Things we've learned that are worth knowing.

The 15-year lease that wasn't: what 250 Starbucks closures should teach 1031 buyers

Somewhere between selling an apartment complex or a family ranch and the IRS's 45-day identification deadline, thousands of Texas investors make the same phone call every year. Find me a single-tenant net lease with corporate credit. I just want to collect the coupon.

The target is almost always a freestanding Starbucks with a drive-thru. The offering memorandum is glossy. Investment-grade credit. Ten to fifteen years of primary term. Few landlord obligations. Buyers pay aggressive cap rates for that perceived safety.

Then corporate strategy changes.

In September, Starbucks announced it would close roughly 250 North American locations — about 1% of its 18,000-store fleet, and the second such round in two years. The company disclosed approximately $300 million in restructuring charges, of which about $200 million is cash, going primarily to lease exits and employee separation.

Read that again. A corporate tenant told its shareholders, in a regulatory filing, what it has budgeted to stop paying landlords.

The term remaining is the part nobody expected. The CRE data platform DealGround ran the September closure list against its own database of offering memoranda. They found 51 single-tenant Starbucks properties they'd previously captured, 50 with enough detail to determine remaining lease term.

Forty-eight of those 50 — 96% — had more than five years left. Nine had more than ten. The outliers are the part worth sitting with. Kearny Mesa in San Diego: roughly 17 years remaining. Tallahassee: 16.6. St. Louis: 14.1. Darlington, South Carolina: 14. San Bernardino: 13.8.

These are not tired inline locations aging out of their terms. Several are recent drive-thru builds from 2024 and 2025, sold to private investors on fresh long-term leases.

One methodological note that makes this more relevant, not less: the sample only includes properties where DealGround already had an offering memorandum — meaning properties that were marketed and sold as net-lease investments. It is not a random slice of 250 closures. It is a slice of exactly the deals that end up in private investors' hands. Possibly yours.

Term is not exposure. The fatal assumption is that lease term equals guaranteed income. Twelve years left on a $140,000 rent means the tenant owes you $1.68 million. It usually doesn't.

Corporate tenants don't sign the lease you'd sign. Their legal teams negotiate custom forms with exit ramps — termination options, go-dark rights, and damages provisions capping what a landlord can actually collect.

DealGround's Alex Esber pulled the leases on two stores in this closure round. One limits Starbucks' exposure for lost base rent and additional rent to two years. The other, to four. Two documents is an anecdote, not a dataset. But set an anecdote like that against stores closing with fourteen and seventeen years remaining, and the question answers itself: what does my lease actually say?

If corporate decides the operating losses exceed the capped payout, they write the check, hand you the keys, and leave. The cap rate you underwrote becomes a zero-income asset with taxes, insurance, and debt service still due on the first.

The asymmetry is the point. Starbucks is managing 250 closures as a portfolio. Real estate committees, financial models, attorneys running simultaneous negotiations. They know what's in their other leases. They know what settlements other landlords have accepted. You are one investor with one property. You don't know what they offered the owner two states over. You may have a loan maturing in three years and a market you don't live in. They know that asymmetry exists. It is priced into what they offer you.

You never buy the lease. You buy the dirt. Corporate credit is a shock absorber, not an insurance policy. When we work with clients placing 1031 proceeds, the first rule is to underwrite the property as though the tenant goes dark tomorrow.

What is the dark residual value? If the tenant leaves, can another drive-thru user take the shell without six figures of re-permitting and tenant improvements? Some pads convert easily. Some don't.

What is replacement rent? Credit tenants often pay above market to secure a flagship corner. If your lease sits well above what a vacant pad commands locally, you didn't buy a strong property with a great tenant. You bought an average property with a rent subsidy that has an expiration date.

What does the default clause actually say? Acceleration rights, or capped exposure? Continuous-operation covenant, or can they go dark and pay while they wait you out?

