Just thought you would like to know that later this week I’ll be announcing 4 unit apartments (aka fourplex) for sale in Gardner, Kansas. Great investment properties. Price? Below $200,000. Gross scheduled rents? $25,200.
Any questions?
Coming Soon: 4 Unit Apartments For Sale In Gardner, KS
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Real Estate Investing Hot Spots Around Kansas City
Real estate investing is part research, part financing, part math, part intuition and part guts. You can argue about the size of the parts, but here in Kansas City we know it will take all five to make a successful real estate investment property.
Areas I’m high on right now include Olathe, Gardner, Lenexa and Shawnee (Western and southern Johnson County) because of the actual and potential for job growth over the next one to five years. As mentioned in a post over the weekend about apartments in Kansas City Marcus & Millichap feel the same way. But I also feel that way about Blue Springs, Lee’s Summit and the Belton/Raymore areas in Missouri. The Kansas City International Airport area has a vibrancy to it that I’m beginning to believe out-shines all the rest of the areas in Missouri. I’m watching it closely.
But let’s not forget the future. Where might positive growth be most likely has the years go by. Think implosion.
I lived in the Washington, DC area when the mass of the city became so great that the far-flung suburbs continued to grow but the inner core of the city exploded with growth and opportunity. Why? Because the point had come and been exceeded where people would drive to work. No longer was another 5 minutes a way just the blink of an eye. Thirty minute commutes became forty-five and then an hour. At the forty-five mark (each way) people began to wonder if it wasn’t less expensive to pay the extra bills for the house close in. If not in money, then lifestyle.
At the hour mark they quit wondering and those that could afford to left the suburbs and went back in. They bought small houses, tore them down and built. Or they rehabbed. Or they made do. But back into the center of the city or the very close suburbs did they go causing an upward pressure on housing and rents.
Could this happen in Kansas City? Well, yes and no. Kansas City has more highway miles per capita than any other city in America. Our commute times here are nominal. Basically for every mile you drive it will take one minute. (Eat your heart out, Los Angeles.) Oh, it can get crazy and take you upwards of forty-five minutes to go thirty miles. But not too bad.
Where I think the pressure will come from is rising gasoline costs. Sure, if you can afford a Range Rover and are living in the posh neighborhoods of south Leawood then you can adjust your spending and adjust to the rising gasoline prices without too much sacrifice to where you live. But what about those that rent? Those that are the rank’n’file of the work force? First time home buyers who struggle to put every dime they have together to get that first house?
My prediction? Prairie Village, already going through a renaissance will continue to be more and more attractive. Brookside, Waldo and the Kansas City’s close-in northern suburbs will make people drool. The Kansas City, Kansas neighborhoods around the KU Medical Center will continue to be rehabbed and converted to today’s buyer.
When you are considering where to put your real estate investment dollars think job centers. Where are the people? Where are the people headed? What are their incomes and lifestyle habits? What external factors go into these decisions? Stop, take a minute and put on your thinking caps. Then go with your gut.
Filed under Kansas City, Kansas City neighborhoods, Real Estate Investing
Owning Apartments In Kansas City Area
Marcus & Millichap has released their opinions on the growth of the Kansas City area apartment market. Marcus & Millichap work exclusively with upper end real estate investments. While I tend to do more single family home and duplex investments they do 20 unit and above residential investment properties.
Anyway, you can find the report here on a Kansas City Buisiness Journal site. If you have interest in the Kansas City apartment market you may want to make the jump. They point out how positive they are on western Johnson County areas like Shawnee, Olathe and Lenexa because of their positive job growth.
LESSON: The big boy investors are looking at the same key factors as you and I. This is not rocket science people. Job growth equals housing demand. Housing demand equals fewer vacancies and upward pressure on housing prices. That’s good if you are already an owner. Makes it tougher to get in the game if you are looking in from the outside. Start your real estate investing today!
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Successful Real Estate Investor Interview
I have been remiss lately with my interviews of successful real estate investors. I apologize. Today, however, we are interviewing “Another California Real Estate Investor”. This person is a reader of this blog though this real estate investor does not (yet?) invest in the Kansas City area. Still, their experience is something we can learn from. This person chooses to stay anonymous.
Q: How many rental properties do you own and (in general) where do you own them?
I own approximately 25 rental homes in the Phoenix area. I have been investing there for about 12 years.
Q: Why don’t you own any properties close to home?
I do not buy in California because the numbers do not make sense and have not made sense for years. That’s not to say you can’t make money in California real estate, because you can at times. However, it’s difficult for a buy and hold investor trying to create an income producing portfolio to do so here.
Q: What is your general rule of thumb when purchasing a good investment property?
I have several rules of thumb. I’m old fashioned, so I focus first on cash flow. In my experience, the biggest mistake new investors make is to focus solely on appreciation. Real estate has risk and it is not a passive investment. Leveraged real estate requires debt repayment, and it is much less risky to have the net income from the property make those payments. In addition, you can make mistakes early in your real estate investment career if your mistakes produce income!
I look for houses located near employment centers with a variety of jobs and in neighborhoods with good schools and other amenities. Proximity to a university and/or a major medical center increases the tenant pool substantially. In my target areas I look for three and four bedroom homes with family rooms and two car garages. I look for 0.75 percent of the purchase price per month as a minimum rent to value ratio. That’s extremely tough to find today.
Q: You’ve told me in emails that you prefer single family homes to duplexes. Would you like to elaborate on that?
