Category Archives: Investment Property

April 9, 2008 · 5:21 am

KC REI, Rants, Thank You’s and Stuff

– I’m dealing with a closing snafu to top all closing snafus. I was fully prepared for a “situation” on the closing of this Overland Park investment property. And I covered all the angles. Followed up. Checked in regularly with the selling agent for my buyers. And still the closing cratered because of a wild card that I simply cannot control. When I have a couple days distance behind me I’ll write about the details for you. Because right now all my adjectives and descriptions are unprintable for a family blog. And man, do I feel for the buyers.

– Many of you may have figured out that I’m a sports fan. Specifically, I love my Kansas Jayhawk basketball. What a year the University of Kansas has had. Won the Orange Bowl. Won the NCAA tournament and brought to the Kansas City area the first national championship this city has seen since the Kansas City Wizards won the MLS Cup in 2000. But for those of you that don’t consider soccer a sport you have to go all the way back to 1988 for the previous championship which again was the KU Jayhawk basketball team. Hey Kansas City Royals and Kansas City Chiefs, it might be nice if you could contribute a little, too.

– I’m flabbergasted at the lack of quality investment property available right this minute in Johnson County, Kansas. There are a total of 36 duplexes currently on the market and only two have any hope of getting my “thumbs up” at this time. Dear Sellers, from what I’ve seen your investment properties are over-priced and under cared-for. Why should buyers pay top dollar for a property with shaky tenants, 22 year old roofs, furnaces leaking carbon monoxide and enough wood rot to keep a carpenter busy for a week?

– Just because Johnson County investment property sellers seem to be a little delusional doesn’t mean there aren’t quality buys around the Kansas City area. I’m still very bullish on the Blue Springs & Raymore/Belton areas over in Missouri.

– Yesterday was my birthday. Any guesses as to how old?

– For you Wyandotte County/Kansas City, Kansas real estate investors I may have a property coming up that you will be interested in. Probably priced around $125,000 with rents at $675/side. This duplex is a three bedroom, two bath and one car garage. I know the property manager well (he referred me to the seller) and I can put you in touch with him for the rental history…when the time comes. Drop me an email if that sounds interesting.

– Dear WordPress, not impressed with your recent changes. No spellcheck. Your new way of adding photos is cumbersome and doesn’t work about 75% of the time which is why there are none for this post. And working out bugs before rolling out a new version of the editor would have been swell. Sorry readers.

– A special “thank you” needs to go out to all our readers. The readership of BBQ Capital : Kansas City Real Estate Investing keeps going up and up. It is both humbling and exciting. Always feel free to leave comments and I really encourage you to send me topics of which you’d like to see covered. After all, this blog is not only for me, it’s for you!

2 Comments

Filed under Investment Property, Kansas City, Kansas City Sports, Misc. Real Estate, Personal Real Estate Opinions

February 21, 2008 · 9:34 am

Selling Your Rental Property In A Buyer’s Market

Kansas City is currently experiencing a buyer’s market. Investment property is a little better off. Certain areas of the city are better than others. Let me give you a picture of what the investment market in Kansas City currently looks like.

Below will be a couple sets of numbers for you to take a look at. One is for Johnson County, Kansas duplexes and the other is for Jackson County, MO duplexes. Now, the numbers only include duplexes priced for sale between $100,000 and $300,000. I just figured below $100,000 isn’t usually what my clients are looking for and above $300,000 just isn’t going to be profitable within the parameters I use.

Johnson County, Kansas Duplex Activity
current as of 2.21.2008

Active =    34
Pending =   3
Sold =        52 (within previous 12 months)

Jackson County, Missouri Duplex Activity
current as of 2.21.2008

Active =   147
Pending =    5
Sold =      100 (within previous 12 months)

Right away you should be able to see the market within the market. Johnson County has about a 7.5 month supply of homes while Jackson County has about a 16.5 month supply of homes. Further emphasizing that all real estate is local. And local can be broken down into cities from country, zip codes within the city and sudivision from the zip code.

