Category Archives: Real Estate Investing

Instead of making resolutions you may never intend to keep, may I suggest setting your 2014 goals for your real estate investing ventures?  How many properties do you own?  How many would you like to own?  Here are some things to think about as you are setting 2014 goals;

• Should you sell or exchange in 2014?
• Should you buy?
• Should rents be moved up or down?
• Is it time to change who manages the property?
• Is this the year to catch up on deferred maintenance?
• Have a good tenant?  Maybe it’s time to send them a “thank you” letter.
• Any value-added improvements that could be done?

Hopefully those few things can get you started on your planning for next year.

Real estate investing isn’t supposed to be all that complicated.  But so many times I really believe that real estate investing is for dummies.  And I don’t mean that in a complimentary way.  The shear gullibility of so many would-be investors and/or the shear lack of understanding of the very basics of the numbers cracks me up.  I have to laugh because maybe I should cry.

Example 1
I recently had someone who wanted me to sell properties for them down in the Murder Factory part of Kansas City.  These homes should never have been purchased by a new investors, let alone a new investor from out of state with little knowledge of the area.  Why they were sold to him I cannot understand unless the moral compass of the agent is a little off.  There is simply no way I want to be involved with trying to recoup the losses from bad purchases in the middle of bad rehabs in the middle of a bad part of town, economically speaking.

Example 2
I recently had someone decide to not work with me because I am “defensive” about charging an additional commission for my years of expertise.  Apparently these two new, first time investors who both have professional situations, seem to think that their realtor who can guide them to good properties shouldn’t earn much of a living. They want me to do breakdown analysis for them, identify properties for them and walk them through the contract and buying process  and make less than $600 – $800 because they only want to buy $40,000 (or so) properties.

Now, I’m not mad.  Just amazed.  Astonished, really.  I’ve helped people buy and sell investment property in Kansas City for quite a while now.  I’ve helped people grow and grow their investments and have more positive references than you could positively want.  Over the years I’ve had so many people who didn’t listen to me on the “buy” call me and ask me to help them out with their “sell” because the property turned out to be a mess.

No, I’m not mad.  Just astonished that people keep making the same mistakes over and over.  I wish people could learn from the experience of others.  I wish people could believe a guy that lives on commission when he’s telling them not to buy something.  But I guess human nature being what it is, I’ll still be doing this five years ago and having the same thoughts.  🙂

For more than a few years I have been offering my services to examine real estate investments here in the Kansas City area for a flat hourly fee.  Mostly it has been real estate investors from out of town that have taken me up on this service and I believe the relationships have been beneficial to both parties.  Now I am beginning to offer my services for the purpose of coaching investors and their agents.

One of the most difficult tasks for the real estate investor in Kansas City and across this great country is the task of finding an agent that knows, understands and is willing to work in concert with the goals and passions of the investor.  On the other hand, one of the most difficult tasks for real estate agents is knowing which real estate investor is an actual investor and not someone who is looking to cash in on the extreme efforts of the agent wherein the agent gets little to no return, ie writing 100 offers in the hopes that one sticks.

Having worked through hundreds and hundreds of investment property transactions, managed 135+homes in the KC area and having talked with literally thousands of investors and about a half dozen of really good investment property real estate agents I have decided there is a real need for this service.  Ideally, both agent and investor will call me to discuss the services. But I know the reality is that I’ll probably only be working with one or the other.

Should be an exciting ride.  Let’s see where it takes us.

Over on Bigger Pockets there was an article posted to real estate agents on how to work with real estate investors.  And by in large I really cannot argue with too much of it.  It’s critically important to work on finding the right real estate agent for real estate investors.  I like to think that I am one.  But I know my personality and style and target does not necessarily fit everyone else’s goals.  So hop on over and take a read.  As a real estate investor it will help you to know how to help your agent to help you.

But I also need to point out that when you find an agent that knows what he is talking about quit trying to abuse him. Do you know how many seminar goers I get wanting me to quit making a living and help them write 100 extremely low-ball offers so that maybe they will get one (and God willing, two) $40,000 houses?  Do you know how much work that is on my part?  Essentially some of you are asking real estate agents to work upwards of 60 hours in the hopes of making a commission of $768…or maybe twice that if  two pop.

Would you work that hard for $768? (Based on a 3% commission paid by seller and then a 64% split with broker.)  C’mon.  This is supposed to be beneficial to everyone.  A real estate agent that understands the numbers, the neighborhoods and the outcome is worth his weight in gold.  Do you know how many retirements worth having I have helped to fund for people?  And in turn I’ve made a nice living for my family.  See how that is supposed to work?

If you want to be a serious real estate investor at some point you are going to need a professional realtor.  Know what to ask.  Know what to expect.  Know how to compensate them fairly while maximizing your situation as well.  Win-Win isn’t just a trite saying.  It’s a profitable one, as well.

Over the last four months of my real estate business I have been changing my real estate goals and direction.  This is because I do not believe in trying to make square pegs fit in to round holes, like so many real estate investors.

Today I received more fuel for my fire when my LinkenIn account sent me a new story update about plunging foreclosure rates.  I’ve been writing for a few months now about how the current real estate market has been changing right before our eyes.  The sudden change from December 2012 to July 2013 is a remarkably quick change.  From December to April it was actually mind-blowing.

But with the new realities in pricing and demand adjustments must be made as far as expectations with quality and price of the house you will be buying for both personal and investment uses.  Investment property expectations have changed drastically.

Yes, there is still plenty of room for the savvy, professional real estate investor.  But it’s not 2010 anymore when I couldn’t get some of you to answer the phone.  🙂

Search for homes now.

It’s your numbers, silly.  With income property it’s all about the return numbers.  But to determine the return numbers you need to know as closely as possible what the cost of the property is.  Items that go in to cost?

• Cost of rental property.
• Closing costs.
• Capital improvement costs.
• Ongoing maintenance costs.
• Taxes.
• Insurance.
• HOA?
• Advertising, marketing and vacancy.
• Depreciating costs of big items like ac/furnace, roof, foundation, carpeting.
• Property management.

That’s not an all inclusive list but should get you to thinking.  Which were you already forgetting?  If list all the variables and add them up and then divide by realistic expected income then you should have your income property numbers.  Are they good?  Bad?  Now is the time to evaluate.  Before you buy.  Not after.