Monthly Archives: September 2010

September 23, 2010 · 5:59 am

Make Your Offer Reasonable, Please

Listen, I’m all for helping you get the very best deal possible when you are making an offer on an investment property. But let’s say a property is worth $150,000 ARV (after repair value) and work through a hypothetical, can we?

Repairs and updates are going to cost $25,000 and then there will be two months holding at about $1,100/mo and you’d like a little something something for the effort, say 18%. So

150,000 –
25,000 –
2,200 –
3,000 – (the “just-in-case” money) –
27,000 – (your something for the effort/risk)
__________

92,800 should be the sales price, more or less.

Now that is if you are an investor/flipper. You know how many properties sell for approximately 62% of retail value in the Kansas City MLS? Right. Not many.

So there is another strategy and that’s the buy and hold investor. Whether you are looking to live in for yourself or to rent. You can then decide what a number is that you can live with as your something something. If it’s 10% of equity then we can get you the place around $105,000 or so.

The house that’s retail at $150,000 offered by a bank is probably for sale somewhere in the $125,000 range. Broker’s Price Opinions nearly always account for repairs but seldom contingency funds and profit margins and holding costs. Those you’ll have to negotiate away.

I guess where I get annoyed is when people try to subtract from the BPO price of $125,000 (or so) and come up with asking prices of $70,000 (or lower) for an ARV house at $150,000. C’mon. You know, I know and the bank knows that’s not going to happen. So why are you wanting me to write an offer?

EDITOR’S NOTE: This is for a house in a neighborhood that’s in Johnson County, Kansas. A desirable school district. Less than 60 days on the market. It’s gonna sell and it’s gonna sell in the $120,000’s or maybe the high teens. Not $70,000 something. 🙂

4 Comments

Filed under Real Estate Investing

September 15, 2010 · 11:53 am

Kansas City Real Estate Investor Interview

I emailed one of my clients yesterday to ask him if he would mind sharing his thoughts and why he is a Kansas City real estate investor. I think people invest in real estate for a variety of reasons and I love hearing those reasons and the thoughts behind them. And for as many real estate investors as there are there are an equal number of reasons, formulas and thought processes.

This particular real estate investor from Kansas City has purchased a primary home (a condo) from me, an investment duplex and an investment single family home. He recently went through a nasty tenant situation wherein he basically ran in to a professional dead-beat. Before you think you couldn’t fall victim to a pro dead-beat you need to know you are kidding yourself. It can happen. But like anything, there are challenges and successes.

Enjoy. And, Kelly, thank you for sharing.

*** *** ***

How long have you been a real estate investor? I’ve been in the real estate business for almost 6 years, and nearly 4 as an investor.

Why did you start investing in real estate in Kansas City? I started investing in KC real estate because I had several friends who were doing the same thing and I thought I would be pretty good at it.

What do you look for in an income property? When looking at an income property my main focus is the cash flow potential versus the management necessary to run the property.

You recently had to do an eviction. I think your first. What was that experience like? Yes this was my first eviction, and it was a nightmare. I believe I had a unique case as my friends have said their eviction experiences were not as bad as mine.

What did you learn from the entire process? From this process I have learned to do thorough background checks prior to renting, and it will hopefully make me a better tenant screener in the long run.

Do you mind sharing what you do in your professional life and how that has shaped your real estate investing goals? I am a commercial real estate appraiser by trade and that has certainly played a role in how I look at potential investments. I feel that I have more patience to wait until the best deal comes around and don’t need to leap at every opportunity that I look at. It has also set a goal for me to eventually graduate to commercial real estate investments.

Kelly

Fun Football, Again

Not sure how long it will last. But last night it was fun being a Kansas City Chief’s fan again. Did you hear that crowd?

Now, if we could just trad’em Cassell for Rivers, straight up, that would be perfect. 🙂

5 Comments

Filed under Kansas City Sports

September 8, 2010 · 7:45 pm

Multi-Family Homes For Sale: Johnson County, Kansas

This is a short post about some stats concerning multi-family homes for sale in Johnson County, Kansas. In the last 181 days there have been 10 multi family homes that have sold and closed. There are currently 47 multi-family housing units for sale in Johnson County.

Just sayin’.

2 Comments

Filed under Kansas City Real Estate

September 7, 2010 · 6:43 am

Disappointing BBQ

My wife and kids went to Marie’s family Family Reunion on Saturday while I worked through the day. So I took my mom out shopping and to dinner on Saturday evening. She wanted to eat at the Independence location of Smokehouse Barbeque.

For years I have maintained that Smokehouse Barbeque has some of the best beans in the world. Sadly, on Saturday evening, that wasn’t enough to make up for the horrible ribs we were served. They were dry. They were tough. And they were chewy.

We ate our fries and beans and cole slaw. And I ate some of the ribs. But what I did was take the ribs home, wrapped them in foil and cooked them down on Monday afternoon while I was grilling brats. After another 45 minutes on my grill they were juicy and tender.

Perhaps Smokehouse Barbeque could use one or more of the army of home cooks out there to show them how to cook ribs? I’m being a little sarcastic. But the chain has four locations. It will soon go back to one if they keep charging $40 for a meal that my mom wasn’t happy with and I had to finish cooking myself.