Category Archives: Real Estate Investing

May 21, 2008 · 8:43 am

Phoenix Real Estate Getaway

Real estate investing and personal points from my time in Phoenix…

…I had dinner with agents from all over the country on Sunday evening. It’s always fun to speak to the ones from the Los Angeles area of California when we discuss real estate investments. They are just simply amazed at what we can do here compared to what they are used to.

…Dry heat. Wet heat. Listen Phoenix, 111° is 111°. I don’t care what you say or how you say it. 🙂

…The Phoenix area is pretty close to exactly twice the size of Kansas City. And yet we have ± 13,000 agents. They have ± 45,000. We run about 23,000 active listings. Someone said they are at about 74,000! (See comment by Jay Thompson for clarification.) I’m just glad I’m not an agent there.

…It’s nice to get away and “mastermind”. It’s even nicer to get home and see my wife and kids. (Personal note: Yesterday was the anniversary of my wife putting up with me for 22 years. Not bad for a 43 yr old.)

4 Comments

Filed under Real Estate Investing

May 20, 2008 · 8:52 am

Successful Real Estate Investing Depends On The People You Listen To

Here in Phoenix I sit listening to differing views about how to market real estate and work with people looking to buy or sell real estate. And although none of the speakers to this point has addressed real estate investing specifically, there is a correlation to be had here.

I’ve said it again and again and again that the people you choose to listen to will have such a bearing on the success, or failure, of your real estate investments that it’s not even close to funny. I say that because I am hearing things here that, based on my experiences and what I know to be true, are both brilliant and completely off base. At least for how I choose to do business.

No one is saying you can’t make money flipping houses, or buying notes, or owning trailer parks, or working with short sales. What I am saying is know what the end result is supposed to be. Then, where are you starting from? If you are a busy executive that travels, has a family, a solid income, a solid start on your retirement assets do you really want to be supervising a construction crew to squeeze out a few extra thousand or are you looking for turn-key investments that will require as little personal attention as is reasonable for real estate investments?

Conversely, if you are a twenty-something with limited assets you are probably not ready to start plunking 20% down on three properties at one time. You have to know that the person you are working with is familiar with you and your situation.

If you are in the Kansas City area, call me. Let’s sit down and talk. Out of the area, call me and we can work by phone on an hourly consultation basis. And I’ll find you an agent in your area that can help with the peripherals. Either way, call me.

8 Comments

Filed under Real Estate Investing

May 14, 2008 · 12:09 pm

Investment Property Basic Training

Just the basics here for owning and operating Investment Property in Kansas City or elsewhere.

The Four Basic Benefits of Investment Property

Cash Flow Before Taxes
Principal Reduction
Tax Benefits (Depreciation, etc.)
Appreciation

Quick, (seemingly) witty tips to help you not go bankrupt with investment property…

Buy on numbers, not gut-feelings
Investing and speculating are two different things
Look to the meat of the market for whatever market you are in (i.e., the meat might be 3 bedroom, 2 bath homes for rent close to medical centers or schools priced between $150,000 & $170,000)
Allow for the unexpected (trite, I know)
Have reserve funds
Don’t proceed too quickly
Don’t procrastinate
Get objective advice from someone with rental property

Required Reading

This blog
www.bawldguy.com
Building Wealth One House At A Time by John Schaub

Last tip: Discernment is required. The ability to understand your own position, feelings, goals and actions and how they fit into what you are hearing and learning.

Owning investment property does not take a rocket scientist. It does take planning, effort and money. Anyone can do own investment property successfully.

7 Comments

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

May 13, 2008 · 11:48 am

REIT: Entertainment Property Trust in Kansas City

If you are gonna invest in the stock market what better way to keep your fingers in real estate than by looking at a REIT, aka Real Estate Investment Trust. Put simply, REITs are companies that manage investment properties and sell shares of their business like stocks. Their earnings will come from rents and other fees (and appreciation when they sell) and the earnings are either reinvested or paid out in dividend form to the stock owners.