As a seller of residential investment property in Kansas City you need to know that you are in for some fierce competition. And while some sellers may think they know that what I see on the market is usually overpriced, under cared for and have crappy tenants.

Why, I know of a duplex in Overland Park that has been on the market for quite some time and the real estate agent has “motivated seller” on her comments. Further inquiry discovers that one side has a tenant that isn’t paying any rent because they made improvements to the property and don’t feel they owe rent for some time to come. The other side unilaterally decided their rent was too high and cut their payment by $200 a month.

And the seller still wants retail for this Overland Park duplex!!!???!!!

Checklist There is no question I could find an investor to take this headache off their hands. But not at retail. So what can you do to be sure you can move your Kansas City are investment property if you need to cash out?

Investment Property Selling Tips

Price it right. Know where the price point is for your particular class of investment property (and location) that the next would-be real estate investor will pull the trigger. This is not the market to “test” the waters.
100% occupancy with quality tenants. I said quality tenants. Tenants with good payment history. Tenants with security deposits. Tenants with time left on their leases. Tenants that don’t trash their rentals.
Deferred maintenance accounted for in the pricing or repaired before marketing. Remember, if you milked the property dry by collecting rent and not fixing a thing you will pay for it on your sales price! You might be able to get away with that crap during a seller’s market. But guess what? This isn’t a seller’s market.
Choose the right real estate agent. I’m not the only one in Kansas City that knows and understand real estate investment property. (I am, however, the best. 🙂 – Sorry for the ego trip.) There are several good agents around the city. But that number doesn’t exceed 10-12 out of the 10,000+ licensed real estate agents around KC.
Be prepared to assist with closing costs. Investors, and that is who will be in the market for your duplex, like to get in with as little cash as possible to maximize their equitable returns.
Be patient. Do all of this correctly and you should sell inside 4-6 months. In fact, if you do all this correctly we should sell inside 4-6 weeks going into spring. But the real estate investor’s credit standards have changed drastically over the last year. You don’t have to like it. But it means fewer people are qualified to buy your rental property.

I’ve used duplexes as the prime examples here. But the same is true for all investment class real estate whether it be single family homes, apartments or four-plexes.

You can definitely sell your investment property in this market. In fact there is a need for quality inventory. Feel free to give me a call, write me an email or leave a comment if you have any questions or comments.

13 Comments

Filed under Investment Property, Kansas City Real Estate, Real Estate Investing

August 12, 2007 · 9:02 am

Rental Housing Registration In Kansas City

The Kansas City Star ran an article in the Local section of the paper today titled More cities keep eye on landlords. I found that the article clearly presented the issue revolving around rental property licensing that is being proposed in several areas around the Kansas City metropolitan area.

(Although I still find it annoying that every weekend the KC Star insists on running some horrible foreclosure related photo from the west coast in the business section. Note to KC Star, if you cannot find the problem here then don’t take the photo. You keep insinuating the real estate meltdown is here, as well. And you know it.)

Let BBQCapital be very clear where we stand on the issue or rental housing registration and/or licensing;

Rental licensing is not acceptable. It is simply a tax and an additional burden to the investment property owner.
Registering rental properties and having an individual with sole responsibility is okay here. (No hiding behind a LLC to shirk your responsibilities.)
Administrative warrants (used by the City of Lawrence) to inspect rental property without the permission of either tenants or landlord is blatantly absurd…regardless of what the federal court of appeals says.
The City of Mission ordinance that allows the city to conduct an inspection of the property when requested by the tenant is a solid compromise.
Tenants should treat their rental homes with respect and care.
Landlords should treat their tenants with respect and care and maintain their Kansas City area investment property to a clean and safe standard.

Agreeing with Dan Kelly of Landlords, Inc. in Kansas City a city should spend more time worrying about code enforcement. If a rental house is becoming a blight on the neighborhood then code enforcement should act. Having registered owners, actual individuals, will allow the city to go after the owner and not have the owner “hiding” from the violations because the city doesn’t know whom he or she is.

