Category Archives: Property Management

In the last few days I’ve had a California real estate investor close on two houses he has purchased here in Kansas City.  Both are in the Waldo neighborhood which is a pretty reliable, older neighborhood in Kansas City that is convenient to a lot of the things tenants like.  But closing on a house, especially two, in November has it’s challenges.

For instance, both properties need some maintenance to get up to rental standards.  One of the properties will take about 8 days and $5,000 while the other more like 5 days and $3,500.  Then we’ll pop a For Rent sign outside.  Now how is that gonna go?

Thanksgiving is just a couple of weeks away now.  Then Christmas and New Year’s are just around the corner.  There are holiday parties, stress to meet the bills for Christmas, etc. 

So when we bought these houses we took into account a few things;

1. That these houses needed maintenance.  The purchase price had to cover the repairs plus a little something something for the owner for taking the trouble. 
2. These houses would have to make sense, financially of course, before committing to buy.
3. These houses are expected to be vacant until February.

Notice I said “expected to be vacant.”  If we get it rented in November or December or January, well, GREAT!  But when doing the numbers we just assumed no renters until February.  And that could even be March.  You never know, but I doubt it. 

So as you might imagine these were two pretty sweet buys to pay for repairs, add in instant equity and to compensate for no rent for three months. 

That is how you buy investment property in Kansas City in the winter time.  😉

I think I do a pretty good job screening tenants which is what allows me to have some success at real estate investing.  But as a client asked the other day, “You make it all sound like a bed of roses.  Are there any problems with real estate investing?”

Oh, yes.  If expenses are unusually high for whatever reason, that’s difficult.  If you end up with an unusually long vacancy, that’s difficult.  If your tenants checks out well, performs great the first month or two and then turns into a difficult tenant, that is definitely difficult.

Performing great for a month or two and then turning difficult has happened recently both to me and a client of mine.  By difficult I mean late/incomplete payments by my tenant and unreasonable repair demands by my tenant’s client.

No.  Real estate investing in Kansas City or anywhere is not all roses.  It’s definitely worth it in the long run.  But sometimes you ask yourself “Why am I doing this?”

I’ve been talking to quite a few would-be investors lately about the difference of rehabbing to a rental standard versus rehabbing to sell.  And it’s really not all that complicated.  Without sounding too cold you really just rehab everything not quite as nice.

What I mean is instead of granite counter tops you go with a very nice Formica.  Contractor grade carpeting instead of the best.  Contractor packs of lighting fixtures instead of hand picking each and paying the individual mark-up.  Refinishing cabinets instead of replacing.  And etc.

This will help increase your equity margin.  Now, in three, four or six years down the road when you want to sell you may very well wish to wait for a vacancy and plan on 60 days holding to rehab up to sales standards.  Or if you keep the place nicely maintained through the years you may very well be able to sell the place as a performing investment property.

Pennies count in any kind of rehab.  Doubly so when you are trying to increase sweat-equity.