March 3, 2007 · 9:17 am

Kansas City Real Estate Links That Help: Localism

Most of you know my policy on open information regarding real estate in Kansas City. I’m completely for it. Open the MLS. Open the tax records. Open the comparable sales. The more information the consumer has to make intelligent real estate home buying decisions the better I can do my job. And that is to help them secure (or liquidate) the right home(s) for their situation and to negotiate the best deal possible and then walk them through to success closing.

To that end I have provided you with Free, no registration, Kansas City MLS searches, links to investment clubs like MAREI and KCIG, private MLS sites like Trulia and write this blog and this blog to allow you insight into what a real estate agent does and how he thinks.
So today I want to give you a new link. It is still in Beta. But Localism is a great site that you will start seeing in your real estate searches. Localism is a real estate agent driven site that allows you to learn about your state and community and your local real estate conditions. There are even homes for sale sections and great articles about the current state of the market.
Of course, there are some REALTORS that are better writers than others. Some that seem to put more effort into the posts than others. Obviously, some are just fishing for leads. Some are really trying to serve the public.

The great thing about it is you get to decide. It’s like an interview with an agent. Like what you are hearing? You can leave a comment or question. Get to know more about them without actually meeting in person or making the phone call. In short, you get open information about your next real estate agent. You learn how they think, what they specialize in, where they live, etc. You get to decide who the best agent for you will be instead of just stumbling into an open house an working with that dude.

Check out the site. You’ll find me on the Kansas side. Due to an oddity of the system,since it’s still in Beta, I cannot do both Missouri and Kansas.

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Filed under Kansas City Real Estate, Real Estate Investing

March 2, 2007 · 4:48 pm

Ameriquest & The Sub Prime Loan Debacle

Today’s Kansas City Star reports that the $295 million settlement with Ameriquest is about to begin taking hold and that consumers should start receiving their refunds in April. It seems they were taking advantage of people with their loan vehicles. The article even contains a link that describes in detail the settlement. If it affects you, it might be worth your time to read the links.

My own personal word about sub-prime loans is “caution”. I have had clients that have used them to their advantage. And I’ve had clients (who probably never even should have purchased a home) continue down the path of financial disaster with them. Seek sound financial counseling before deciding whether or not a “B” or “C” paper loan is the way to go for you.

Here is a great story of someone that used it to their advantage: I had some clients call and say they were two years out of bankruptcy, had $1,900 in cash and wanted to buy their own home. They readily admitted that their own financial stupidity is what caused the bankruptcy. For their family of four they were paying $925/mo for rent in a 3 bedroom apartment.

We talked about the positives and the negatives of what they were about to do and talked about the loan they would be taking on. It was a 100% loan and the interest they ended up paying was 8.7% with all closing costs paid by the Seller. After adding up principal and interest and taxes and insurance and working out their tax situation we discovered that their real dollars house payment was $963/mo. So yes, the interest was very high, but no they weren’t any worse off than they were renting. They had kept the style and price of the home very affordable.

Three years later and they have just refinanced their house and did it at 7.0%. The house had appreciated enough and they had paid down enough of the loan to end up with an 80% LTV.

There, my friends, is a great example of how sub prime loans can and should be used.

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Filed under Misc. Real Estate

March 2, 2007 · 10:44 am

Investment Clubs in Kansas City

Last night when I picked up my mail I had a flyer from MAREI (one of the two investment real estate clubs here in Kansas City, KCIG being the other) announcing a Conference that they were conducting and selling tickets for. It looks to me like most of the topics are covering issues surrounding Buy & Sell (flipping) real estate transactions and Subject To financing, foreclosures and the like.

I am not endorsing this conference but I am telling you about it because I know I have quite a few readers that Buy & Sell or would like to. I think I’ve made my feelings be known about Buy & Sell (I’m not against it…just be wary) and if you would like to go it looks like they have some speakers worth hearing from. And there is probably worth to the Buy & Hold real estate investor, as well.

Not everybody I recognize, but certainly Jerry Clevenger and Jeffrey Taylor are two that jump to the forefront. In fact, Jerry Clevenger is interviewed by Dave Jenks/Gary Keller in the Millionaire Real Estate Investor book I often speak about.

If you go, get back to me and let me know how it flies!

MAREI = Mid America Association of Real Estate Investors
KCIG = Kansas City Investment Group

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Filed under Kansas City Real Estate, Real Estate Investing

March 1, 2007 · 9:42 pm

Postcards From Australia

I want to invite you to my son’s new blog. He launched it last weekend and is already receiving good traffic. In fact, on Monday he had more visitors than me! It’s a shameless begging blog…but I’ll let him tell you about it.