And our last point here will be this: Landlords, it is to your benefit to maintain your properties! You will attract better tenants, collect higher rents and sell for more money. Why is this so hard to get across? If you don’t, if there is mold in the basement or a roof leaking then a tenant should have the right to have the city come in and work on their behalf. It wouldn’t have happened if you had maintained the house, right?

Here in Kansas City landlords can evict a tenant for non-performance (no rent payments or tearing up the house) a lot easier than in other parts of the country. Believe me. The flip side is they should have rights too when the landlord is guilty of non-performance.

In the words of Stuart Smith of Mission (as quoted in the Kansas City Star) “If you can’t afford to keep the property up, you shouldn’t have bought it in the first place.”

2 Comments

Filed under Investment Property, Property Management

June 16, 2007 · 9:15 am

Landlord Tales of Nighmare Tenants

This was found on MSN. I’m in a hurry and will read it later in it’s entirety. But the overview looked like something of interest for this real estate investing blog.

Why should you hire a property manager?

3 Comments

Filed under Investment Property, Property Management

April 15, 2007 · 2:25 pm

Four Duplexes in Kansas City Area For Sale – All Good Choices

Right now I’m pretty excited about the market here in the Greater Kansas City area, at least where investment property is concerned. Over the course of the last 4 days I have found 4 duplexes that rate “Buy” in my opinion. Two happen to be in Blue Springs, the other two are in Olathe.

The really nice thing about these four income properties is that they are all over the map as far as growth and cash flow are concerned. The smallest on in Blue Springs would have excellent cash flow with as little as 10% down on about a $120,000 purchase. Good to great growth can be had on the $240,000 duplex in Olathe and it will hold it’s own with 20% down.

Should you have some cash languishing in a non-performing stock or gaining modest interest in your 401(k), we really need to talk. Retirement is just around the corner…or could be.

1 Comment

Filed under Investment Property, Kansas City Real Estate

April 12, 2007 · 4:15 pm

Keeping An Eye Out For Great Investment Properties

Keeping an eye out for sharp investment properties takes discipline, experience and a keen knowledge of what today’s renters are looking for.

Make no mistake about it. When you own rental property and you have a vacancy you are competing against all of the other vacancies out there. Your prospective tenants know this and are looking for a lot of the same attributes for their home as a home buyer would be looking for theirs.

Today I had the chance to get out and see 11 properties. Obviously, I was most impressed with the properties my buyer was impressed with. We liked the same things. Clean, freshly painted walls, newer roofs, structural integrity, proximity to conveniences and work zones, free flowing floor plans and well maintained and groomed exteriors.

And you know what? The homes that fit the above criteria were priced remarkably similar to the houses that didn’t meet any or all of those standards.

Some home investors are in a position that they are looking for “distressed” properties that they can improve and have some built in equity. But many of my buyers are working professionals with busy lives. They are looking for turn key properties that are not going to have a lot of future maintenance issues.

After finding and identifying the proper home candidates the next thing to do is sit down and figure out going rent rates for each unit and their corresponding expenses. From that point, it is very easy for me to package a home up for the right buyer.

Not every buyer wants or needs the same thing. Not every house will fit every buyer. My job is knowing the differences and where to apply them.

Investment Property Analysis Doesn’t Have To Be Complicated

People love to complicate things. Especially the gurus. After all, they do have two hours to fill when they are trying to convince you to purchase their book and tape systems. Knowing your investment property has profit potential is very important. Measuring it against every other property within a 20 mile radius, isn’t.

Again, there are 4 Benefits to investing in real estate;

Cash Flow Before Taxes
Principal Reduction
Depreciation
Appreciation

You hear about cap rates and gross rent multipliers and internal rates of return and the list goes on. But figuring your total rate of return doesn’t have to be rocket science.

Figure your 4 Benefits and their total revenue and divide that by the amount of cash you have invested. There is your return. Then you can compare property to property.

Or, you can do what I hear so many of you do. Put down as little as you can on the purchase and trust that the rents will cover the house payment along with escrows. If that works then buy it! (Not necessarily the strategy I recommend. But it beats not doing anything at all. So long as it works out…)