Category Archives: Investment Property

January 5, 2011 · 10:33 am

Searching for Quality Investment Property

Searching for quality investment property is cumbersome. Oh, there are lots and lots of properties for sale in the Kansas City area right now. And some seemingly great bargains…until you examine the neighborhood, the repairs necessary, the ~~financing~~ appropriate financing, etc.

And you really have to keep appraisals in mind. It’s been quite a while since I’ve had a problem with a primary home appraisal. But refinancing an investment property seems to be a rather interesting way to spend your time for the real estate investor. It’s like a hobby that may or may not pay for itself. 🙂

Right now, more than ever, you have to keep your criteria in mind when deciding on a quality investment property. My criteria?

Neighborhood
Vacancy rates
Rent to price ratios
Tenant pool

Just to name a few. The property I seek for my clients must have money to be made on the buy side ( a little or a lot depends on your patience ) and pay for itself during the holding period of the next 5-10 years. To pay for itself the rental property needs to be clean and attractive to an available tenant pool that is in need of housing (less than 10% vacancies) and can afford the rental rates being sought.

Sounds simplistic. But the more you can define YOUR criteria the harder it will be to find YOUR investment property. But when you find it, it’s an easy decision.

Search for Kansas City Investment Properties

Search for Kansas City investment properties using either my Kansas City MLS Search IDX mechanism, like many you’ve seen before, or using the new Property Hub I’ve signed up with from eReal Investor.

Using the Property Hub is brand new to me, too. But I’m anxious to get in and see what it can do. There are some cool analytical tools (Yes, yes, I know. I prefer pencil and paper but I do have to admit these are cool.) along with at-your-finger-tips rent comparisons. You can browse for free but to do the cool stuff you’ll have to register with me. But hey, you want me to represent you when you buy investment properties in Kansas City right? 🙂

Investment Property Worksheet

I use a very basic investment property worksheet that I acquired from Tom Lundstedt a few years ago. It’s simple and I can pencil out figures right in front of people so they can see how the numbers work (or don’t work) on any prospective rental property.

Yes. Yes. I know. I too have used those fancy computer generated investment model programs. But they are so stale and the sometimes you can’t see how the numbers were derived. So I like this better. And I fully realize that many real estate investors have many different formulas. Funny thing is that the successful real estate investors may have different formulas but always end up with about the same calculations.

For the first time, I’m sharing a sample. I always worried about sharing it. But after years and years of investment property experience I realize it’s just a paper without the knowledge that goes with it. So enjoy.

7 Comments

Filed under 4 Benefits of Real Estate Investing, Investment Property, Real Estate Investing

July 31, 2010 · 1:02 pm

HUD Owned Homes Viewings

Yesterday I went out and looked at 13 HUD owned homes that are on “daily bid” status. I was hoping to turn up one, maybe two possible investment property for Kansas City area real estate investors. And I did come up with two real good possibles.

Side Note: It’s amazing how trashed some of these houses can get in just a few short years. What’s up with that? 🙂

HUD owned homes are purchased a little differently than your regular real estate transaction. To see more about buying a HUD owned home you can look at a page I wrote on another website title Buying HUD Owned Homes. Now if you are a primary home buyer you can also take advantage of FHA 203(k) rehab financing. Sadly, seasoned income property owners know you cannot use the FHA financing for investment properties.

Anyway, one of the homes I identified is located in Kansas City, Missouri. The other home is located in Shawnee, Kansas. (Shawnee is a suburb of Kansas City on the Kansas side to the southwest of the city.)

Starting Monday I’m rolling out my new mailing list to people who want to be in the know. The mailing list will come out 1-4 times a week with foreclosure real estate or other value-oriented REO property where I believe there is money to be made. To join the list, just click below.

BBQ Captial: Kansas City real estate investing well done.
Chris Lengquist
Keller Williams Realty
Diamond Partners, Inc
Olathe, Kansas
913.322.7500 o
913.322.7515 d

Bad Advice Leads To Real Estate Investing Disaster

I remember years ago when a good acquaintance of mine used a better-buddy realtor friend to buy three fourplexes up in Kansas City, Kansas. He followed a few simple mathematical formulas that he had learned (his Realtor buddy leading him all the way) and decided that not only would these properties pay for themselves but they would also kick-off cash flow. After all, they were priced about $15,000-$20,000 under the available comps in the area.