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March 1, 2007 · 11:49 am

Kansas City Real Estate Market Condition Forecast

Yesterday I was out driving in my MINI and noticed a behemoth cloud mass growing to the south. So I pulled over and grabbed my trusty little Canon Powershot A530. Not my good camera but one I throw in the bag for moments like these.

Anyway, this huge mass had with it lightning, thunder and later came massive amounts of rain and first pea sized hail, followed by dime sized hail followed by quarter sized hail right around midnight. (Can’t wait to look at my roof carefully.) The streets literally filled with hail.

But I think this photo represents the Kansas City real estate market right now. As a photo, the image is static. Oh sure, it’s easy to see what happened in retrospect. But for those of you not familiar with the weather from Kansas City to Tulsa you know that the clouds could have just built, rumbled and produced nothing. On the left side of the photo it’s blue skies and clear sailing. The right side brings an ominous forecast.

Which side of the photo do you see the real estate market from? My own feeling is we will have a 2007 that closely resembles our 2006. Nothing great. Nothing bad. Just waddling along.

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February 28, 2007 · 10:41 am

Investment Real Estate In Kansas City: Don’t Stop

Chicken Little loved to say the sky was falling. And if you read all of the newspapers you will see that they like to do the same when speaking of real estate. The media loves all the fodder regarding stagnant growth, reverse growth, minimal growth, large inventories, etc. But, and you need to listen here, it really doesn’t make too much of a difference if you own investment property, especially here in the Kansas City area, and you own it for the long haul.

If you’ve read my blog for any length of time you know I’m not a big proponent of Buy & Sell strategies. Buy & Hold income property is a whole other subject. Inman News is a great portal to keep up on real estate news. And today I read an article on Inman that reported that the home-price index fell 0.7% in the fourth quarter while rising 0.4% compared to the same period of time the previous year. A mixed signal but relatively flat, none-the-less.

However, (read the article) it goes on to speak of growth since 2000. Detroit is the worst city on the index with a rise of 19.51% since 2000 and Miami had the highest rise at 180.87%!

We can assume that Detroit will not face the correction that Miami will. (We don’t know, but it’s an educated guess.) And neither will Kansas City. But lets say Kansas City appreciated somewhere along the lines of Denver at 37% and Dallas at 23%. (I’ll use the 25% number since I believe we aren’t Denver but a little nicer than Dallas…oh, I can see the angry emails now.)

Example: Paid $150,000 for duplex in 2000. Appreciated 25% over the 6 years and now has a market value of $187,500. For the sake of argument, we can say that it really appreciated 27% but over the last year dropped 1%. Doesn’t really matter. The point is your equity grew on appreciation alone by $37,500. Your remaining principal is now $111,230 (or so assuming you put 20% down at 7.0% back in February of 2000) so your tenants paid your loan down an additional $8,770 on your investment property. That’s total equity growth of $46,270.

Therefore, your initial $30,000 cash investment is now worth $76,270. A 254% increase. Are you getting that? You had 25% appreciation on the property but because of leverage you had a 254% increase in your money. How are your stocks/bonds doing?

And I have not even mentioned Cash Flow Before Taxes or Depreciation. Two more of the 4 benefits when owning investment real estate.

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Filed under 4 Benefits of Real Estate Investing, Kansas City Real Estate, Misc. Real Estate

February 27, 2007 · 9:10 am

New To Real Estate Investing? Look Out For Expenses!

I’ve covered the topic of NOI (Net Operating Income) before and if you are new to real estate investing you may wish to go back and read those posts. But the key to knowing your NOI is knowing the actual expenses. Here are some obvious expenses to look out for;

  • insurance
  • property management
  • leasing costs
  • grounds upkeep (lawn, snow removal)
  • maintenance costs
  • vacancy

Here are some expenses you may not readily think of but you’ll need to account for.

  • hidden maintenace costs future/sinking fund (ie, the roof passes inspections but only has a life of 5-7 years left.)
  • non-performing tenants (rent rolls show $795/mo but you find out after closing they are 30-60 days behind)
  • HOA (numbers look great until you throw in that $375/qtr. HOA fee that cares for exterior maintenance but everyone on the block has peeling paint and wood rot)
  • utilities (who is responsible for these?)
  • rental licensing fee (Wyandotte County has a fee for rental properties and Kansas City, MO is considering one)

Just a few extra things to think about when purchasing income property. Remember, the key is to have a property that makes you money and not an investment house that costs you your vacation each year.

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Filed under Real Estate Investing