Category Archives: Real Estate Investor Interview

September 18, 2025 · 11:50 am

House Hacking and Kansas City BBQ

I wanted to share a new video series we are doing for real estate investors here in the Kansas City area. The series combines two of my favorite things.

Real Estate Investing
Kansas City BBQ

This first video is about House Hacking.

What is House Hacking? It’s a term the younger people use. House Hacking describes a process I’ve taught younger buyers many times in my 26 years of real estate. Essentially, it’s buying your first property and making it a duplex. The advantages are many.

You can live in one side and rent out the other allowing your tenants to pay a significant portion of your PITI (Principal, Interest, Taxes and Insurance)
You can buy with as little as 3.5% down instead of 20% down
You have a lower interest rate than if you bought an investment property
You have lower closing costs than if it was just an investment property
You can learn how to work with tenants and manage property because you are right there

FIND THE VIDEO HERE: House Hacking and Kansas City BBQ – Learn Secrets to Wealth

There are many others, but those are just a few to get your mind racing.

Are there young people in your life asking you how you got started in real estate investing? Are there young people in your life you’d like to share the gift of knowledge about House Hacking as a way to get started for them?

I encourage you to watch AND share this video with them. Yes, it may create more sales for us here in Kansas City. More importantly, it will help us to get more home owner/investors started on their journey and discover what you’ve already discovered: housing is one of the best ways for “regular” people to create real wealth.

Thank you for watching. Thank you for sharing. And thank you for supporting Ad Astra Realty. We are here to serve you.

Actual Cash on Cash Returns of a Kansas City Real Estate Investor

Here at Kansas City Real Estate Investing we get asked all the time, and rightfully so, for real life examples. Real numbers.

“What is my return going to be if I go with you?”

Well here are some actual cash on cash returns of an Kansas City real estate investor. Below is an email I sent to an income property investor who is actively in the Kansas City market buying, rehabbing and then renting property on a consistent basis. You’ll be able to figure out the average all in costs with a calculator and just a few minutes of your time.

Some background: This investor now holds 47 rental properties that we have had the pleasure to sell them, then manage the rehab and then manage the properties with suitable, qualified tenants. We ran these numbers for the houses that had closed before the end of October of 2011 and thus were inhabited by real life tenants by January 1.

Also, while these homes are not in Mission Hills style neighborhoods they are perfectly safe, have good school districts and now have lots of sweat-equity. I won’t let my clients buy – rehab – rent a house that I don’t want to manage. And if my grandma wouldn’t spend the night there* (God rest her soul) then we don’t buy it.

Enjoy…and hopefully you’ll pick a few nuggets out of the brief synopsis.

* Phrase stolen from BawldGuy.

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So to get to the bottom of the question as to how much these houses are/are not making what I did was go back to the homes that we purchased last summer/fall that we had time to get rehabbed and rented before Christmas. I took the close date and then gave about 60-75days (or so) for rehab and lease out and to basically let all the rehab expenses fall off and just get to the expenses you would have if you had bought turn key.

Attached is a .pdf of the raw data if you would like read. But here is a breakdown that may be helpful.

There are 15 properties in question. Of those, 4 turned out to have some post-inhabited major repairs…either things we should have done before occupancy or things we had no way of knowing. (See more details in the raw, scribbled data.) Also realize that on the raw sheets I put approx how many months the homes are being evaluated from. No insurance or taxes are included. But literally everything else is.

All 15 homes had an income of $109,083 with expenses at $40,887 which is 37.5% of income.

If we lose the 4 homes with the more major repairs (new ac, new plumbing, etc.) we had 11 homes with income of $82,321 and expenses of $23,947 which is, of course, 29.1% of income.

There are variables here that are hard to pinpoint. We cannot know EXACTLY what the numbers are until all rehab expenses are pared off and I cannot know that without a forensic examination of each and every property. So I tried to accomplish it by just taking the close date and adding a couple months as mentioned above.

So sometimes the lease out fees may not be totally included. But in most cases it’s close.

