…for my God, my family and my country.
…especially for my wife.
…for my clients. They are some of the best and most loyal.
…for opportunity.
…for struggles.
…for our readership.
Take a minute and make your own list. It’ll bring a smile to your face.
Monthly Archives: November 2008
CPA Who Is Dishonest Or Unknowledgable: Either Way Not Good
An agent in our office was tryingto sell an investment property in Kansas City to her client. Now this agent isn’t up to speed with investment analysis but that is a whole other topic that I’ve ranted on before. What caught my attention was that she took an 8% cash on cash deal to her client who then took it to her CPA. The CPA said that he had another investment (not real estate) that returned 10% and the lady went with that and not the real estate.
Apparently the main argument was that 10% was better than 8%. And I guess that is true. But as my friend Jeff Brown at BawldGuy likes to say it’s what you don’t know that kills you. For the newby real estate investor to not know that apples were being compared to raisins is one thing. For a licensed CPA to simply ignore the other three benefits of real estate investing and the working in of those calculations into the return is either ignorance or dishonesty (since he had a stake in the other investment vehicle).
Now, when you add 8% cash on cash onto your return for depreciation and principal reduction and, well yes, appreciation, the returns aren’t even comparable. But heck, throw out the appreciation and you still have a real estate return of 15%-18% over the 10% the CPA was tallking about.
You may very well determine that the extra return is not worth the additional risk of credit or commitment of time. That’s a decision only you can make. But you can only make that informed decision if you know what to ask or if you actually work with someone who is knowledgable and will lay out ALL OF THE OPTIONS.
There is my five minute rant for the day. 😉
Filed under Personal Real Estate Opinions
Phone Is Ringing Again…Whew
Phone calls always come before business. In September and October the phone all but stopped ringing. I have most definitely noticed an uptick in phone calls over the past couple of weeks.
Is this because the election is over?
Is this because people are doing solid evaluations and realize the real situation?
Is this just because?
I don’t know. But I can tell you that the phone is ringing again. And I suspect by Spring we’ll see a bit of a return towards normalcy. Now, I don’t think the investment property credit market will be smooth sailing by any means. But we should start moving that direction again.
Filed under Misc. Real Estate
Dishonest Mortgage Loans: Watch Your Money
I laugh with sadness at the dishonest mortgage loans advertisements I hear when driving around. There is one in particular that is surely unscrupulous. (Think high pitched voice kinda like Ross Perot.) The other day I had an agent in my office telling me about a couple so excited to buy they were ready to write an offer.
After three attempts to get a Good Faith Estimate from the loan officer (at the agent’s urging) the agent finally called up and demanded one. What she got was laughable. Closing costs three times what they should have been and a loan program completely different than what the buyers thought they were getting. The agent correctly told them now was not the time to buy until they had a good pre-approval letter from a reputable mortgage person.
Then this morning I hear another version of their “blue sky and roses” commercial and they say that after they help you get the loan they will give you financial counseling! How about starting that counseling before they give the loan and that advice would be to not take out a loan with closing costs that are ridiculous, at best, or piracy.
Times may be harder than they were. Don’t make them worse. Seek competent counsel and a couple of opinoions when making huge financial decisions. Please.
Filed under Financing Options
Kansas City Housing Set For Rebound?
According to SmartMoney.com and magazine Kansas City is #13 on the list for cities whose housing markets are set for a rebound. Now, no one can know the future. We can only speculate. But what is meant by rebound is a fair question.
Here in Johnson County, Kansas where I reside in the ‘burbs of Kansas City the housing market has been far more affected by the financing crisis. Housing prices here haven’t fallen too badly. 2%? 3%? In some neighborhoods it is closer to flat or even +2%. Others may be down as much as 5% or 6% in isolated neighborhoods.
The real housing slump here isn’t prices but volume. Houses just aren’t moving. No one is looking. So slashing prices really isn’t the answer. NO ONE IS LOOKING!!! I currently have 8 listings. In the last 30 days I have had 4 showings. I said 4. Four. Quatro.
My opinion? We are where we are until Spring. Then I will be able to reevaluate what is going on. For strong investment property buyers there are bargains to be had. Mostly outside Johnson County. More like on the Missouri side of the state line. But with financing today you really need to be putting 20% down. 25.01% gets you a lot better interest rate.
If you are currently in the market for an investment property in Kansas City give me a call today.
Filed under Kansas City Real Estate
Buying Investment Property In The Winter
In the last few days I’ve had a California real estate investor close on two houses he has purchased here in Kansas City. Both are in the Waldo neighborhood which is a pretty reliable, older neighborhood in Kansas City that is convenient to a lot of the things tenants like. But closing on a house, especially two, in November has it’s challenges.
For instance, both properties need some maintenance to get up to rental standards. One of the properties will take about 8 days and $5,000 while the other more like 5 days and $3,500. Then we’ll pop a For Rent sign outside. Now how is that gonna go?
Thanksgiving is just a couple of weeks away now. Then Christmas and New Year’s are just around the corner. There are holiday parties, stress to meet the bills for Christmas, etc.
So when we bought these houses we took into account a few things;
- That these houses needed maintenance. The purchase price had to cover the repairs plus a little something something for the owner for taking the trouble.
- These houses would have to make sense, financially of course, before committing to buy.
- These houses are expected to be vacant until February.
Notice I said “expected to be vacant.” If we get it rented in November or December or January, well, GREAT! But when doing the numbers we just assumed no renters until February. And that could even be March. You never know, but I doubt it.
So as you might imagine these were two pretty sweet buys to pay for repairs, add in instant equity and to compensate for no rent for three months.
That is how you buy investment property in Kansas City in the winter time. 😉
Filed under Property Management, Real Estate Investing
BBQ Capital | Kansas City Real Estate Investing 