Category Archives: Property Management

So here I was just talking along about a property thinking everyone on Earth knew what Section 8 was.  So a prospective buyer stops me and says “What exactly is Section 8?  How does it work?”

Editors note:  That’s not exactly how it happened.  But what the heck?

Section 8 is a cover-all term for the different housing authorities around this great nation.  When someone calls you and asks if you will accept Section 8 what they are saying is “Hey, I have a housing voucher from XYZ Housing Authority and will you take payment from them rather than me?”

A housing voucher is simply the amount of money any given housing authority will pay towards a tenant’s rental fees.  For instance, the housing authority could say that this single mother of two is entitled to a three bedroom house up to $725/mo.  The HA can, based on her income and expenses, choose to pay any or all of that amount.  The voucher could be for all $725.  In that case your entire check comes from them.  If the voucher is for $615 then you’ll need to be reasonably assured that the tenant can pay the other $110 each and every month.

Now let’s go through the positives;

• You know your check from the housing authority will be in the mail, like clock work, each month at the same time.  Some even have direct deposit. 
• Yearly inspections will help to discipline you to keep your rental in good condition.

Now let’s talk about some of the negatives;

• Depending on how much the voucher is for the tenant may feel little to no personal responsibility for the care of your rental home.
• Housing authorities do not provide deposit money.  If you are going to require a deposit (let’s hope you do) you will need to get that from the tenant.  I suggest cash.
• Yearly inspections can be a bit tedious, depending on the housing authority.  Most are reasonable.  Some a pain in the butt.

There really is no right or wrong answer as to whether or not you should accept tenants that are on the various Section 8 programs.  Some of my clients love the program.  Others avoid it like the plague.  Maybe because they’ve had previously bad experiences or maybe just fear of the unknown.

Personally, I’ve taken housing vouchers in the past and would do so again.  Just because you are taking a voucher doesn’t, or shouldn’t, keep you from doing background checks, credit checks, sexual predator checks, etc.  You still need to make sure that prospective tenant is someone you want in your house.  Based on Equal Housing Opportunity laws, of course.

If you enjoy reading about property management issues I might point out the new link on the right column to The Successful Landlord Blog.  I read it periodically and it’s a good read.   Though you had better like sarcasm.  🙂

Owning investment property in Kansas City can be challenging.  Especially in the winter time.  If your income property is vacant in November, there is an excellent chance it will remain vacant at least until February.  No one wants to hear it.  But it’s true.

Yes.  You can rent a house in December or January.  But it’s much tougher.  So what do you do?

First, if you are buying an investment property going into the winter make sure your numbers work knowing you may very well be holding the property through 3-4 house payments before any income begins to flow.  Happily, this was my advice to a buyer whose property is still vacant now going on 58 days.  But we bought so significantly below market that he is still way, way ahead.

Second, if you are unlucky enough to have a tenant leave or skip you can get real agressive with incentives.  Maybe you could offer:

• Second month free.
• 1/2 price rent for months 2 & 3.
• 1/2 security deposit.
• Landlord pays utilities for first 3 months.

Those are just some thoughts.  But don’t forget that you do not want this same situation next year.  So if you sign a new tenant up in January, offer them a little something to get them to sign a 13 or 14 or 15 month lease.  There’s no law that says a lease has to be 12 months.

Get creative.  And make it happen.  Make your Kansas City real estate investing business both profitable and stress free.  Do you have any suggestions? 

As most of my frequent readers know I have often moaned and groaned about the fact that I have not been able to find a property manager in Missouri that:

• Has an understanding of Missouri landlord/tenant law.
• Knows that they have to be licensed in the state of Missouri AND complies.
• Understands that I am a working REALTOR who works mostly with Kansas City real estate investors and that if they mess me over that will be the end of a lucrative partnership.

Well, I still have to go through all the materials they left me yesterday but I believe I may have found one, Advantage Homes. Funny thing is, I didn’t find them, they found me. They found one of my blogs lamenting the fact that I cannot find anyone I can trust fully.

Side Note: I even had one dude here in the Kansas City area that works with real estate investors and manages properties. Now, aside from my basic belief that you cannot do both extremely well – maybe somewhat well, or kinda well, but not extremely – he told me, yes told me, that if I referred my investors to him for property management that he would now consider them his customers. And besides, after they worked with him they wouldn’t want to work with me, anyway! Seriously? I won’t name the guy. But what an ass.

Property management in Missouri has been my Achilles heel. Now I won’t have to “temporarily” manage these properties for my real estate investor clients. I can, in good conscious, turn them over to a professional property manager.

Okay. Let’s put an end to the question of whether or not you need a real estate license in the State of Missouri in order to hold yourself out as a property manager.

As I said in an earlier post today I called the Missouri Real Estate Commission at 573.751.2628 and left a message concerning this whole issue. A few minutes ago Joe Dinkler with MOREC called me back and said that I can quote him. But since I don’t have a tape recorder or a photographic memory, I’ll summarize.

(By the way, the photo above is probably a little harsh.)

In order to offer for rent, rent or hold any kind of rents in the State of Missouri you must be a licensed real estate sales person or broker. Unless… The only unless offered by Mr. Dinkler was unless the person doing those duties was an EMPLOYEE of the property owner. And an employee is not someone who is under contract with an investment property owner.

ANY third party transactions must use a licensee. He went on to state that there is a lot of confusion in the Kansas City area because Kansas does not require a property manager to be licensed. (Until they reach a certain threshold. – My words, not his.)

I hope this clears up the issue. I wish I weren’t right. Mr. Dinkler says he answers that question almost everyday. Feel free to call him if you wish.

A reader here of BBQ Capital has responded to an article I wrote a couple days ago titled Property Management In Kansas City. You can see the comment by clicking the link. The basis of his comments are that he believes that either myself or his property manager is wrong about this.

So you’ll see in the comments where I quoted some of the Missouri Rules & Statutes. It’s seems clear to me. But confusion still seems to reign.

Therefore, I have put in a call to the Missouri Real Estate Commission to get this interpretation cleared up once and for all. (I’ve had this discussion before with a broker making my argument and a property manager making his.)

Let me say right here and right now that I hope I’m wrong on this. My life will become so much easier if I can quit worrying about whether or not a particular property manager operating in Kansas City is licensed or not.

The MOREC answering machine promises answers in 24 hours. Is that human hours or government hours? Who knows. But I’ll keep you posted.

I have got to tell you, good to great property management in Kansas City is very difficult to find!