Dave Strachan, Elite Realty
Strachan, an Eagle Scout, graduated from Claremont McKenna College with a dual major in Government and History in 1998. Upon graduation, Strachan was commissioned as an Army Medical Service Corps officer, and served as a Medical Platoon Leader and Hospital CIO. In 2003, Strachan volunteered for, and was deployed to Kuwait in direct support of Operation Iraqi Freedom, where he assisted in the creation of the medical communications network for the entire Iraqi theatre. Shortly after that deployment, Strachan was granted a very rare branch transfer to the Armor branch, where he served as an Assistant Operations Officer in an Armored Cavalry Squadron. In 2004, he completed his military service and went on to become a real estate broker in Barstow, Calif. Strachan now lives with his wife, Megan, and their four children in Barstow, where they are active members of First Baptist Church.
NuWire: What is it in particular about the Barstow market...that you think should be exciting for investors across the U.S.?
Strachan: I think there's a tremendous amount of opportunity.
Barstow, just like the rest of California and the California high desert, has experienced just an unprecedented amount of investor interest and growth in the last few years. The thing about Barstow is that it's located strategically right at the crossroads of the I-15...Interstate 40, Highway 58 and the rail hub that's located here is I think the biggest this side of the Mississippi, so there's a lot of people that come through here, and...there's a lot of interest that that's brought to the area.
Barstow right now is currently in the process of trying to secure a dual Indian gaming casino/resort out in the Lenwood outlet center area. Barstow was also recently designated as a California Enterprise Zone, which provides a lot of tax incentives to companies and businesses that locate out here. Home Depot recently opened their doors here to take direct advantage of the Enterprise Zone. And Wal-Mart has also announced that they're planning on building an 8,000 square foot distribution center that'll service the super Wal-Marts in the region, and they're planning on doing that out in the Lenwood area as well. Hopefully, I think through the proper marketing and utilization of the California Enterprise Zone, what it'll do in the long run is attract more companies...and better paying jobs to this area....If the jobs are here, the rooftops will follow.
Another major development that's going on in the area is the SunCal Companies' Waterman Junction development; they're planning a 20,000 to 25,000 home master planned community right along the I-15....There's a number of other pending and proposed developments in the area as well, whether they be residential or commercial. There's a number of things that are happening in the area that bode well for the future.
NuWire: How has the Barstow market changed over the last few years, and how do you see it changing over the next five years and beyond, particularly in real estate?
Strachan: I think the biggest thing is the interest level has really...risen dramatically, with the interest that's been brought by those developments that I mentioned, and...those things going on, there's really been a rise in the property value and...developers that are willing to take a second look at Barstow and I think that they're coming to really like what they see....I think that they see that Barstow is positioned well for a tremendous amount of growth, that there's a lot of potential here, and...I think they see that there's an opportunity here...to get land, commercial or residential at really bargain prices when compared to the rest of California, southern California in particular....The slowdown has affected the nation and it's certainly been felt here in Barstow but because we didn't rise as dramatically as some of the other areas such as...San Diego or L.A. or Orange County, the correction has been less dramatic here.
NuWire: Which areas...within the city are currently experiencing the greatest amount of growth, and why?
Strachan: I think anybody would have to state that it's probably the south central area of Barstow and the southwest portion of Barstow. Most of the developments that I've mentioned are in those areas, and I think the biggest factor in it is the simple geography of it. That's where the most land is, and that's where...Barstow really has the room to grow. Barstow was built along the banks of the Mojave River, and so trying to expand to the north would be much more difficult than...to the south and to the southwest. The southwest is where...the Lenwood outlet center is and many of the developments that I talked about are at. I see a lot of potential out there, and some of the residential developments...are also in the south central area. There's a lot of higher-end residential development going on there right now and a lot proposed for the future as well.
NuWire: Which areas of Barstow represent the best opportunity for investors who are interested exclusively in maximizing their cash flow?
