Monthly Archives: July 2008

July 31, 2008 · 7:54 am

Are You A Straw Buyer?

Are you a straw buyer? If you are you are helping to perpetuate loan fraud. Sure signs you may be a straw buyer;

You are approached to help someone else buy a house for investment purposes
You are told you’ll have to do nothing but take out the mortgage in your name
You will be paid several thousand dollars upon a successful closing
You will share in the backside rewards of appreciation once the house is sold

On the surface, none of the items listed above is illegal. In fact, all can be done individually or grouped together in very legal fashion. But many, many times it’s a wide-open door for you to be defrauded.

Listen, YOU have to do YOUR due diligence. No one can do it for you save a very TRUSTED and TESTED source. Most straw buyers have never seen the houses they helped to purchase. That should be a warning sign right there.

Read more about straw buyers here and here. Then check with legal counsel before you do anything similar. Again, this can all be done on the up and up. But usually, it seems, it’s not.

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Filed under Legal Issues, Misc. Real Estate

July 29, 2008 · 9:21 am

Kansas City Foreclosure Property And Your Real Estate Investments

Foreclosure property in Kansas City is still a hot topic. Though not boiling over as it was a couple years back. Still, not a week goes by that a stranger will call and ask about entering the foreclosure market. Or bank owned homes, whatever you want to call them.

Here are a few facts as I see them regarding Kansas City and the foreclosure boom;

Missouri has more foreclosures than Kansas
Kansas City, MO proper has a higher foreclosure rate than either the Missouri or Kansas suburbs
That said, Kansas City is WAY below the foreclosure hotbeds of Ohio, Michigan, California, Nevada and Florida (Click here to see heat map.)
Foreclosure properties are not nearly as profitable as the public thinks
Banks are not giving away homes

Is there money to be made buying bank foreclosures in Kansas City?
Yes. But you’ll need cash on hand. Both for the down payment and the necessary updates and repairs. I’ve never seen a bank foreclosed house that didn’t need at least carpet and paint. Most need significantly more repairs and/or rodent/flea controls.

A good model? Buy a foreclosure and rehab and then rent. A sure way to have a jump start on equity and to keep your overall costs low compared to a buyer going straight retail.

A better model? Buy a pre-foreclosure. Pre-foreclosures are homes that are steamrolling into foreclosure that have some equity in them that will allow you to “buy-out” the existing homeowner and do the necessary repairs and still make money. This also involves short sales. It’s a very complicated process. Well, more time consuming than complicated.

True Story
We put in an offer 63 days ago on a short sale house over in Kansas City, Missouri. 63 days. Consistent follow ups by the listing agent (and I’m sure he got tired of hearing from me) finally yielded a response yesterday. The response from the loan servicing company was that if we could close with cash on Thursday (that’s THIS Thursday…two days from today) they would accept our offer.

So let me get this straight. We have to wait and wait and wait and wait and wait and then jump on your request on a day’s notice? Well, yes. And of course the buyer is going to do it because he’s going to have equity city when the sale is completed. But what a hassle. And not a lot of buyers are set with cash ready to go…know what I mean.

The foreclosure market can be profitable. It can also be annoying. Scary at times, too. (Ever walk into a vacant home only to hear rustling noises and when you walk into a back bedroom you find an open window, the smell of a freshly smoked cigarette and fresh urine in the closet?)

So my advice is to think twice before delving into bank owned homes (aka REO – real estate owned) or HUD homes, as well. The foreclosure market can be profitable and exciting. But trust me, it’s not for everyone.

Still not scared? Then give me a call and I’ll help you through the process of buying foreclosed homes. But be forewarned. I don’t mess with $5,000 or $10,000 houses. Not my style. In neighborhoods I don’t feel safe, generally. And I don’t see the long term rewards in them. But still feel free to give me a call to discuss. Just dial 913.568.1579 to discuss buying Kansas City bank owned homes.

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Filed under HUD homes, Real Estate Investing

July 28, 2008 · 7:57 am

Tenants And Your Investment Property

Owning Kansas City investment property would be a lot more fun if it just weren’t for those darned tenants. Right?

Honestly, most of my problems with the investment property I own and/or manage (not looking to manage more…) comes from some of the questionable decisions made by tenants. But let me be clear here, I really don’t have too much trouble. I do tend to screen pretty heavily and I do treat them right.

But one thing I surely do is inspect the properties every 90 to 120 days. I go in and change their furnace filter and look around under the sinks for water leaks. I look at the bathroom walls to be sure the grout is still good and water isn’t leaking behind to the dry wall causing horrific problems for later down the road. I make sure the dog isn’t chewing though my carpet or walls.

Clothes all over the floor? I can live with that. Fist-sized holes in walls or doors tells me I have a tenant that cannot manage their anger and needs to be encouraged to leave as soon as the lease is up. Drug paraphanelia? Gone. That’s a lease violation that isn’t open to interpretation.

The point here is to go in and examine your properties three or four times during the course of a lease. Most tenants, your good ones, have no problem with this and in fact see the benefit to them. Anyone that doesn’t want me in is telling me they are not taking care of the property.

Just some thoughts to help you successfully own Kansas City investment property.

Worth Reading re: Real Estate Investing

Here are a couple of blogs to keep you busy over the weekend.

Principles Of Flight & Real Estate Investment — Gettin’ Off The Ground by Jeff Brown

Top 8 Worst Real Estate Deals On Record by Mortgage Calculator

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Filed under Worth Reading

July 25, 2008 · 8:23 am

Kansas Jayhawk Basketball Schedule 2008-2009

Many of you know my affinity for Jayhawk Basketball. The new schedule is out for the 2008-2009 season.

When you consider we only return 4 scholarship players and that only one of them (Collins) had real significant playing time this upcoming year could prove to be very challenging. Though Aldrich did prove his upside in the tourney against Hansbrough. He’ll have to step up big.

Either way, I’ll enjoy!

Oh. For you new readers who think I only like a winner, I’m going to the Kansas City Royals game tonight. Hopefully they still sell beer.

First Time Home Buyers In Kansas City

Attention first time home buyers in Kansas City. And yes, that includes Overland Park, Olathe and a dozen other cities. The current mortgage crisis will now benefit you!

The House has passed a bill that will likely become law within the week. It’s a bill that no one wants to stand in the way of so it’s pretty much a done deal. How will this help the first time home buyer in the Kansas City area? Well, if you;

Are a first time home buyer
Have purchased or will purchase a home between April 9, 2008 and July 1, 2009
Have individual income of less than $75,000 or as a couple earn less than $150,000

If you meet those 3 standards you are eligible for a $7,500 tax credit.

Now, you will be expected to pay that back over the course of the next 15 years interest free. So it’s not free money. But it’s discounted money. If inflation ends up being 5% this year, well…hopefully you get the picture. I’ll work out the math for you a little later today but you will be saving hundreds and possible a couple thousand in interest over the course of that 15 years.

(Further details will be announced as I dig deeper into this Housing Rescue Bill.)

So if you are a first time home buyer and looking to purchase a home in the Kansas City area you need to contact me today. Regardless of where you are looking be it Olathe, Overland Park, Blue Springs, Lee’s Summit, Shawnee or a host of other suburban cities or Kansas City. If I am not knowledgeable about the area of town you are looking I’ll hook you up with someone who is.

With a FHA loan, 3% of the purchase price and good credit this makes it easier and more economically feasible to be a first time home buyer than ever before!