If a broker's analysis begins and ends with the credit rating and the years on the flyer, they are not underwriting real estate. They are selling paper. When the music stops, paper doesn't pay the note. The dirt does.

If you're working against a 45-day clock, the identification window is where most exchanges fail — and a rushed net-lease purchase is one of the more expensive ways to fail it.

General observations from our commercial transaction experience. Not investment, tax, or legal advice, and not a recommendation regarding any property, tenant, or security. Lease terms vary materially by document — no general description substitutes for reading the actual lease with qualified counsel. Consult your CPA and a real estate attorney before placing exchange proceeds.

Harris County's flood maps just got redrawn. The Woodlands is still on maps from 2014.

In February, FEMA released draft flood maps for Harris County — the first countywide update since 2007. They carry no regulatory weight yet. Effective maps are estimated for 2028 or 2029. But they are public, they are address-searchable, and they are the clearest picture anyone has had in almost twenty years of where water actually goes.

The maps governing The Woodlands date to August 2014. That matters for a specific reason: NOAA did not update its Texas rainfall statistics until 2018, and Harvey was 2017. The Woodlands is operating on maps drawn before the rainfall math changed and before the storm that changed it.

The updated rainfall data — Atlas 14 — put the 100-year, 24-hour rainfall figure roughly a third higher than the numbers the older maps were built on. Harris County's preliminary guidance suggests floodplains expand somewhere between 50 and 100 percent under the new modeling. The modeling itself is also better: instead of treating channels in isolation, it simulates how water actually moves across flat ground, which is what flat ground does.

The number worth holding onto: roughly 70 percent of homes that flooded during Harvey were outside the mapped high-risk zone. The maps were not wrong about the zone. They were silent about everything else.

It is not all expansion. Some parts of Harris County come out of the floodplain in the draft maps, the result of channel widening and detention basins built over the last two decades. That work moved real risk. The maps are finally catching up to it in both directions.

If you are buying in Harris County: the draft maps are public and you can search an address. A property sitting in Zone X today may sit inside an expanded floodplain on the draft. That does not change anything at closing, but it may change your insurance while you own the home. Price it, and call an insurance agent before your option period ends — not after.

If you are buying in Montgomery County: there is no draft map to check. You have a 2014 map and reasonable inference. Ask about street-level flooding history. Ask the neighbors, who will tell you things a disclosure will not. Get an elevation certificate.

If you already own: flood risk and flood zone were never the same thing. Roughly 82 percent of Harris County housing carries no flood insurance, and nationally about one in three federal flood insurance claims comes from outside a high-risk zone. Those two facts sit badly together.

We will update this once Montgomery County releases its own timeline.

Draft flood maps are preliminary and carry no regulatory effect until adopted. These are general observations from our transaction experience, not insurance, legal, or engineering advice. Verify flood zone status and insurance implications directly with FEMA, your county, and a licensed insurance agent for your specific property.

Who is holding your closing documents between contract and close?

Somewhere between contract and close, an email arrives. Create an account on a platform you have never heard of. Upload your driver's license. Confirm wire instructions. Sign something. You did not choose this vendor. The title company did. You cannot opt out and still close.

Some of these platforms are genuinely excellent. A few are built specifically to stop wire fraud and do it well. But the economics are worth understanding: the vendor's customer is the title company, not you. You are the data passing through.

I run a security consulting practice alongside this one, which is the only reason I know to ask these four questions. Does the vendor publish a trust page? Do they hold a SOC 2 — Type I or Type II — and will they show the report? What happens to your documents after closing: what is the retention period, and is there deletion? Who do you call at two in the morning if something goes wrong — is there a named incident response contact?

A SOC 2 report is a floor, not a ceiling. It says a firm was audited against controls it selected. It does not say those controls are the right ones for holding a stranger's driver's license and bank details.

One rule overrides everything above. No legitimate party ever sends or changes wire instructions by email. If instructions arrive or change by email, stop. Call the title company at a number you looked up yourself — not one in the email. Confirm the account verbally, digit by digit. Then send.