I like keeping an eye on Entertainment Property Trust located here in the Kansas City area. Today’s Kansas City Star has them ranked as the #18 publicly traded company in the Kansas City market area. You can follow them, as I do, on by their ticker symbol EPR on the NYSE.

One of the reasons I like them is they are Kansas City based. And as many of you know, I’m a homer. But their business model is extremely sound to me, as well. This from today’s Kansas City Star:

“The real estate investment trust develops, owns, leases and finances entertainment related businesses, primarily movie megaplexes, of which Kansas City-based AMC makes up more than half. Its total assets exceed $2.1 billion. Last year, the firm loaned $81.6 million to the developer of the proposed Schlitterbahn Vacation Village water park development near Kansas Speedway.”

Let’s be clear about this. Even with the influx of dvd’s and direct-to-your-cable-box movies there is no way people, even in a bad economy, are going to quit going to the movies. Furthermore, with their inroads into the surrounding shops and specialty properties like Schlitterbahn (which will be a slam dunk, by the way) you have to like the outlook.

Am I a securities dealer? No. I just thought I would mix a little stock market in with our usual discussions on residential investment property ownership.

1 Comment

Filed under Kansas City, News Of The Weird, Real Estate Investing

May 9, 2008 · 12:32 pm

Freddie Mac Just Made Getting Investment Loans Harder

I just received this email from a very reliable lender that I like to work with (Tom Brassfield of Security Savings Bank).

Chris, the following is an announcement about Freddie changing maximum number of mortgages from 10 to 4.

Ah, folks, this is not good news for many of you. Why? Because it just made getting a conforming loan nearly impossible if you already own four rental properties here in Kansas City and elsewhere. Me no like.

And where Freddie goes Fannie is sure to follow. This seems to follow up on the trend of punishing proven real estate investors for the problems real estate speculators and careless mortgage companies made. It’s like when the NCAA punishes a current team and coaches for the transgressions of the previous coach and team. The statement is made…just to the wrong people.

Tom, also mention that PMI is getting harder and harder to get for the real estate investor. Oy.

4 Comments

Filed under Misc. Real Estate, Real Estate Investing

May 7, 2008 · 9:01 am

You Can Be Defrauded: It’s Easy

Every one of us likes to think we are so smart and so wary that we cannot be defrauded. Bull. If I learned anything as a PI all those years in the Washington, DC area it is that anyone, and I mean anyone can be taken advantage of.

When we think of fraud in real estate we think of lying on loan apps, lying about disclosures, lying about this & that. But here is the deal. There are people out there that have nothing better to do but sit around all day and night trying to figure out how to take advantage of you. You really don’t stand a chance. Trust me on this.

I’ve seen too many people of all shapes, sizes, economic & education backgrounds be taken advantage of in ways that would make your hair curl. Currently I am helping a couple of people to work out of decisions that seemed like no-brainers at the time but with a few months behind them cannot believe how easily they were misled. Before you criticize just be glad it wasn’t you. It could have been.

Take a few minutes and do a Google search for Brent Barber, our Kansas City real estate fraud guy. (Just click his name.) Read especially, if you have the time, the article in The Pitch that lays out the whole scheme in detail. He is actually quite proud of his industriousness in taking your properties.

I just wonder what he could have accomplished as an honest member of our society. Now he’s in prison for 19 years. And we are getting messed over again because we have to pay for him to live for free. Jeez.

1 Comment

Filed under Investment Property, Kansas City, Legal Issues, Misc. Real Estate, Real Estate Investing, Worth Reading

May 1, 2008 · 9:44 am

Capital Growth

Cash Flow Before Taxes
+
Principal Reduction
+
Tax Benefits (depreciation/interest)
+
Appreciation
/ (divided by)
Capital Invested (downpayment + closing costs)
=
Capital Growth

Or Return on Investment, if you will. Now to me, I like to make sure my returns are satisfactory and that the rental property will be self-sustaining without adding in the Apprecaition.