Strachan: As far as cash flow opportunities...there's a number of commercial and multi-unit residential opportunities that come to mind. The area around the Tanger outlet center, which is positioned very strategically...at the corner of Lenwood Road and I-15, that's experiencing a lot of expansion right now, and there's a lot of businesses that are locating in that area. Hampton Inn Suites, and Holiday Inn Express just recently opened some hotels in the area....There's a lot of commercial...whether it be buildings or land opportunities available in that area...and having the freeway visibility to over 60 million drivers per year certainly helps...any commercial endeavor in those areas. Main Street itself has a lot of commercial opportunities and the added bonus there is that you would be able to take advantage of the California Enterprise Zone designation and...the tax and financial incentives that come with that.
NuWire: Which areas would be best specifically for someone who is interested in focusing on their long-term appreciation?
Strachan: I really love the opportunities that south central and the southwest areas provide. Like I said, there's a lot of pending and proposed developments in those areas that really bode well for the future if investors are willing to get in now.
If you can find the right piece of land with the right zoning in a good location for a decent price, I think you can do very well. And I see a lot of those opportunities out there currently, and I think the next few years are going to provide even more...opportunities as far as prices and chances for growth, expansion and progress.
NuWire: What about people who are interested in coming in and doing rehabs and flips on single family homes; what areas would you say are best for those?
Strachan: I think it's just a very tough market in general for that type of thing....Barstow has certainly experienced a slowdown. While it's not as dramatic as other areas, it's a tough time to try and buy a house to flip. I would caution people against that, and it's certainly not something that I would be doing in this market, but if you...come across a deal that can't be passed up that's going to allow you the flexibility to...maintain low carrying costs and be able to weather the slowdown until future development, I think you would be better off, but...I would probably not choose that investment strategy for myself at this time.
NuWire: I have...a question for you about the California Free Enterprise Zone. I'm wondering specifically if you can talk a bit about it and why it perhaps helps Barstow and the areas around Barstow and the businesses.
Strachan: It's a designation that the state gives to certain areas. Traditionally, they're impoverished areas or lower income type demographic areas....Barstow...certainly falls into that category, and so what it does is try to encourage...companies and businesses to invest in those areas and to bring their businesses to those locations, to try and...create better jobs and...raise the income levels of the demographic there. It’s a 15-year designation. It was started in, I believe it was September of 2005. Like I said, Wal-Mart and Home Depot have already taken advantage of it and there are a number of other companies that are said to be interested in taking advantage of it as well. I think it's a tremendous opportunity that Barstow could really capitalize on, if it's marketed correctly and if it's done in a way where businesses see all of the benefits that are going to be provided to them, I think it can be a tremendous tool for marketing Barstow and for bringing higher paying jobs to the area.
NuWire: Which [investment strategy] would you say within the market in Barstow is the most successful?
Strachan: Up until the beginning of the year there were many flipping and rehab opportunities that investors did very well on. There were many landowners who...had bought in a long time ago and had experienced very little appreciation who during the boom were able to sell when the market was up. There were plenty of smaller developers who...built houses...two or three, five or 10, something like that. And they really raised the overall quality of the housing that was available in Barstow. When you look at Barstow, it was a pretty old town...that had a lot of...functionally obsolescent type houses...900, 1,000 square foot...two-bedroom, one-bath things that not many people are looking for these days. So what these developers were able to do and what the developers in the future are going to be able to do is bring in the...the more modern type home—larger square footage and...more rooms and bathrooms.
NuWire: Are there any common mistakes you've seen made in the market in Barstow?
Strachan: I think as in any...bullish market there were certainly investors that probably got ahead of themselves and likely overpaid for properties that probably could have been had at lower cost, whether it be houses or land. I think there were people that kind of got into the frenzy and in my estimation they might have overextended themselves. In Barstow, since the boom was less dramatically felt, it's to a lesser extent that the correction is felt, but I think it happened nonetheless. I think there were some people that probably paid too much for what may be realized in the future, but as far as current or past market value I think they probably overextended themselves.
NuWire: Do you invest in real estate personally?