The scale here is not theoretical. The FBI's Internet Crime Complaint Center recorded 21,489 business email compromise complaints in 2023, with adjusted losses over $2.9 billion. In a separate advisory, the FBI reported that from 2020 to 2022, victim reports of these scams with a real estate nexus rose 27 percent and victim losses rose 72 percent. Closing wire theft lives inside that category.

Most agents have never asked a title company any of these questions. I would include myself until a few years ago. If your agent cannot tell you who is holding your data and what their security posture is, that is not a gap in the vendor's disclosure. That is information about your agent.

General observations drawn from our real estate and security consulting experience. Not legal, financial, or cybersecurity advice. Vendor certifications and security postures change — verify them directly with the vendor and your title company.

The 1031 exchange clock is the whole game — and most people start it late

A 1031 exchange lets you defer capital gains tax when you sell an investment property and reinvest the proceeds into another one. That is the part everyone knows. The part that causes deals to fail is the timeline, and the timeline is unforgiving.

Two deadlines run simultaneously from the day your relinquished property closes. You have 45 days to formally identify replacement properties in writing, and 180 days to close on one of them. Those are calendar days, not business days. They do not pause for holidays, for a seller who goes quiet, or for a lender who needs another week. And the 45-day identification window is the one that actually kills exchanges — because most investors start looking for replacement property after their sale closes, which means they have already burned the easiest weeks of the search.

The other mechanical requirement people discover too late: you cannot touch the money. Proceeds have to go to a qualified intermediary before closing on the sale. If the funds hit your account, even briefly, the exchange is generally disqualified. The intermediary needs to be engaged before your sale closes, not after.

Experienced exchangers handle this by lining up replacement candidates before the relinquished property goes under contract. By the time the clock starts, they already know their primary target and their backups. The identification rules give you some flexibility — you can name three properties regardless of value, or more under certain value tests — but that flexibility is only useful if you have candidates worth naming.

The strategic question worth asking before any of this is whether an exchange is actually the right move. Deferral is not the same as forgiveness. The basis carries forward, and you are trading a tax bill today for a constrained search under a hard deadline. Sometimes paying the tax and buying the right asset on your own timeline is the better outcome. That calculation belongs to your CPA, not your broker. Our job is to make sure that when you do decide to exchange, the real estate side is ready before the clock starts.

Section 1031 exchange rules are governed by federal tax law and are subject to change. Requirements, deadlines, and eligibility depend on your specific circumstances. This reflects general observations from our transaction experience and is not tax or legal advice — consult a qualified tax advisor and a qualified intermediary before initiating an exchange.

Texas brings back business tax incentives — and this time with guardrails

Texas has re-introduced a meaningful tax incentive: the Texas Job and Investment Tax Credit (JETI) under Section 403. The program is designed to replace Section 313, which expired at the end of 2022, and has been revised to reduce the amount of tax previously abated, limit eligible projects, and add oversight into the abatement process.

For qualifying commercial projects, this is worth understanding before you're deep in your underwriting. The new program is narrower and more closely monitored than its predecessor, but the incentive structure — when you qualify — remains meaningful for site selection and development economics.

The lesson from Section 313's sunset: Texas will continue to compete aggressively for investment and jobs. The terms keep getting more specific. Know what you qualify for before you need to know.

Tax incentive programs are subject to legislative change. This reflects our understanding as of publication date. Consult a qualified tax advisor for guidance specific to your project and situation.

Your property tax assessment is not a fixed number. Here's what to do about it.

Texas has no state income tax, which sounds great until you see your property tax bill. What most owners don't realize is that the assessed value — the number your tax is calculated against — is protestable. Every year. And the process is more accessible than most people assume.

The appraisal district sets your assessed value annually. They use mass appraisal methodology, which is efficient but imprecise. Individual properties frequently get assessed above what comparable sales data would support. The protest process exists precisely to correct this — and it works.

