Monthly Archives: November 2014

November 24, 2014 · 11:03 am

Thankful Real Estate Investing

Thanksgiving is just around the corner. So it’s time to count our blessings. I for one, am glad I’m a real estate investor and that I am real estate agent for real estate investors. It’s a busy life. But it’s lucrative. My work allows me to support my wife and kids and to pay for college and, well, a vacation every year. Sure I work hard. Sure there is risk. But who said life should be void of hard work and risk?

I am thankful for each of our clients that has put their faith in us. We are not perfect. But we always try to do the right thing. Of course, working with all these real estate investors on rental houses has led to us owning a property management firm, as well. That has allowed us to provide better service for our clients and to grow 5 Kansas jobs. (With no governmental subsidy.)

Property management isn’t glorious. But it’s needed. It isn’t easy. But it isn’t rocket science, either. We are happy to serve real estate investors from all over the country. Thankful, really.

I hope you, too, are thankful in your line of work. And thankful for your family and friends.

Managing Your Own Rental Properties May Be Costing You Money

I sat down with a very nice retired man the other day to discuss his eleven rental properties that he manages himself. A fellow realtor was trying to convince the man that he shouldn’t be managing his own rental properties because it was costing him money. And after hearing all the facts, the realtor was correct. This man was costing himself a considerable amount of money by not letting myself or another property manager manage his rentals.

You see, he has a tenant who has only been partially paying for the last year. I said year! When I learned additional facts about the story I knew that the situation was even worse, but I won’t go in to those here. But suffice it to say the tenant was short paying by about $400/mo leaving a deficit of about $4,900 for the last year.

Then there was the additional tenant staying in the home causing damage. Then there was another of his eleven properties that had pets that he didn’t initially know about. And he has two vacancies. So, essentially, he has 4 properties under-performing.

Now, one vacancy out of 11 isn’t too bad, normally. But both of these vacancies have been for many months. And now it’s mid-November.

His chief objection was that a property manager costs him money. And he’s right. But as near as I can tell, he’s losing about $3,150/mo not using a property manager. My cost would be somewhere around $780/mo to manage those 11 properties. Throw in some leasing fees and you might be up to $1,100/mo. Might. But he’d still be in the black by about 2K a month on his rental properties.

So is property management costing him money? I’d say “no”. But, I was unable to convince him of the value of my services. He’s concerned about the monthly fee and being nice to his tenants, the same tenants who are breaking his leases and abusing his demeanor. I wish him the best.

Get Rich…Slowly

Real estate investing isn’t new. It isn’t exciting. It isn’t quick. Real estate investing is “Get rich slowly.”

I’m sorry if that doesn’t excite you. I’m sorry if it’s against everything every seminar guru wants you to believe.

There is a difference between real estate investing and real estate speculating or a real estate job.

Here in Kansas City, real estate investing means buying quality properties, taking care of them as well as the tenants and then letting time march on. As time marches on you can usually depend on appreciation at or above (slightly) inflation, the fact that your tenants are paying down your mortgage for you and that REI is creating tax benefits for you that you may forget to calculate in to the equation when you get started.

Dave Ramsey said on the radio the other day that the stock market generates a 12% return per year if you look at the average from the beginning of time. Real estate will do that, too. And better when you calculate everything and buy in good neighborhoods…and has the added benefit of providing quality housing for people who need such.