June 11, 2007 · 2:12 pm

First Time Home Buyers

I love working with residential investment property. But to keep myself fresh I also really enjoy working with young home buyers. Especially, first time home buyers.

This weekend I had the opportunity to work with a young couple that was referred to me. The excitement in their eyes and nervousness in their signature is something that always takes me back to my first house.

To the real estate agents out there, don’t forget about this market segment. It reminds you of the pure joy of our business. To young home buyers out there, get started. People do everyday. It’s scary. But it’s doable. And if you manage your finances properly, you will find it tough to lose.

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For those of you who know me well you know my oldest boy is over in Fiji, New Zealand and Australia this month. To follow his exploits and those of his fellow student ambassadors just click here.

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June 9, 2007 · 2:54 pm

Yahoo! Says Real Estate Sky Isn’t Falling

What? A rational article from the “media” about real estate values? Congratulations to Yahoo! for using their heads.

I read a funny article in the USA Today a few days ago, that I believe I referenced, and they just couldn’t say enough negative things about real estate. They were comparing real estate investing to investing in the stock market.

Never mind that they forgot to mention leverage. Or principal reduction. Or depreciation. But to each his own.

Kansas City isn’t going through a negative growth period. In fact, many areas of Kansas City still have very fair to reasonable growth. A couple areas are doing very nicely, thank you. The sky isn’t falling. Real estate was never as good or as easy as the media were making it out to be a couple of years ago.

And it’s not as bad as they are making it out today. Just my humble opinion…again.

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June 8, 2007 · 9:13 am

New Real Estate Links

Today I’m adding two very worthy sites to my Real Estate Links section. You’ll want to add these to your reading.

RE Agent in Connecticut aka The Sock Puppet

REALTOR GENIUS

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June 8, 2007 · 6:57 am

The 1% Rule When Investing In Real Estate: Is It Dead Or Alive?


Would you believe me if I told you there was a place on this planet Earth, right here in the United States, where the 1% Rule was still in play when considering residential real estate investing?

There is. And those of you that know me well know where it might be. I’m working on plans to help my real estate investor clients to know when and where to put their hard earned investment capital.

For those of you unfamiliar with the 1% Rule it goes something like this. Buy your income property or rental houses or investment homes (whatever you call them) where the rent is 1% of the sales price. In other words, if the home costs $100,000 then the rents would be $1,000 per month.

A fantasy you say? If I lived in California or Washington, DC or New York or Florida and owned income property there I would be skeptical, as well. But there are such places here in the Heartland.

Kansas City is a great place to invest in income housing. No question about it. But there are a couple of other jewels out there where growth is STILL happening and rents are strong. More on this as things come closer to finalization.

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June 7, 2007 · 7:48 am

Current State of the Kansas City Real Estate Investing Market

Here are my opinions on the current Kansas City investment market for real estate:

Buy & Holds – This market is in great shape. There are several values out there right now and many, many homes priced at a realistic market value based on their community. I’m high on duplexes and fourplexes and lukewarm on single family homes. Several apartments for sale right now have grabbed my attention, as well. I’m forecasting a 5-7 year hold period for maximum use of depreciation, appreciation and then an IRC 1031 exchange.

Rehab Properties/Flipping – This market scares me at this time. Sure, there are some good properties out there. I just haven’t seen them. Many foreclosures right now are aborted rehab situations. Not enough appreciation and housing demand to make this a lucrative enterprise at this time.

Buy, Rehab & Hold – I’m very high on this strategy. Very high. There are many a house for sale right now that are value priced but not lean enough to do buy, rehab, and sell. But if you can buy, rehab and have $12,000 of equity before you hire a property manager and put a renter in, why not?

Rental Market – In many parts of the city the rental market is extremely strong. Only a few pockets of weakness that I have seen. Most of the property managers I speak to have the same opinion. Gone are the days of long vacancies and rental incentives to get people in. Unless you are a pioneer on the outskirts of town. Then you are probably running high vacancy rates and banking on end-game appreciation. I’m not thrilled with that idea as housing growth (building) has greatly slowed.

Lease Option Market – I do very few of these. But three different real estate investors I know have successfully entered into lease option agreements with their “tenants” within the last 45 days. So there are people out there looking.

Personal Note: I read yesterday in USA Today that many real estate investors are leaving real estate and going back into stocks. Finally in the article, they distinguished between the Buy & Hold investor and the real estate speculator. They also based all of real estate’s benefits on appreciation only.

Don’t forget there are 4 Benefits to real estate investing:

  1. Cash Flow Before Taxes
  2. Principal Reduction
  3. Depreciation
  4. Appreciation

Of course, plan with your financial advisor. Diversity is the name of the game. Bawldguy did a great post about using insurance to gain the funds for real estate. Of course, out there you are paying $750,000 for the same duplexes we can get for $175,000.

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June 6, 2007 · 2:17 pm

Sad News

Thank you for whatever help you may have been. But it appears that the worst has befallen Kelsey. Keep her and her family in your prayers.

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June 6, 2007 · 9:30 am

Understanding the Size of the Kansas City Real Estate Market

Kansas City, geographically, is a huge area. Huge. Don’t believe me? Check this out:

Kansas City Metropolitan Area*

  • Population 1,967,405
  • 27th largest metro (by population)
  • Area covered 5,406 square miles

Los Angeles Metropolitan Area*

  • Population 12,943,547
  • 2nd largest metro (by population)
  • Area covered 4,850 square miles

Wow! What a difference. Los Angeles has 6.5 times the amount of people and less land to put them in!

So What Does All This Mean To You?

It means, quite simply, that you need an expert when you are buying or selling a home in the Kansas City area. I live in Olathe and I see signs from agents who live in the Northland (north of the Missouri River) listing homes here. Why? Are they experts in Olathe? I see Olathe agents listing homes in Blue Springs. That is 34 miles away! How much of an expert can you be?

I do drive around all day because I’m comparing investment numbers to investment numbers. So to me and my clients it really doesn’t matter where I find them good values. Investors are looking for return on their investments. Not convenience of shopping centers and etc. (Yes, I know that counts, but not as much as ROI.)

Occasionally, I will list regular single family homes. But it better be in an area that I am intimately familiar with. Otherwise, you should be looking for another agent that will be a good marketer for your situation.

I Can Refer You To Good LOCAL Agents

Because I get all around town working with income property I meet a lot of different real estate agents with a lot of different companies. If you are looking to buy or sell a home over in Lee’s Summit feel free to give me a call. I can refer you to a good house agent over there. Same is true for the Northland and Wyandotte County.

As the real estat market continues to shake out and the part time real estate agents fall away it will be more and more important for the consumer to choose their agent carefully.

*Statistical information found on Wikipedia

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