Now, I have never, nor will I ever, advise a client of mine to buy investment property in this area of Kansas City, Kansas. The value of the investment property there was not realistic for KC rental property. Way over-valued. Crime is/was abundant. Quality tenant? No. Housing voucher bums that float from apartment to apartment after dismantling the one they are in were plentiful. (No. Not everyone that uses a housing voucher is a bum. Just most of them in this area.) And they weren’t in that great of repair, anyway.

Have I ever been in his units? No. I don’t need to. I’ve seen others in the neighborhood. He bought at $140,000. Rents were about $525/mo. Slam dunk, right? NOOOOOOOOOOOOO!

He called me earlier this week. He had comped the area (with the same agent he used before!) and said that the values were down to about $40,000 each in today’s market. That’s $100,000 less than what he paid for each of the three four years ago. Vacancy? He’s currently half full.

He’s going to attempt a short sale and was seeking buyers. What’s worse is his notes are held by Bank of America. Now, Bank of America can get you loans. They can even service them to a certain extent. But when it comes to work-outs and short sales I cannot imagine a more incompetent bunch of case managers. I mean, without a single exception, none of them understands what is going on and how long buyers will/will not wait around.

And there could be more trouble brewing. What if he does get them short saled? When does the statute of limitations end for BOA to come back in and try to recover their losses from the personal assets of this individual? He has a nice income, an even nicer personal residence and other assets. I like this guy. I really do. But it’s frustrating when I hear people choose to let the banks take the loss or share in the loss and hope to have no more responsibility. If he had made $100,000 per unit would he have allowed anyone, BOA for instance, to share in the responsibility of the profits?

You simply must get professional advice before investing in real estate. QUIT USING REALTORS THAT DON’T KNOW WHICH WAY IS NORTH ON A MAP REGARDING INVESTMENT PROPERTY!!!!!!!!! (Phrase borrowed from Jeff Brown. – I had another phrase in mind.) Or it could cost you just about everything you’ve worked for.

I pray for this guy and others like him.

20 Comments

Filed under Investment Property, Kansas City Real Estate, Legal Issues

June 9, 2009 · 1:59 pm

Kansas City, Kansas Duplex For Sale

Kansas City, Kansas Duplex For Sale – Price Reduced $10,000

Out of state owner says SELL this Kansas City, Kansas duplex. The owner’s priorities have changed over the years and now he is moving on. That means he’s held on to this duplex for sale too long and just wants to move on. His loss is your gain. Each side rents at $695. One side is currently occupied and the other side is getting some minor renovation done before new tenants are placed. It’s had a good occupancy history and has been professionally managed.

Attention Real Estate Investors: As of 7.2.2009 the owner has dropped the price to $87,500. He wants to move on. Now how would the numbers look?

Do the math. You buy at $95,000. Each side is bringing in $695 you are at $16,680/yr. Follow? Look below.

Estimated Expenses

$1,668   Property management
$1,400   Vacancy
$   500 Utilities
$2,300   Taxes
$1,500   Repairs/maintenance
$   900   Insurance
$   500   Misc

Total Expenses equal $8,768

Net Operating Income is appox $7,912

Your mortgage payments add up to $505.63/mo. (That’s 20% down leaving a mortgage of $76,000 at 7.0% interest since it’s an investment property loan.)

NOI – Debt Service = Cash Flow

$7,912 – $6,068 = $1,844 /yr cash flow

Your Principal Reduction = $715 (approx 1st year)

Your Tax Benes = (NOI – interest – depreciation) $85 (approx 1st year)

Total 1st year benefits (approx) = $2,644
Cash invested (down payment, closing costs, etc) = $22,300 (approx)

First year return as a percentage = 11.9%

Now what would the numbers be if you managed the property yourself?

All numbers are of course estimates and this is not a guarantee of performance. Just trying to use all the numbers I know.

7 Comments

Filed under Investment Property, Kansas City Real Estate

April 15, 2009 · 7:53 am

Rental Property Update For Waldo

The Waldo neighborhood of Kansas City is seeing some pretty darned good activity right now on rental property. I know of two different units that went up for rent about or less than 30 days ago. One has a tenant already in it and one received a deposit last evening. che-pi

As I’ve already told you a couple weeks back I’m seeing a lack of inventory that is ripe for cherry picking. There are homes to be had. But the “deals” everyone dreams of when watching their local news are just not there. While it is certainly not a seller’s market in Waldo neither is it a buyer’s market. If the inventory is priced according to it’s condition it will sell quickly. Same goes for the rental possibilities.

Waldo is a section of Kansas City that I just love for rental properties. If you are looking for an investment property it’s a great place to start. I also I have my eye on a place up in the East Plaza area.

5 Comments

Filed under Investment Property, Kansas City neighborhoods