April 9, 2013 · 9:39 am

Shame on Warren Buffett

Shame on Warren Buffett, Berkshire Hathaway and Iowa Realty.  Many of you probably don’t know that Berkshire Hathaway and therefore Warren Buffett own Home Services which is basically a holding company of a great many real estate companies throughout the USA.   No problem there, of course.  The problem comes in with his/their attempt to squeeze competition in Iowa.  And rumor has it that if successful they will continue to engage in these techniques in other markets.

Iowa Realty has quit paying commissions to Keller Williams Realty there in Iowa.  And other brokerages for that matter in the past.  I’m not going to bore you with a 30 paragraph rant.  If you are interested you can follow these links and do your own searches.

http://activerain.com/blogsview/3342619/commission-squabbles-in-iowa

http://fiberopticconnector.blogspot.com/2013/03/keller-williams-official-will-visit.html

http://www.inman.com/news/2012/06/29/iowas-largest-brokerage-sued-over-commission-splits

But he next time Warren Buffett is opening his mouth about fair taxes for everyone why don’t we just ask him why he won’t pay agents with a different sign color the commissions they earned by selling a house his company listed?  After all, no income means no taxes, right?  And how is this in the best fiduciary duty to your client?  Oh, I could go on.

Here is hoping that the Anti-Trust lawsuit beginning in November crushes the bug.  Classic case of greed.  If you cannot compete in the market fairly do so unfairly.  If you are upset about Keller Williams’ recruiting efforts make your business model more attractive to your agents.  It is really not that complicated.

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April 5, 2013 · 9:38 am

Yes. It’s a Seller’s Market. But…

Yes. It’s a seller’s market in the Kansas City area right now.  But….

It’s funny right now.  Priced in the number two spot in your neighborhood and nearly turn-key for bell curve houses in the Overland Park and Olathe area you will most likely sell your house in 30 days or less.  But push the price and you will likely be staring at a 4-6 month sales process.

I keep talking about this because it is what I’m seeing for “regular” housing in Johnson County, KS.

Now investment property over in Jackson County, MO is popping off the MLS at record pacing.  Houses in “good” neighborhoods that can be purchased for $40,000 or less are red hot.  And if you are buying at 40 today you could have had at 30 18 months ago and at 35 6-8 months ago.  But alas, real estate markets expand and contract based on demand.  And right now investment property demand is high.

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Filed under Kansas City Real Estate

April 2, 2013 · 5:55 pm

It’s Been Busy…And I’ve Been Pre-Occupied

I was thinking today that I really haven’t been as diligent in my posting as I should be.  So many of you read this and email/call me because of this site and yet I’ve sluffed it off the last few months.  Why?

Business
Frankly, it’s crazy busy.  Real estate investors are piling back in to the pool.  Good thing?  Depends on your view.  The market is getting stronger but that means returns on investment are lower.  When figuring cash on cash assume about 1%-3% lower than just 6-8 months ago.  That’s significant. And then there are “Joe and Mary” home buyer and seller.  They are trading up.  Buying for the first time.  And all that causes a chain reaction.  Make no mistake, the “regular” home buyers and sellers are far more active and getting results in Johnson County, KS real estate transactions than in Jackson County, MO.  But it is happening all over the Kansas City metro area.

Personal
My mom passed away from cancer back on February 26, 2013. A note from the doctor I found in early December told me what I needed to find on Google to get the truth.  So basically I turned over both my photography and real estate businesses over to our excellent and well trained employees.  (Not only did  they maintain, but business actually grew in both!   Am I the problem?)  🙂  I worked as I could but my priority was my mom. I wouldn’t trade those last three months for anything.

I promise to be more diligent with your real estate news for Kansas City.   I look forward to writing again!

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March 21, 2013 · 12:10 pm

Property Management Praises

We received this from one of our rental property owners the other day.  Thought I would give an “atta-boy” to Melissa by sharing it with you.

“Just wanted to flip you a note and say that Melissa is awesome. She has been a real pleasure to work with. Answers questions completely, is fast with a response and seems to work well with tenants.
 
Makes things really easy.”

