I’m not much of a gloom and doomer. Though I can recognize situations to stay out of. From today’s Kansas City Star Money Wise…
Investors are borrowing record amounts of money to finance trades on the New York Stock Exchange. Margin debt jumped to $343 billion in May.
Now for those that argue you can leverage stock investments, you can. But the rules for “the call” are much different.
Filed under Uncategorized
Not too long ago Jeff Brown wrote an article titled My 4% Will Beat Your 10% Any Day – Stocks vs Real Estate and it received quite a few comments.
Then in through the door walked Michael Cook. Michael left a couple of compelling comments. And to make a long story very short (heck, you can just follow the first link and follow along) what we have here is two heavyweights getting ready to square off.
Don’t get me wrong, it looks to me that these two gentlemen have the utmost respect for each other and both make reasonable and sound arguments. And I don’t know about you, but I love a good intellectual debate.
Not sure if there will be a winner or loser in this debate so much as two guys arguing their approach to wealth building. I will tell you who will be the winner, though. Readers who take the time to follow along and educate themselves. You cannot have too much education.
There simply is no place more beautiful or romantic than Kansas City’s Country Club Plaza at Christmas. I’ve had the good fortune of seeing New York’s Rockefeller Center and Washington’s National Tree lighting ceremony.
But Kansas City’s one great contribution to Christmas is The Plaza. Photos just cannot capture the majesty of the place. And it’s not bad the rest of the year, too.
Last evening my wife & I along with our best friends decided we needed an upscale night on the town. There are plenty of entertainment and dining options in Johnson County, Kansas. But for romance and a truly world-class experience there is really only one place to go.
History & Flavor
The Country Club Plaza was first designed in 1922 to be the country’s first suburban shopping district. From the linked website comes the following…
The Plaza is an outdoor museum of romantic Spanish architecture and European art where people actually live and work every day amid its beauty. ~ Those who have traveled overseas might do a double take when they stroll past the statue of Sir Winston Churchill. Just steps away two of Spain’s landmarks–the Giralda Tower and the Seville Light — tower majestically on the horizon. Down the street in a quiet courtyard sits an original bronze of Pomona by Italian sculptor Donatello Gabrielli. Is this England, or maybe Spain, or could it be Italy? What a surprise to the traveler to find these magnificent European works of art in the heart of the Midwest — on Kansas City’s famed Country Club Plaza.
Modern Times 
Today’s Plaza if filled with the finest shops you would expect to see in Paris, New York and San Francisco. Visitors from out of town on their first visit to Kansas City, are always amazed at the experience they are filled with upon first arriving at The Plaza.
International level hotels from big names and boutiques are closely located to and within the boundaries of this magnificent destination. National chain restaurants and local fair are intermingled with the shopping, fountains and street experiences. Pedestrians have the right of way on The Plaza. Really. With only a couple of stop lights interfering with the charm drivers are instantly educated to the fact that this place is one of a kind. Park the car and walk. No matter the weather.
Romance is easily discovered. Carriage rides of all shapes and sizes are available. And in the warmer months gondolas meander up and down Brush Creek. Or you can just stroll up and down the streets window shopping or admiring the beautiful fountains.
The Country Club Plaza in Kansas City is truly our area’s pride and joy. The proper balance of condos, close by homes and big business all work together to make this a spot you must visit during your lifetime. Don’t shy away from a visit to Kansas City. You will leave with a smile on your face.
Investing is a fascinating topic for me. I like simple math. So here is a little something I figured out in a few minutes regarding traditional investing (stocks, bonds, whatever) versus real estate investing.
Traditional Investing
Let’s start with a $10,000 liquid savings account. We’ll buy some stocks, not counting any fees, and we’ll add $200/mo. to that balance. Every month.
And we are going to say that we have an 8% return each and every year. (Yes, I know some years will be higher, some lower. I wasn’t born yesterday.)
After 30 years you should have approximately $398,698. Hey, that’s pretty good! I’d take it. Unless…
Real Estate Investing
Let’s take the same $10,000 and leverage it into a $200,000 duplex. Now the cash flow on this will be negative so we’ll contribute that same $200/mo. we used earlier to help it break even. Just to be fair I’d hate to throw in the other advantages of real estate investing like depreciation. But we will use principle reduction and appreciation.
