, and it's a great stepping stone to graduate to Appfolio later. Appfolio— and oh my gosh, do I wish they had like an affiliate program because I pitch these guys all the time. They do not, unfortunately. Um, premium, premium software. Every automation you want— investor distributions, accounting, anything that you can think of. Uh, very innovative software. Also definitely not the cheapest, and they only work with owners who have 50 or more units. So, uh, in my opinion, on the way up, Buildium all the way. Great stepping stone to when you have over 50 units in your portfolio. Migrate to AppFolio, have the best of the best, and, and build the business from there. Uh, but I, I think if you're new, there's so many features in AppFolio you're never gonna use anyway. You're gonna be overpaying if you have less than 50 units. So I think they do their, uh, I think they do their clients a courtesy by saying like, hey, build the 50 doors, then join AppFolio. And so I'll give the same advice, building them into AppFolio. I've looked at a lot of software. I've worked with a lot of software. I have mentees who use a lot of software. Very confident in my advice there. I'll start adding a Buildium link to the, uh, the bottom here though, because they have, uh, they give a very, very, very slight discount, uh, to people if I, if I recommend them. I just haven't got around to building that link out, but you asked the question, so it will be there. All right, and that's the questions. You guys got me to get a little bit political online, so hopefully I don't lose too many, uh, too many Instagram and, uh, YouTube points for having opinions, uh, on anything ever, because apparently we're not allowed to do that anymore. So, um, other than that, you guys, thank you for joining today. I'll see you guys next week. We go live the same time every single week. If you're looking for the webinar on how to get into real estate no to low money down, we're sharing strategies with real-world examples on the upcoming webinar, top of the hour. I'll see you guys there, and I'll see you on next week's episode.