Strachan: Yes, I do. It's a large part of my family's business, and having been raised in the land business, I'm certainly biased towards land, but...I think that Barstow itself provides many opportunities for...people that are willing to invest, whether it be in residential, commercial or vacant land....And I think even more so in the next few years here, there's going to be a number of opportunities as these proposed developments come to fruition. I think that there's going to be a number of opportunities for people to do very well in this market. We're currently invested around the Barstow area and in the Barstow area, and I've mentioned some of the areas where I think that investors can do quite well.
NuWire: Do you think that there's enough of a water source there or at least close to there to sustain the kind of development that's happening there right now?
Strachan: That's a question that has come up, and actually there was a story about it in the Victor Valley Daily Press....People are concerned that because of the unprecedented level of growth that the water isn't going to be able to sustain the number of people that are coming to this area, and it seemed to me that the gist of that story was that those concerns were really unfounded. It's certainly a concern that anybody...in just layman terms, [you] would think as you come out to the desert, "Is there enough water to sustain everybody?" Barstow is strategically positioned...right adjacent to the Mojave River, which provides a huge underground water source, and I don't perceive that as a problem, but I'm sure it's something that...especially the major residential developers that are coming in, I'm sure it's an issue that they're going to be faced with. When I spoke with the SunCal Companies, [which] is planning the Waterman Junction master planned community, they had stated it was a concern that came up to them and they had inquired with the various water boards in the area and it became apparent to them that there is a lot of growth that could be sustained in the area as far as water goes.
NuWire: Are there any other trends...within Barstow that you think investors out of the area should be aware of?
Strachan: The Barstow market has softened, and...that's happened across the country. I think what that does offer though...these soft patches, they offer real opportunities for bargains and even more so I believe in the coming years. If the trend continues the way that I believe it will and the way that historical data has shown, I believe the next two to three years will provide a myriad of bargain opportunities to investors in Barstow. I think that cash is going to be king, and I think for those people that are well positioned in that regard, there's going to be a number of opportunities to do very well, in the short term and the long term.
NuWire: Which areas do you think have the most future opportunity for investors within the market in Barstow?
Strachan: I don't think it gets much better than the southwest area, the area I've mentioned around the Lenwood outlet centers and that whole Lenwood area in general. And then south central. When you look at where the newer developments are coming in, that's where they're going, and I believe that's where the future of Barstow lies.
When you talk about what the population of Barstow is right now, it's anywhere from 25,000 to 35,000. When you bring in 20,000 to 25,000 new homes, you're talking about an influx of anywhere from 50,000 to 100,000 more people, so what you're looking at I think is that new development that SunCal is proposing and many of the developments that are attached to that, I think that will essentially become new Barstow because these are the areas where Barstow actually has to expand. It's going to be tough to do it any other direction. So I believe that if you can get...the right properties with the right zoning in the right location for the right price, I think that your future prospects would look very good.
NuWire: Do you have anything you want to add...that we haven't talked about?
Strachan: One thing that I want to mention, and it's one thing that's affecting the way that investors and companies are viewing the high desert and it's certainly affecting Barstow, is what's going on over in Victorville at the Southern California Logistics Airport. What they did is they took what was the shut down George Airforce Base, they privatized it and they're turning it into an intermodal facility that's going to be attached to the Santa Fe rail line and it's going to try and take a lot of the cargo that's coming into L.A. and...ease their...overuse, and bring the jobs associated...with that cargo to this area.
Depending upon what reports you look at...the jobs directly associated with that development, a number from anywhere from 10,000 to 15,000, and then the ancillary jobs that are attached to the developments there number in the tens of thousands. So that is something that's really revolutionizing the way that people view...the whole high desert in general but especially the areas that are close to the logistics airport. And so that's something that Barstow is going to benefit from and I think that a lot of the residential developers that are looking at building here have to be taking that into account, at least partially because...like I said, with jobs the rooftops are going to follow. So it's in anticipation of that that I think a lot of the people are locating here in Barstow because it's just 20 minutes away from Victorville.