Adding in pro-rated insurance and taxes and I think we’re pretty close to (or possibly under) the 35% I like to shoot for…at least on the houses that didn’t have something major come up on. With those extra four houses included we’re probably more like around 40%-41% range.

I hope this helps. I’m happy it showed pretty much what I promised/expected. 🙂 But positive or negative I’d love to hear your thoughts.

If we want to take the scenario farther…and I do…let’s figure a pro-rated return of all 15 homes. I’d say the average is about 9 months.

109,083 – 40887 = 68,196 / 9 months =7,577/mo x 12 = 90,928

If you take the CAPEX Column R from our KC Portfolio Master then you’ll see your all in price for those homes is $648,747.

$90,928 / $648,747 = 14.0% cash on cash return

Not too shabby.

But again, this just can’t be exact with some of the educated guess work I’ve had to do. So plus or minus 1% is probably safe to say.

And we haven’t even talked about the hidden equity in all of these homes now….

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Find out more about Kansas City real estate investing by following me
@KCInvestments

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Filed under 4 Benefits of Real Estate Investing, Investment Property, Kansas City, Real Estate Investing, Real Estate Investor Interview

September 15, 2010 · 11:53 am

Kansas City Real Estate Investor Interview

I emailed one of my clients yesterday to ask him if he would mind sharing his thoughts and why he is a Kansas City real estate investor. I think people invest in real estate for a variety of reasons and I love hearing those reasons and the thoughts behind them. And for as many real estate investors as there are there are an equal number of reasons, formulas and thought processes.

This particular real estate investor from Kansas City has purchased a primary home (a condo) from me, an investment duplex and an investment single family home. He recently went through a nasty tenant situation wherein he basically ran in to a professional dead-beat. Before you think you couldn’t fall victim to a pro dead-beat you need to know you are kidding yourself. It can happen. But like anything, there are challenges and successes.

Enjoy. And, Kelly, thank you for sharing.

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How long have you been a real estate investor? I’ve been in the real estate business for almost 6 years, and nearly 4 as an investor.

Why did you start investing in real estate in Kansas City? I started investing in KC real estate because I had several friends who were doing the same thing and I thought I would be pretty good at it.

What do you look for in an income property? When looking at an income property my main focus is the cash flow potential versus the management necessary to run the property.

You recently had to do an eviction. I think your first. What was that experience like? Yes this was my first eviction, and it was a nightmare. I believe I had a unique case as my friends have said their eviction experiences were not as bad as mine.

What did you learn from the entire process? From this process I have learned to do thorough background checks prior to renting, and it will hopefully make me a better tenant screener in the long run.

Do you mind sharing what you do in your professional life and how that has shaped your real estate investing goals? I am a commercial real estate appraiser by trade and that has certainly played a role in how I look at potential investments. I feel that I have more patience to wait until the best deal comes around and don’t need to leap at every opportunity that I look at. It has also set a goal for me to eventually graduate to commercial real estate investments.

Kelly

Successful Real Estate Investor Interview

I have been remiss lately with my interviews of successful real estate investors. I apologize. Today, however, we are interviewing “Another California Real Estate Investor”. This person is a reader of this blog though this real estate investor does not (yet?) invest in the Kansas City area. Still, their experience is something we can learn from. This person chooses to stay anonymous.

Q: How many rental properties do you own and (in general) where do you own them?

I own approximately 25 rental homes in the Phoenix area. I have been investing there for about 12 years.

Q: Why don’t you own any properties close to home?

I do not buy in California because the numbers do not make sense and have not made sense for years. That’s not to say you can’t make money in California real estate, because you can at times. However, it’s difficult for a buy and hold investor trying to create an income producing portfolio to do so here.

Q: What is your general rule of thumb when purchasing a good investment property?

I have several rules of thumb. I’m old fashioned, so I focus first on cash flow. In my experience, the biggest mistake new investors make is to focus solely on appreciation. Real estate has risk and it is not a passive investment. Leveraged real estate requires debt repayment, and it is much less risky to have the net income from the property make those payments. In addition, you can make mistakes early in your real estate investment career if your mistakes produce income!

