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

February 26, 2008 · 8:38 am

Going To Kansas City? We’re Not Miserable ;)

KCI When I meet with out of state investors who have come to Kansas City for the more affordable investment properties our airport invariably comes up somewhere in the conversation. Yes, it’s quite a ways from downtown Kansas City. And yes, it’s 42 miles from my home all the way down in Olathe.

However, it’s also extremely convenient for travel. Today’s Kansas City Star reports that we are the third least miserable airport to travel in and out of. (Sorry to all the English teachers reading this. I realize I’m technically not supposed to end a sentence with a preposition.)

Getting back to comments by traveling investors, they all want to leave to catch their plane about two hours early. Uh, this is Kansas City’s KCI airport we’re talking about. (MCI to you pilots.) There are no lines. No traffic jams. I usually arrive less than 45 minutes in advance and I’ve never once broke out in a sweat worrying about catching my flight.

Kansas City has a lot of advantages for the real estate investor. And another one you may not have considered is the ease of travel. Heck, we’re only a round trip airline flight away from your next income property. Check out today’s Southwest Airlines round trips for 30 days from now:

From Los Angeles: $284
From San Francisco: $300
From New York: $273
From Washington, DC: $284

Is this a big expense when you are purchasing your next property? How often do you “drive-by” anyway? Heck, inspections cost more than that.

Besides, if you come out, I’ll buy the BBQ.

2 Comments

Filed under Kansas City

February 24, 2008 · 10:57 am

Looking For A Lawsuit? Don’t Disclose.

Lie by omission Anyone who has bought or sold a house in the last ten years has seen the Disclosure forms that are attached to most real estate contracts today. Even states where it is not required to have these Real Estate Disclosure Addendums have them as a routine practice.

What Is A Disclosure Form?

Every real estate board probably has a little different version. But in the broadest scope a Disclosure Addendum is designed for the Seller of a property to “disclose” anything they know about a property that a potential home Buyer would want to know. Some example items would be;

Has the house had termites?
Is the house in a blasting zone?
Does the house have a chronic sewer line back-up problem?
Is the house haunted?

Each of those examples given, amongst literally hundreds and hundreds more, are items any potential Buyer would want to know. And laugh if you will on the last one. But I read about a case where the courts ruled the Sellers should have notified the Buyers that they thought the house was haunted.

How Does This Pertain To Real Estate Investing?

Investment property Sellers here in the Kansas City area are notorious for putting on their Disclosures “Owner Never Occupied” and little else. They just figure that will get them off any responsibility that comes down the line.

Well neither I, nor the states of Kansas and Missouri, believe that to be true. As a real property owner you still have knowledge of expenses incurred. You know that a basement is a problem or not. Your tenants have told you the sewers back up, or the roof leaks in heavy rains, or that there is a foul smell that comes from the attic in the hottest parts of the summer.

Do You Feel Lucky? Well, Do You? Punk!

Disclose what you know…or should have known. I would venture to say that most lawsuits stem from an initial failure to fully disclose known issues with a house. You ignore it and figure that by the time Mr. Home Buyer figures it out you’ll have your proceeds and be on down the road. But when the sewer starts backing up and the plumber comes out and says it looks like the main line is shot and that he had given an estimate on it about 6 months ago…or Joe the busy-body neighbor says “Oh, yeah. They always had plumbers over for that.” Well, you are going to have issues. Trust me.

Problems leave a paper trail. You will be found out sooner or later. If there is a problem not only must you disclose, you should. It’s the right thing to do. Deal with it up front, without the attorney fees. It’ll save you a lot of money in the end.

And if I know about it, or any other real estate agent for that matter, I must disclose whether you do or not. It’s the law. It’s my license. It’s the right thing to do.

22 Comments

Filed under Personal Real Estate Opinions

February 21, 2008 · 9:34 am

Selling Your Rental Property In A Buyer’s Market

Kansas City is currently experiencing a buyer’s market. Investment property is a little better off. Certain areas of the city are better than others. Let me give you a picture of what the investment market in Kansas City currently looks like.

Below will be a couple sets of numbers for you to take a look at. One is for Johnson County, Kansas duplexes and the other is for Jackson County, MO duplexes. Now, the numbers only include duplexes priced for sale between $100,000 and $300,000. I just figured below $100,000 isn’t usually what my clients are looking for and above $300,000 just isn’t going to be profitable within the parameters I use.

Johnson County, Kansas Duplex Activity
current as of 2.21.2008

Active =    34
Pending =   3
Sold =        52 (within previous 12 months)

Jackson County, Missouri Duplex Activity
current as of 2.21.2008

Active =   147
Pending =    5
Sold =      100 (within previous 12 months)

Right away you should be able to see the market within the market. Johnson County has about a 7.5 month supply of homes while Jackson County has about a 16.5 month supply of homes. Further emphasizing that all real estate is local. And local can be broken down into cities from country, zip codes within the city and sudivision from the zip code.

As a seller of residential investment property in Kansas City you need to know that you are in for some fierce competition. And while some sellers may think they know that what I see on the market is usually overpriced, under cared for and have crappy tenants.

Why, I know of a duplex in Overland Park that has been on the market for quite some time and the real estate agent has “motivated seller” on her comments. Further inquiry discovers that one side has a tenant that isn’t paying any rent because they made improvements to the property and don’t feel they owe rent for some time to come. The other side unilaterally decided their rent was too high and cut their payment by $200 a month.

And the seller still wants retail for this Overland Park duplex!!!???!!!