So after 30 years the mortgage will be paid off (by the tenants!!!!) and we’ll use an annual appreciation rate of 4%. That sound more than about right.
Where are we after 30 years? Right around $650,000. Doh!
Filed under Real Estate Investing
Real estate sales is an inexact science, at best. Take the house pictured at right. We started it off as a two bedroom. After a few months of barely any buyer views we converted the home back to a three bedroom, though one bedroom was pretty small.
Again, barely any buyer views. Then one day 10-12 days back I had 4 different agents show it in a 24 hour period and we accepted an offer.
Before that offer, over the course of 6 months I probably had 2 sign calls inquiring about the house. Since we’ve accepted the offer I’ve probably had about 10 calls inquiring about this Kansas City, Kansas home for sale.
I can’t explain it. I really can’t. I market all my homes for sale very aggressively and use nearly the same formula for all of them. Some sell quicker than others. And some generate more interest than others. But that’s twice this year, so far, that as soon as I get a house under contract I get quite a bit of interest.
I may never figure this business out in that regard.
Filed under Kansas City Real Estate
Once again Missouri has figured out a way to stick it to Kansas. And once again, Missouri will lose if Kansas chooses to retaliate.
Reported in today’s Kansas City Star (go out an buy a copy)…
The first shot was fired by Missouri when Gov. Matt Blunt signed a bill this month providing an income tax break for Missourians who receive Social Security. It contained a little-discussed provision eliminating a deduction for real estate taxes paid outside Missouri.
That’s a $190 ding for the typical Johnson County resident who works in Missouri.
When someone asked Governor Matt Blunt of Missouri about the tax that screws Kansans his response was again reported in the Star as…
Blunt said he was the governor of Missouri and his focus was on reducing taxes for Missouri residents.
As someone who has to pay some Missouri taxes, this is just stupid. Why? Because when Kansas inevitably responds, here are the numbers
Based on commuting patterns, Johnson County’s Economic Research Institute estimates that more than 71,000 residents from eight nearby Missouri counties work in Johnson County. And at least 53,000 Johnson Countians work in those Missouri counties.
So by getting taxes from 53,000 JoCo residents the Governor will cost 71,000 of his residents higher taxes. Will Missouri ever learn? This is why there is so little cooperation between the “rich” Johnson County and the “incompetent” Kansas City/Missouri governments.
Nobody asked, and it has nothing to do with real estate investing… No wait, it has everything to do with real estate and real estate investing. More taxes cause higher expenses. Higher expenses cause higher rents and fees. Figure it out. Just my $.02 on the subject.
For you out of town readers Kansas City, Jackson County and the State of Missouri are always trying to figure out how to screw Johnson County, Kansas. When they did a study and found out the majority of ticket buyers to the Chiefs and Royals were Johnson Countians they added a per seat tax. Then they “locked out” Kansas ticket buyers for the perennially sold out Chiefs until all the Jackson County residents who wanted tickets had tickets. (Not that Jackson County can support the Chiefs all by themselves.)
Then there is the City payroll tax. The bi-state tax and the never ending attempt to get Johnson County to further subsidize Kansas City, Missouri. I’m all for civic cooperation, realizing we all have a stake in this metropolitan area. It would help is stupid policies like these weren’t instituted. It just builds further resentment.
Filed under Kansas City, Social Issues
Now, don’t jump all over me. I realize there is a word out there called diversification. But there is also an “old-fashioned” theory out there called having a plan. Purposeful Planning is what my friend Jeff Brown calls it.
I’m not going to dive into this too deeply. I could make this a four part post. But I am going to say, that in my mind at least, there is a huge difference between being a real estate investor or being a property collector. Real estate investing takes planning, purpose, education, guidance and hard work. All of those combinations put together create all those conversations that start with “Boy, you sure were smart all those years ago to buy those properties. I wasn’t that lucky…”
With property collecting, you will need some luck involved. Some people make it through with this philosophy. Some “investors” don’t even realize they are property collectors.
Stop right now,review your portfolio of income property. Does it look like it happened on purpose? Then keep it up. Is it a mish-mash? Then let’s talk.
Filed under Real Estate Investing
BBQ Capital | Kansas City Real Estate Investing 