I look for houses located near employment centers with a variety of jobs and in neighborhoods with good schools and other amenities. Proximity to a university and/or a major medical center increases the tenant pool substantially. In my target areas I look for three and four bedroom homes with family rooms and two car garages. I look for 0.75 percent of the purchase price per month as a minimum rent to value ratio. That’s extremely tough to find today.

Q: You’ve told me in emails that you prefer single family homes to duplexes. Would you like to elaborate on that?

Most investors out there are not full time investors. They have full time jobs and are seeking to diversify their investments and create retirement income. That’s where I was when I started.

Unless you want to be the property manager, I would stay away from units, at least in California and Arizona. Single family homes in stable, well-located neighborhoods are easy to rent, attract better tenants, turn over less often, and generally have lower maintenance costs. If you do not live within an hour’s drive of the properties, you will probably want to opt for property management. It’s easier to find decent property management for houses. In addition, my observation is two to four unit properties tend to be overpriced in today’s market, based on the net income these properties actually produce.

Q: As you examine the market today, what are your feelings about acquiring or liquidating property?

It’s a difficult market on both sides. There are opportunities out there if you shop carefully, but bargains for the cash flow investor are still hard to find. The Phoenix foreclosure market is very hot right now, with multiple offers on many properties, but the cash flow still does not meet my requirements. I would only sell if I needed to raise capital. If you bought right to begin with and your properties are producing income, you should probably adopt Warren Buffett’s attitude toward your investments. Pretend the market is closed and deposit the rent checks.

Q: Any closing thoughts?

I really like your investment approach for the 20 and 30 somethings. Buy that first owner-occupied property with a plan to convert it into a rental property within two or three years. When your life settles down and your income becomes more predictable, move up a little in house, and rent the first house. Rinse, repeat, and you will have a three property rental portfolio in six to eight years. Max out your retirement plans in the first few years, and between the houses and your other investments, you will be on your way to serious wealth.

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March 27, 2008 · 7:54 am

Tax Time Has Tax Consequences

Hurricane It’s only twenty days until April 15 hits with a powerful punch for some of you. Have you figured your tax consequences to your 2007 activities yet? Or has your CPA?

Real estate investing can be very lucrative, tax wise and otherwise, if done correctly. I’m going to publish an email I received this morning, anonymously of course, from a client I’ve sold a couple of properties for. He’s owned property for 4 decades but sold off his final property in 2007. Now before you cry for him, he knew how his actions would affect his taxes BEFORE selling because we discussed it. And because he’s sold without exchanging before. Money should not be an issue for him for the rest of his life. 🙂

Oh, and I love the milk analogy.

Chris,

Nice shirt, nice color, nice thought.

Glad to see your keeping a visible presence with your past clients. Who knows when I may come back to make more money in real estate.

Just finished doing my taxes and had a refresher course on recapture of depreciation and capital gains. On the recapture I can understand Uncle Sam saying you did not pay taxes on that value you said was depreciating but it did not depreciate, so pay me now. That is only fair.

One thing I do not understand however is capital gains. You see when I bought my Duplex, milk was selling for $1 a gallon. When I sold the duplex milk was selling for $ 3 a gallon. My duplex sold for 3 times what I paid for it so I could by the same amount of milk today now as when purchased the duplex. But Uncle Sam says I had a Gain and wants a tax that gain. I did not gain purchasing power just an inflated number. If I were to use the price of gasoline there would be loss of purchasing power. Nothing you or I can do about this fact but grin & bear it.

The good news however was that all that inflated gain was paid for by rental payments made by others.

So there is some money to be made in Real Estate. With inflation about to go gangbusters in the near future one needs to keep hard assets like Gold & Metals ( which do not pay dividends) or Brick & Mortar (also know as housing) which can produce dividends known as rent.

Ciao;Name withheld

Last week I recommended you read Jeff Brown’s article on how to figure your basis. You’ve just read a real life email on how your basis relates to you in real life. And did you catch my most favorite sentence in that whole email?