Checklist There is no question I could find an investor to take this headache off their hands. But not at retail. So what can you do to be sure you can move your Kansas City are investment property if you need to cash out?

Investment Property Selling Tips

Price it right. Know where the price point is for your particular class of investment property (and location) that the next would-be real estate investor will pull the trigger. This is not the market to “test” the waters.
100% occupancy with quality tenants. I said quality tenants. Tenants with good payment history. Tenants with security deposits. Tenants with time left on their leases. Tenants that don’t trash their rentals.
Deferred maintenance accounted for in the pricing or repaired before marketing. Remember, if you milked the property dry by collecting rent and not fixing a thing you will pay for it on your sales price! You might be able to get away with that crap during a seller’s market. But guess what? This isn’t a seller’s market.
Choose the right real estate agent. I’m not the only one in Kansas City that knows and understand real estate investment property. (I am, however, the best. 🙂 – Sorry for the ego trip.) There are several good agents around the city. But that number doesn’t exceed 10-12 out of the 10,000+ licensed real estate agents around KC.
Be prepared to assist with closing costs. Investors, and that is who will be in the market for your duplex, like to get in with as little cash as possible to maximize their equitable returns.
Be patient. Do all of this correctly and you should sell inside 4-6 months. In fact, if you do all this correctly we should sell inside 4-6 weeks going into spring. But the real estate investor’s credit standards have changed drastically over the last year. You don’t have to like it. But it means fewer people are qualified to buy your rental property.

I’ve used duplexes as the prime examples here. But the same is true for all investment class real estate whether it be single family homes, apartments or four-plexes.

You can definitely sell your investment property in this market. In fact there is a need for quality inventory. Feel free to give me a call, write me an email or leave a comment if you have any questions or comments.

13 Comments

Filed under Investment Property, Kansas City Real Estate, Real Estate Investing

February 20, 2008 · 7:34 pm

I’m Sick of this Weather

	Thursday Snow and light sleet likely. Snow and sleet accumulation of 1 to 2 inches. Highs in the lower 20s. East winds 10 to 15 mph. Chance of precipitation 70 percent. Wind chill readings 2 below to 8 above zero. » ZIP Code Detail
	Thursday Night Cloudy. Chance of snow and light sleet in the evening…then a chance of snow after midnight. Lows around 18. Northeast winds 5 to 10 mph. Chance of precipitation 40 percent.

The above is provided by www.weatherunderground.com Will this winter ever end?

1 Comment

Filed under Uncategorized

February 19, 2008 · 5:13 pm

Real Estate Investing Class at UMKC

Once again I will be teaching at UMKC on March 1 and the topic will be The Basics of Real Estate Investing. If you are a neophyte trying to decide to whom you should listen to I would encourage you to come on out.

You’ll need to put in your reservation with UMKC’s Communiversity. Just follow the link or give them a call at 816.235.1448.

As always I try to make it at least a little bit of fun. We’ll see you there!

New Zip Code Appreciation (Depreciation) Map for Kansas City Real Estate

Last year I linked to the the Kansas City’s Star’s report on housing appreciation in the Kansas City metro area. By in large there was modest appreciation and some depreciation…but not enough to worry about in most places.

This year’s interactive map shows a different story. Read the entire story here. (NOTE:If the Kansas City Star holds true they will not have this map up indefinitely. Housing Under Microscope So it’s possible the link will lead you to nowhere after a couple weeks. If they do you can purchase a zip code map for Kansas City by clicking Zip Code Map.) Now let’s put the numbers under the microscope and see what we see. Especially for those out-of-staters that read this Kansas City real estate investing blog. You need to have the full story interpreted.

Everyday I get would be real estate investors calling from around the country. Especially California. They are always wanting to flip houses and/or buy the lower priced houses in the city so they can get “good cash flow.”

The houses they like to target are generally located in the following zip codes:

64130 -23.4% -19.6%
64132 -12.8% -12.4%
64134 -14.6% – 9.3%

Next to the zip codes above is the “appreciation” rate for those areas in the last year, followed by the Kansas City Star’s explanation of the appreciation rates for all years dating back to 2003.

Now lets look at the zip codes where I’ve had my last 10 transactions since December:

66204 + 1.4% +11.7% (1 unit)
64083 + 6.0% N/A (3 units)
66106 -10.5% +0.7% (We got a steal on a rehab)
64064 + 6.0% +17.4% (2 units)
Gardner – not listed though I suspect close to Olathe’s 66062 at +7.6% +43.2%

Hey, out-of-state investors. Do you see what I’ve been talking about for the last 3 years?

While much of the country suffers through a housing correction not seen in many’s recent memory here in Kansas City the real estate investor can still find opportunity. Yes, we have areas that are suffering greatly. They are not areas that I’ve endorsed anyway. Successful real estate investing takes study, analysis and local knowledge.

And that is true whether you are investing in real estate around Los Angeles, Sacramento, Washington, DC, New York or right here in ole KC.

6 Comments

Filed under Kansas City neighborhoods, Kansas City Real Estate

February 15, 2008 · 11:20 am

Paul Wenske: Worth Reading In The Kansas City Star

Paul Wenske is a columnist with the Kansas City Star who writes an In Your Corner piece each week. He also can be found in the Business section from time to time. He is constantly addressing the real estate situation here and around the country, among other topics.

I’ve been reading Mr. Wenske’s pieces for over a year now. They are usually pretty well balanced and he uses good old fashioned common sense as his measuring stick. So consider this my endorsement of his efforts.

Click the link above and read some of his article that are still posted. And let me know what you think.

1 Comment

Filed under Worth Reading