The basics: you file a protest before the deadline (typically May 15 in Texas, though it varies by county), gather comparable sales data for similar properties in your neighborhood, and present your case either in writing or at an informal hearing. Most protests are resolved informally. A good set of comps is usually enough.

The homestead exemption is a separate tool — and if you haven't claimed it on your primary residence, that's the first thing to fix. It reduces your taxable value and caps annual assessment increases at 10%, which becomes increasingly valuable in appreciating markets.

Property tax protest processes, deadlines, and exemption rules vary by county and are subject to legislative change. This reflects our general understanding. Consult a qualified property tax advisor or your county appraisal district for guidance specific to your situation.

Your home is under contract and there's water in the street. Now what.

Houston buyers know this anxiety. A storm rolls through during the option period — or after it — and suddenly a straightforward transaction has a real question mark. The answers depend almost entirely on where you are in the contract timeline and what your specific agreement says.

If you're inside the option period, you're in the best position. You retain the right to terminate for any reason. A flooding event during this window gives you the opportunity to reassess — get an independent inspector to evaluate the property after the water recedes, understand whether the flooding was a fluke or a pattern, and make an informed decision. Documentation is critical: photograph everything.

If the option period has expired but you haven't closed, the picture is more complex. The Texas contract has provisions for damage occurring before closing, and your agent needs to be working those provisions actively — not waiting to see what the seller offers. The seller's disclosure history on flooding becomes newly material.

After closing, the property is yours. This is why flood disclosure review and independent inspection matter before you get there.

This reflects general observations about Texas real estate contract provisions and is not legal advice. Your specific contract terms control your rights and obligations. Consult a real estate attorney for guidance specific to your situation.

Bought or sold this year? A few tax items worth knowing before December 31.

Real estate transactions generate tax implications that most buyers and sellers don't think about until their accountant asks the right question in March. Getting ahead of this before year-end is worth the effort.

On the buying side: property taxes paid at or after closing, mortgage interest, and certain closing costs may be deductible. The deductibility of real estate taxes is subject to the $10,000 SALT cap established in 2017, which affects some Houston buyers more than others depending on their overall tax picture. Your HUD-1 or closing disclosure has the numbers your CPA needs.

On the selling side: if the property was your primary residence for at least two of the last five years, you may exclude up to $250,000 in capital gains ($500,000 for married couples) from taxable income. If the property was investment or rental, the tax picture is different — depreciation recapture is a real consideration that surprises people.

The documents to have ready: your closing disclosure from both purchase and sale, any records of capital improvements made during ownership (these increase your cost basis), and your original purchase records. Your CPA will ask for all of it.

Tax treatment of real estate transactions involves federal and state law that changes frequently. This reflects general awareness, not tax advice. Consult a qualified tax professional for guidance specific to your situation and tax year.

Pricing a home to sell is not the same as pricing it to feel good

There is a conversation that happens in almost every listing, and it goes something like this: the seller has a number in mind, the agent has a number based on data, and the gap between them is filled with hope. Hope is not a pricing strategy.

Overpricing a listing produces a predictable sequence of events. The home sits. Days on market accumulate. Buyers start asking what's wrong with it — because they assume something must be, otherwise it would have sold. The seller reduces the price, often in increments that feel like defeat rather than strategy. The final sale price is frequently lower than what a correct initial price would have generated, because the psychological damage of a stale listing is real and measurable.

The data on this is consistent across markets and cycles: homes priced correctly from day one — meaning at or slightly below market — generate more offers, sell faster, and net sellers more money than homes that chase the market down from an aspirational starting point.

Our job is to tell you what the market will actually bear, not what would make you feel best about listing. Sometimes those are the same number. When they're not, we tell you. That's the conversation worth having before you sign a listing agreement, not three weeks into a price reduction cycle.

Pricing analysis reflects our professional judgment based on available market data at the time of evaluation. Market conditions change. No outcome can be guaranteed.

