Category Archives: Real Estate Investing

December 12, 2016 · 8:55 am

Is It Time To Evaluate Your Investment Property

The New Year is fast approaching and I have to ask; Is it time to evaluate your investment property?

Many of our clients purchased their rental properties during the Great Recession. They bought low and now may be the time to sell high. Or is it?

The very first thing you need to know in order to make an intelligent decision is to get a comparative market analysis of your income property. Listen, it doesn’t have to be detailed. But if you can be plus or minus 3%-5% you can have a good idea as to how to measure your future options.

Should I continue to hold because I’m making good money on my investment?
Should I 1030 Exchange myself in to fewer but more valuable income properties?
Should I sell, pay the tax and relax?

There are, of course, a few other options and variables not the least of which is “where are you in your life?” What I am saying is that the real estate market in Kansas City has changed by leaps and bounds since 2009 and so may have your investment needs.

So, is it time to evaluate your investment properties? If it is, give me a call at 913-568-1579. I’d love to help.

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Filed under 1031 Exchange, 4 Benefits of Real Estate Investing, Kansas City Real Estate, Real Estate Investing, Uncategorized

October 10, 2016 · 5:14 pm

Mistakes Real Estate Investors Make

Here are some of the more common mistakes I see real estate investors make year after year in the real estate investing business.

Hiring a “home” agent to help them buy or sell.
Not double checking their assumptions regarding rents, expenses and loans.
Over-leveraging.
Under-leveraging.
Not choosing the right property management company.
Buying when prices are at their peak.
Multiple bid situations.
Buying too much too fast.
Not acquiring to a strategic plan based on future need.

Just a little food for thought for you.

Investment vs Speculation

One of the topics I like to revisit over and over is the idea of real estate investing versus real estate speculation.

Real estate investing is the thoughtful approach to building wealth through the acquisition of good, solid properties and then allowing the 4 Benefits of Real Estate Investing to do their thing.

Cash flow before taxes
Principal reduction
Tax benefits
Appreciation

Real estate speculation is the hopeful approach to building wealth as quickly as possible (or possibly losing wealth) through the acquisition of properties “on the come”.

Your guess could be very wrong about a neighborhood.
Your guess could be very wrong about the economy.
Your guess could be very wrong about the rents.

I’m not saying people don’t make money through real estate speculation But it’s more of an “active” way to earn income versus a “passive” way to earn income.

Feel free to call us should you have any more questions about the difference. It’s better to know beforehand what you are getting yourself in to when it comes to real estate purchases.

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Filed under Real Estate Investing, Uncategorized

June 25, 2015 · 9:19 am

The Supreme Court, Disparate Impact and Property Management

Well, in the opinion of this author, we’ve moved yet another step closer to hell. Today the Supreme Court ruled that Disparate Impact lawsuits for discrimination can move forward and are part of the fair housing acts enacted in the 1960s. This is a HUGE expansion of fair housing and I’m not really sure it can be defined. And that is what make me nervous.

I am all for the seven protected classes that fair housing protects. No question. And we are very careful to not violate those classes. But now the definition of discrimination has grown so broad that I don’t know when we’ll be discriminating and when we wont.

See this link for an example.
http://www.kentucky.com/2015/06/25/3917235_supreme-court-opens-door-to-housing.html?rh=1

Here is the important paragraph:

A “disparate impact” arises when a practice produces different effects across racial groups, even if the practice wasn’t racially motivated. For instance, if a mortgage lender establishes borrowing standards based on income and net worth, and some racial groups are less likely than others to qualify for loans under those standards, this could result in a disparate impact

And I had a Kansas City housing official tell me about a year ago that in his opinion (now green-lighted by the Supreme Court) that because I refuse to lease homes to people with violent criminal pasts and that disproportionally people of color go to jail because of violent criminal behavior that I am discriminating against people of color under the broad definition of “disparate impact.”

Here is the scary, scary thing. It doesn’t have to intentional. And we all know it doesn’t have to be really even proven in civil court. So regardless of the fact that I won’t rent to a white guy with a criminal past I may still be discriminating under disparate impact because I won’t rent to a person of color with a criminal past.

Where does this stop? Read carefully and think about the two examples given. Then take time to shiver. Government has taken another step into allowing housing to become a populist right.

Again, to answer some of the arguments I can already hear, I am not discriminatory. Not in my nature. But I’m not stupid, either. This will be used against property managers, landlords, realtors and lenders to the tune of hundreds of millions (billions) of dollars in lawsuits. And that will “trickle down” into your expenses, too.

1 Comment

Filed under Property Management, Real Estate Investing, Social Issues

April 7, 2015 · 7:35 am

What Is Your Criteria For Investment Property

Good criteria is the most important aspect of real estate investing. At least that is what the last thirteen years of working with real estate investors helping to buy, sell and manage income property has taught me. What is your criteria when it comes to investment property?

I have written about how important good criteria is for your rental properties before. Here are just a few of the posts for you to go back and read. Heck, the dates are from years ago but the philosophy has not changed at all.

What is Your Criteria For A Good Investment Property?
Real Estate Investment Property Criteria
Set Criteria For Your Real Estate Investments

Identifying the returns you would like to make in real estate investing is very, very important. But so is knowing what property you are looking for to make that happen. And what if your criteria and your return goals don’t match up? Well, then you can move on to another investment vehicle that will better suit you than real estate or you can counsel to find out what is actually realistic when considering income property as a vehicle to get you to that retirement worth having.

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Filed under Real Estate Investing

March 30, 2015 · 4:43 pm

Fully Understanding Investment Property

There are so many moving parts to fully understanding investment property that it is easy to get confused and overwhelmed. But relax, just like algebra, it’s not all that difficult once you break it down in to little bite sized pieces.

The next series of blog posts will include the following subjects;

YOUR CRITERIA
YOUR TEAM
YOUR ACQUISITION
YOUR PROPERTY MANAGER
YOUR EXIT STRATEGY

In the following posts we’ll discuss each of these in detail to help you understand how you should really think about investment property whether it’s in Kansas, Texas or California. We’ll talk about realistic expectations versus guru-seminar fantasy. At least from what I see here in Kansas City. As a professional real estate broker and property manager with Ad Astra Realty I can tell you what really happens out on the street.

Interest Rates and Your Rental Property

We have been enjoying historically low interest rates for about these past 6+ years. I mean historical. If you are reading this and you are 35 and under you need to know it’s not your God given right to have interest rates at or below 5%. These rates are going to go up. It’s really just a matter of time. In fact, I’m surprised they are still so low.

When interest rates rise it negatively impacts your rental property purchases. Don’t worry. The income property you have now, if it’s on a fixed, conventional loan, won’t change. But your purchase of additional rental property will change. With higher interest rates you’ll have to buy the rental property at a lower price or get higher rents (or a combination of the two) in order to receive the same rates. And that is not always possible.

Then 10% cap rates become 9% cap rates, and so on.

Now is the time to keep buying rental property if you can afford it. My guess is, it’ll be decades more before we see rates this low again.