January | 2013 | BBQ Capital | Kansas City Real Estate Investing

Monthly Archives: January 2013

January 11, 2013 · 10:57 am

Observations of the Current Investment Property and Rental Markets

Owning investment property is markedly better when the rental markets are strong. And that is where we are right now in Kansas City. I thought I would share a few observations that I have about our current investment property and rental markets.

Prices for Rehab-to-Rent homes are on the uptick. Not a good thing. If this continues the real bargains on single family homes for income property purposes probably has a window of another 6-12 months for great cash on cash returns.
Cash on cash returns on Rehab-to-Rent homes are down about 1%-2% in the last 6 months. In our core service area, returns are now hovering in the 11%-12% range.
Johnson County, Kansas rental market is on fire! We have some vacancies that are over before our listings even syndicate.
Bell curve income property in Olathe is renting in the $1,400 – $1,750 range all day long.
Competition is way up for Rehab-to-Rent homes on the Missouri side in the $45,000 – $55,000 “all in” price range.

Buy while you can. Some day this will get more expensive. And that day is coming sooner than later here in KC.

Pets and Your Rental Property

We have brought on several new owners to our KC Property Manager property management services. And we always have to talk to the new income property owners about their pet policy. Most income owners don’t want to allow pets. That’s almost always the first inclination. But let’s stop and discuss this, shall we?

I’d say about 45-50% (maybe more?) of the prospective tenants out there have a dog or cat or bird or something. They do. Heck, even most of the owners that don’t want to allow pets have a pet. 🙂 It’s part of who we are as a society. So if you are not going to allow pets then you are automatically eliminating half the tenant pool right off the bat.

And think about this. Pet owners usually expect to pay more to occupy your rental property. In fact, I cannot remember the last time a real tenant candidate was surprised when I mentioned additional pet deposits or a bump in rent.

Protecting your investment property and getting the tenant to buy in to keeping your house nice can begin with a good talking to and a financial incentive to make sure their pets are doing no harm to the unit. I like the idea of a $350-$500 REFUNDABLE pet deposits because it’s incentive. If the dog is large or there are multiple animals I suggest a refundable pet deposit in ADDITION to a rent bump. $25 a month or even $50 a month is negotiable.

Don’t eliminate half your tenant pool. Make money from them.