What to fix before you list — and what not to spend money on

Sellers consistently overspend on the wrong things and underspend on the right ones. Here is what actually moves buyers.

Paint and cleaning move the needle more than almost anything else. Fresh neutral paint — not white, but warm neutral — makes a home read as cared for. Professional cleaning, including windows, is the single highest-return expenditure a seller can make. Buyers smell and feel neglect before they can articulate it.

Lighting matters more than sellers realize. Replace every burned-out bulb. Add lamps to dark corners. Open every blind and curtain for showings. A bright home reads as larger and more valuable.

Landscaping curb appeal is the first impression and shapes every subsequent impression. Mulch, trimmed hedges, and a power-washed driveway cost almost nothing relative to their impact.

What not to spend money on: full kitchen or bathroom renovations before listing. The ROI on a $40,000 kitchen remodel in a home you're selling is almost never $40,000. Buyers will remodel to their own taste anyway. Focus on clean, functional, and well-maintained — not new.

The underlying principle: you are staging for buyer psychology, not for your own taste. The goal is to help buyers project their life into the space. That means reducing visual noise, not adding personality.

Presentation recommendations reflect our professional experience and perspective. Return on investment varies by property, market conditions, and buyer pool.

How negotiations actually work — and where most agents leave money behind

Most people think negotiation happens when an offer is made and a counteroffer comes back. In real estate, the real negotiation happens in the 48 hours before that, and most agents miss it.

Understanding what the other side actually needs — not just what they're asking for — is the foundational skill. A seller asking for a quick close might be more motivated by certainty than price. A buyer at their ceiling on price might have flexibility on the option period or repairs. The surface terms and the underlying priorities are frequently different, and a skilled negotiator is mapping the gap between them.

On the listing side: the first offer is almost never the only offer if the home is priced correctly. How you respond to that first offer — speed, tone, the specific terms you counter — signals to the buyer's agent whether there is room to move and how hard to push. Responding slowly to a strong offer is one of the most common and costly mistakes sellers make.

On the buying side: emotional attachment to a specific property is the single biggest negotiating liability. Buyers who must have a house are buyers who pay too much for it. The discipline of being willing to walk away — even on a property you love — is the single most powerful thing you can bring to a negotiation.

Inspection negotiations are where sophisticated buyers and sellers most commonly make mistakes. Sellers who fight every repair request signal desperation. Buyers who demand a laundry list of cosmetic items signal inexperience. The goal is to address what is genuinely material and move on.

Negotiation outcomes depend on numerous factors including market conditions, specific property characteristics, and individual circumstances. Past experience does not guarantee future results.

What buyers consistently get wrong about the search process

Buyers who struggle — who make offers on homes they're not sure about, who back out at inspection, who experience buyer's remorse before closing — almost always got there the same way: they started looking for a house before they had clarity on what they actually needed.

The search process works best when it begins with a clear-eyed conversation about priorities, not a Zillow session. What are you genuinely unwilling to compromise on? Not what would be nice — what are the actual non-negotiables? That list is almost always shorter than buyers initially think, and much more useful.

Location and community often matter more than the specific house. A home in the right neighborhood that needs updating is usually a better long-term decision than a perfectly renovated home in a neighborhood that doesn't fit. Neighborhoods don't get renovated.

New construction and resale require different mental frameworks. New construction buyers are making decisions earlier in the process with less information — you're buying a plan and a promise, not a finished product. Resale buyers are evaluating something complete. The inspection process is different, the negotiation is different, and the emotional experience is different. Clarity about which mode you're in before you start saves time and mistakes.

The buyers who move most efficiently through this process are the ones who can say clearly: here is what I need, here is my price ceiling, here is my timeline, and here are the communities I've already decided are right for us. That clarity is our starting point, not our destination.

Market observations reflect our professional experience. Individual circumstances vary. Real estate decisions involve risk and should be made with appropriate professional guidance.