Most investors out there are not full time investors. They have full time jobs and are seeking to diversify their investments and create retirement income. That’s where I was when I started.
Unless you want to be the property manager, I would stay away from units, at least in California and Arizona. Single family homes in stable, well-located neighborhoods are easy to rent, attract better tenants, turn over less often, and generally have lower maintenance costs. If you do not live within an hour’s drive of the properties, you will probably want to opt for property management. It’s easier to find decent property management for houses. In addition, my observation is two to four unit properties tend to be overpriced in today’s market, based on the net income these properties actually produce.
Q: As you examine the market today, what are your feelings about acquiring or liquidating property?
It’s a difficult market on both sides. There are opportunities out there if you shop carefully, but bargains for the cash flow investor are still hard to find. The Phoenix foreclosure market is very hot right now, with multiple offers on many properties, but the cash flow still does not meet my requirements. I would only sell if I needed to raise capital. If you bought right to begin with and your properties are producing income, you should probably adopt Warren Buffett’s attitude toward your investments. Pretend the market is closed and deposit the rent checks.
Q: Any closing thoughts?
I really like your investment approach for the 20 and 30 somethings. Buy that first owner-occupied property with a plan to convert it into a rental property within two or three years. When your life settles down and your income becomes more predictable, move up a little in house, and rent the first house. Rinse, repeat, and you will have a three property rental portfolio in six to eight years. Max out your retirement plans in the first few years, and between the houses and your other investments, you will be on your way to serious wealth.
Filed under Real Estate Investor Interview
Kansas City Real Estate Bits and Pieces
I met with a professional home rehabber yesterday and he was kind enough to buy me lunch. (I had the taco salad with no duck.) Afterwards we toured a couple of his properties and I came away impressed. These are houses in blue collar neighborhoods that have always been known as rental neighborhoods. At least in my mind. He puts in new windows, carpet, paint, heating & air conditioning as well as a roof if it needs it. Many of his properties are Section 8 with the Kansas City Housing Authority (ugh) but he is getting $850 per month for rents. Cost after rehab? About $62,500. He guarantees the first year’s rent, does the property management for free and has them occupied by closing. Call me at 913.568.1579 if you want questions answered.- I’ve been revamping one of my websites that I use for mostly “regular” home buyers and sellers. It’s over at www.olathekansascityrealestate.com. Give it a visit and let me know what you think. It’s still a work in progress.
- Working on bringing you another real estate investor interview for tomorrow. It’s just about ready.
- Working on a HUD owned home where I represent the buyers. I had forgotten how ridiculous with procedure they were.
- Remember, there must be 50 ways to leave your lover.
Chris Lengquist of Keller Williams Realty, Olathe, Kansas – My MeMe
Geno over at Chicago’s Home Weblog for real estate decided to irritate me by tagging me for a MeMe. MeMe’s, for those who don’t yet know, are a bloggers expression of friendship saying “I want to know more about you.” I’ve done these before but I will play along. So if this seems a little self-absorbed, remember you have Geno to thank!
1. Who is your favorite musical artist? This is a tough one as I don’t really play favorites anymore. Who has the time? I will say that Alison Krauss, her voice, melts my heart. The Foo Fighters when I’m feeling energetic. Eminem when I need a laugh. I like music. All kinds.
2. Who is your favorite artist? I’ve got to go in the direction of photography. And each and every photographer that has ever graced the pages of National Geographic deserves a nod here.
3. Who is your favorite blogger? For knowledge I like Bawldguy. For great writing I like Geno. For trashy entertainment with a communist holier-than-thou slant I’ll visit Tony’s Kansas City.
4. If you could meet anyone dead or alive, who would it be and why? Thomas Jefferson. Think about the influence this man still has on modern life. I would love to know where his brilliance came from, what his thought processes were and how he reconciled “All men are created equal” with owning slaves.
5. What did you want to be when you were growing up? Center fielder for the Kansas City Royals. Or an architect.
6. What is the most entertaining piece of trivia you know? Trivia is trivial, right? Oh, okay. Did you know the Bumper Sticker was invented in Lenexa, KS?
7. If you could live at any point in history what would it be and why? I really don’t have a problem with where I’m at. Think about the changes the X Generation has seen/will see. It’s amazing.
8. What is the most interesting job you have ever held? People love to hear that I was once an investigator in the Washington, DC area. And I do have exciting stories to tell. But over all, the job is fairly tedious. Boring, even. I never carried a gun. I didn’t own a Ferrari. And I didn’t sleep with women for information. (That’s the part that disappoints me the most. 🙂 )
Now I’m supposed to “tag” other bloggers. But I’ll just say “you’re it” and you let me know if you take the bait!
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Positive Appreciation In Kansas And Missouri
Sorry California. Too bad, Florida. Nevada, close your eyes. Last Thursday the government’s index for housing stated that Kansas had appreciation in the first quarter of 2008 was 2.7%. Missouri was 1.7%. And the Kansas City area housing prices were up “a little less than 1 percent in the first quarter.” (This is as compared to the first quarter of 2007.)
I’ve said it here over and over and over again. Some people are still not getting the message. Kansas City real estate investment property is a safe haven. Not full proof. Not perfect. In great years we might get 7%-10% growth. But in bad years we may only decline slightly or still manage to pull out very modest gains.
Think about that. Forty-three states lost value. Kansas and Missouri housing chose not to participate. What’s the old saying: “Slow and steady wins the race.”
Filed under Kansas City, Kansas City Real Estate, Real Estate Investing
BBQ Capital | Kansas City Real Estate Investing 