The good news however was that all that inflated gain was paid for by rental payments made by others.

Oh, how I do love Principal Reduction. Now go do your taxes!

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August 20, 2007 · 12:27 pm

Interview With A Young Kansas City Real Estate Investor

Folks, I’m in Austin,TX right now (what a town!) and don’t have time for photos to pretty the blog up. But I wanted you to know about this young Kansas City Real Estate Investor that I have had the honor to help for the past few years. His name is Ryan. Enjoy.

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How long have you been investing in real estate and what got you started? And would you mind sharing your age?

I bought my first house July 2005. I am 26.

What is your area of focus? I mean, Buy & Hold, Buy & Sell…

Primarily Buy and Hold. However, I have one property under contract with a lease option to purchase agreement. Additionally, I have a potential buyer for another home that is currently being remodeled.

You like to use construction loans to purchase homes. Tell a little about your thinking there.

Using construction loans is a good method of financing when a home is in need of serious repairs. Additionally, it is good way to avoid using any of your own money. Refer to the simple figures below:

Purchase Price: $80k
Repairs: $20k
Total Loan Amnt: $100k
After Repair Value $120k

Based on these numbers you have created $20k in “sweat equity” without using any of your own money. (Note: construction loan usually have an interest rate of prime + 1. This is much higher than a typical 30 yr fixed loan.)

If you are planning to hold the property it is wise to refinance the construction loan with a long term loan. When refinancing you can essentially use the 20% “sweat equity” as a down payment. By leveraging your equity for your down payment you avoid using your own money and get a better interest rate.

To date, what has been your biggest success?

Since my investment strategy is aimed more towards buy and hold… I would have to say my biggest success would be the amount of property I have been able to accumulate in the two years of investing. Additionally, the amount of equity I have in my real estate holdings.

Your biggest regret?

I really don’t have any regrets. Although, I have made a ton of mistakes. But with every mistake I make I would like to think I learn something from it.

I guess one regret would be that I didn’t start investing in RE while I was in college. With all the free time I had it would have been fairly easy to manage / own a few rental properties.

Investing in rental property can be tedious and move at a slower pace than some people like. To this you say what?

Rental properties aren’t going to make you rich over night. But over the long-run if you are able to grow your RE portfolio and pay off the loans you can generate a sizable monthly income. Also, the properties will continue to appreciate – further increasing your wealth.

Buy and Sell strategy in a good market is obviously more fast paced. If you have a reliable source for finding good deals and good people working for you then you really can’t go wrong. But you could probably say that about any business.

Anything you would like to add, say or preach about?

Just for the record. I am by no means an expert in real estate. It is something that I enjoy doing and will continue to do until I am old and hopefully retired.

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August 3, 2007 · 7:21 am

Gen Y Will Be Your Tenants

I was reading through my copy of the REALTORS Commercial Alliance Report last evening and specifically a story titled Who Are Tomorrows Renters?

Thought I would share a couple of exerts from the article:

“I’m really bullish on multifamily demand” says Leanne Lachman, president of Lachman Associates…

Projections by the Joint Center for Housing Studies at Harvard University estimate that around 2 million new households will be formed between 2005 and 2015. Rising interest rates and booming growth in many traditionally renter demographics make it likely that apartments will receive a proportionately higher share of that growth than they have in the last few years.

Between now and 2020, 4 million Americans or more will be turning 18 each year.

While an average of 31 percent of all U.S. households rent, the number jumps to 74 percent of those under 25 years old and stays at 59 percent for households between 25 and 29 years of age…

Some households rent as a lifestyle choice, avoiding the costs and inflexibility of home ownership. Indeed a 2006 JCHS study found that some 20 percent of renters had incomes above $60,000. However, the majority of long-term renters are there because of economic necessity.

I find this all a great indicator of growth. Especially in the areas of town that will appeal to the upcoming youth. Close to business centers, nightlife and where space is affordable. Know of any areas that fit this description?