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February 1, 2013 · 11:44 am

California Real Estate Investing

California real estate investing is definitely different than the REI we do here in Kansas City.  And I’ve written about the differences between California and Kansas City before and I think I’ve proved that for cash flow nothing beats Kansas City.  You can see the first post here wherein I proved the math for Kansas City.

Of course, those articles go all the way back to 2007 when real estate was still booming.  It’s not anymore in most places though activity has most definitely picked up.  But then I receive this facebook message from my cousin, a realtor in California.

“We closed on an investment property yesterday and now I’m trying to get it ready to rent. 960 cash – 2 week close and no contingencies. ( 8 offers I think ) As soon as we closed I got a call if we’d sell for 1,050,000. It’s only a 2 bedrm condo and I’m asking 4400 mo rent but it will go higher. It’s crazy here. I don’t even do real estate anymore but for us…”

Now I admit that looks fantastic!  Heck, it’s a $90,000 equity gain in a matter of days!  But I regularly sell houses with cap rates of 10.  I regularly sell houses with 11%-13% cash on cash returns.  Heck, if you take all in prices of houses we do and go for my quick-n-dirty multiplier I sit at 1.7-1.9 on a more than regular basis.  ($46,000 all in price divided into rent of $850 equals a 1.85 which is sure to kick off better than 11% cash on cash.)

I don’t have the energy to do all the math today.  But her quick-n-dirty return number is 0.46.  I said 0.46!

With $960,000 I could have approximately 20 homes in and around Kansas City bringing in cash flow and earning whatever appreciable equity growth KC will do.  Your risk would be spread out across 20 properties instead of 1.  If after buying and rehabing and renting I had created a harvestable equity position of about 12%-15% (our average – difference between what it’s worth and the all in price) I would have created an equity gain of $138,000.  That’s better than the $90,000 we mentioned above, right?

California real estate investing or Kansas City?  C’mon out to KC.  The first BBQ sandwich is on me.

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January 11, 2013 · 10:57 am

Observations of the Current Investment Property and Rental Markets

Owning investment property is markedly better when the rental markets are strong.  And that is where we are right now in Kansas City.  I thought I would share a few observations that I have about our current investment property and rental markets.

  • Prices for Rehab-to-Rent homes are on the uptick. Not a good thing.  If this continues the real bargains on single family homes for income property purposes probably has a window of another 6-12 months for great cash on cash returns.
  • Cash on cash returns on Rehab-to-Rent homes are down about 1%-2% in the last 6 months.  In our core service area, returns are now hovering in the 11%-12% range.
  • Johnson County, Kansas rental market is on fire!  We have some vacancies that are over before our listings even syndicate.
  • Bell curve income property in Olathe is renting in the $1,400 – $1,750 range all day long.
  • Competition is way up for Rehab-to-Rent homes on the Missouri side in the $45,000 – $55,000 “all in” price range.

Buy while you can.  Some day this will get more expensive. And that day is coming sooner than later here in KC.

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Filed under Investment Property, Property Management

January 7, 2013 · 10:26 am

Pets and Your Rental Property

We have brought on several new owners to our KC Property Manager property management services.  And we always have to talk to the new income property owners about their pet policy.  Most income owners don’t want to allow pets. That’s almost always the first inclination.  But let’s stop and discuss this, shall we?

I’d say about 45-50% (maybe more?) of the prospective tenants out there have a dog or cat or bird or something.  They do.  Heck, even most of the owners that don’t want to allow pets have a pet.  🙂  It’s part of who we are as a society.  So if you are not going to allow pets then you are automatically eliminating half the tenant pool right off the bat.

And think about this.  Pet owners usually expect to pay more to occupy your rental property.  In fact, I cannot remember the last time a real tenant candidate was surprised when I mentioned additional pet deposits or a bump in rent.

Protecting your investment property and getting the tenant to buy in to keeping your house nice can begin with a good talking to and a financial incentive to make sure their pets are doing no harm to the unit.  I like the idea of a $350-$500 REFUNDABLE pet deposits because it’s incentive.  If the dog is large or there are multiple animals I suggest a refundable pet deposit in ADDITION to a rent bump.  $25 a month or even $50 a month is negotiable.

Don’t eliminate half your tenant pool.  Make money from them.

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