BBQ Capital | Kansas City Real Estate Investing | Real estate investing and property management in Kansas City.

November 20, 2008 · 10:08 am

Credit Tightening For Investment Property

I received this email from a mortgage person I’ve worked with in the past and probably will work with again in the future…

Please note that we are receiving releases about changes in lending guidelines. Just today Chase decided that all second homes and investment properties have a maximum loan to value on a purchase of 80%. A very important piece of information for your investment clients.

Let me know if you’d like more information,

Audra Chandler
Mortgage Planner, CMPS
FirsTrust Mortgage, Inc.
4501 College Boulevard, Suite 250A
Leawood, KS 66211
913-747-3279 phone

Dishonest Mortgage Loans: Watch Your Money

I laugh with sadness at the dishonest mortgage loans advertisements I hear when driving around. There is one in particular that is surely unscrupulous. (Think high pitched voice kinda like Ross Perot.) The other day I had an agent in my office telling me about a couple so excited to buy they were ready to write an offer.

After three attempts to get a Good Faith Estimate from the loan officer (at the agent’s urging) the agent finally called up and demanded one. What she got was laughable. Closing costs three times what they should have been and a loan program completely different than what the buyers thought they were getting. The agent correctly told them now was not the time to buy until they had a good pre-approval letter from a reputable mortgage person.

Then this morning I hear another version of their “blue sky and roses” commercial and they say that after they help you get the loan they will give you financial counseling! How about starting that counseling before they give the loan and that advice would be to not take out a loan with closing costs that are ridiculous, at best, or piracy.

Times may be harder than they were. Don’t make them worse. Seek competent counsel and a couple of opinoions when making huge financial decisions. Please.

Kansas City Housing Set For Rebound?

According to SmartMoney.com and magazine Kansas City is #13 on the list for cities whose housing markets are set for a rebound. Now, no one can know the future. We can only speculate. But what is meant by rebound is a fair question.

Here in Johnson County, Kansas where I reside in the ‘burbs of Kansas City the housing market has been far more affected by the financing crisis. Housing prices here haven’t fallen too badly. 2%? 3%? In some neighborhoods it is closer to flat or even +2%. Others may be down as much as 5% or 6% in isolated neighborhoods.

The real housing slump here isn’t prices but volume. Houses just aren’t moving. No one is looking. So slashing prices really isn’t the answer. NO ONE IS LOOKING!!! I currently have 8 listings. In the last 30 days I have had 4 showings. I said 4. Four. Quatro.

My opinion? We are where we are until Spring. Then I will be able to reevaluate what is going on. For strong investment property buyers there are bargains to be had. Mostly outside Johnson County. More like on the Missouri side of the state line. But with financing today you really need to be putting 20% down. 25.01% gets you a lot better interest rate.

If you are currently in the market for an investment property in Kansas City give me a call today.

Buying Investment Property In The Winter

In the last few days I’ve had a California real estate investor close on two houses he has purchased here in Kansas City. Both are in the Waldo neighborhood which is a pretty reliable, older neighborhood in Kansas City that is convenient to a lot of the things tenants like. But closing on a house, especially two, in November has it’s challenges.

For instance, both properties need some maintenance to get up to rental standards. One of the properties will take about 8 days and $5,000 while the other more like 5 days and $3,500. Then we’ll pop a For Rent sign outside. Now how is that gonna go?

Thanksgiving is just a couple of weeks away now. Then Christmas and New Year’s are just around the corner. There are holiday parties, stress to meet the bills for Christmas, etc.

So when we bought these houses we took into account a few things;

That these houses needed maintenance. The purchase price had to cover the repairs plus a little something something for the owner for taking the trouble.
These houses would have to make sense, financially of course, before committing to buy.
These houses are expected to be vacant until February.

Notice I said “expected to be vacant.” If we get it rented in November or December or January, well, GREAT! But when doing the numbers we just assumed no renters until February. And that could even be March. You never know, but I doubt it.

So as you might imagine these were two pretty sweet buys to pay for repairs, add in instant equity and to compensate for no rent for three months.

That is how you buy investment property in Kansas City in the winter time. 😉

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November 6, 2008 · 11:43 am

Are You A Savvy Real Estate Investor

To be a savvy real estate investor really doesn’t take all that much. I can recognize them immediately. It’s just a few simple things, really.

I represent the seller of four fourplexes (4 unit apartments) for sale down in Gardner, Kansas. I got a call/email from his real estate agent yesterday asking for;

a copy of the Schedule E for the last three years.
a rent roll with ACTUAL rents, not pro forma.

There you have it. Someone is taking a serious look based on numbers, not speculation. After having those items and weighing any future potential this investor thinks the properties will or will not have he or she will know whether to buy or not.

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November 4, 2008 · 4:54 pm

Kansas Basketball

Kansas basketball starts tonight. That’s all you need to know.

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Filed under Kansas City Sports

November 3, 2008 · 10:49 am

This Correction Is Good For America

We all know that pruned bushes grow fuller. That’s all great…unless you are one of the branches pruned. That’s what we see all across America today. A lot of trimmed branches. But we are also seeing how the branches left un-snipped are reacting.

Allow me to digress for a moment. I was walking though my house today. Two of my children had their music cd’s laying on the carpet, the dresser or wherever. Why does this matter? It shows a lack of care and understanding that those cost money.

Me? I tend to throw things away knowing I can just buy more if I actually need it. Though I still have tendencies to go cheap. I’m 43. That will matter in a minute.

Some say I’m a Gen Xer. Some say a Baby Boomer. Personally, I associate myself more with X. But let’s be clear, I firmly believe anyone under 40 years old has a hard time dealing with what the economy is doing right now. Think about the crash of ’87 (was it ’87?). Or the oil bust of the mid ’80s. Or high inflation of in the late ’70s. Anyone younger than 40 will have a hard time remembering that.

Especially the 20-somethings of today. Imagine. If you grew up middle class in America you believe it’s your God-given right to big screen televisions, 6% interest rates, huge vehicles and stainless steel on every appliance in the kitchen.

I was watching tv the other night and I was struck by how spartan the kitchen was. This was a 1970-something re-run. I can’t imagine what the average family’s reaction to such a simple kitchen would be today.

Chris. Chris. Chris. What pray-tell does this have to do with real estate investing in Kansas City? You are always going off on these tangents!

I don’t really know. I’ve seen many of my real estate friend disappear both locally and nationally. I see the trimming taking a toll on everyday people here in the Kansas City area. Yet, we are insulated from the carnage I see in other cities.

Maybe we can take this moment in time to grow stronger. That is what nature says we shall do. Re-evaluate your goals and daily habits. Make a few tweaks. Dig in. Analyze. Go for it.

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Filed under Personal Real Estate Opinions