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

January 20, 2008 · 1:38 pm

A Successful Few Days In Kansas City

Early, and I mean early, this morning I put Jeff & Josh Brown back on the plane to San Diego, California. While they were here I had a chance to show them that Kansas City does have wireless internet in their hotel rooms, running water to houses and buildings made out of other materials than sod.

Jeff Brown On the business front Saturday saw two very successful investment workshops conducted by Jeff. Feedback from those that attended has been positive. There is a hunger in the market to know all they can regarding their real estate investing present and future.

And also on Friday I think Jeff was impressed with some of what Kansas City real estate investment housing has to offer.

From a barbeque standpoint Jeff & Josh got to experience Arthur Bryant’s, BB’s Lawnside and Oklahoma Joe’s Bar-B-Q’s. You’ll have to ask Jeff which he preferred. I’ve emailed him a photo of him standing in front of a real BBQ pit at BB’s. Now he understands how BBQ is made. 🙂

The photos are from BB’s. (Athol, I was using a small point & shoot in low light. So forgive the lack of quality.) 🙂

7 Comments

Filed under Kansas City BBQ, Misc. Real Estate

January 18, 2008 · 2:48 pm

Again With The Four Benefits of Real Estate Investing

BBQ Capital is constantly adding readers. How do I know this? By the internal stat counter. So one of the issues I like to revisit over and over and over and over again is the 4 Benefits of Real Estate Investing.

***

Cash Flow Before Taxes. Simple enough. You take all of your income, subtract all of your expenses and what is left over is your cash flow before taxes. For your Cash-On-Cash return you simply divide that number by the total amount of dollars you have put into the income property.

Principal Reduction. Again, fairly simple. Take the total amount you put towards debt service and subtract that portion that was interest. What’s left over is the amount your tenant’s put on your rental house’s mortgage towards your retirement.

Depreciation. This is a bit more complicated. Especially if you accelerate your deprecation. But in short, it’s an amount the government allow you to write down your investment property each year…so long as the depreciation schedule is in effect. Do not overlook this benefit. It’s major.

Appreciation. What’s the property worth now. Subtract what you paid for it. That’s your appreciation.

3 Comments

Filed under 4 Benefits of Real Estate Investing

January 17, 2008 · 9:27 am

Odds & (Burnt) Ends

I have suspected this was going on at unprecedented levels and now I have confirmation from today’s Kansas City Star. The Star reports in the Business section that CountryWide Financial Corp helped 81,266 borrowers renegotiate their terms to allow them to stay in their homes.

First, this just seems smarter than taking the real estate back. Second, it shows there is a movement by the free market to correct it’s own mistakes. And third, the borrowers will benefit, at least in the short term.

***

I’m picking up Jeff & Josh Brown today from KCI. For anyone interested, we’ll be atBB’s Lawnside BBQ tonight. We’ll probably get there around 7:00. John Paul’s Flying Circus will be performing. Maybe we’ll see you there.

For a late lunch I’m taking him to Arthur Byrant’s. It’s my hope we’ll put 20 lbs on them before they leave.

***

Anyone else tired of all the snow? And the kids are out, again. Ugh.

***

Watch carefully for the new construction homes announcement next week. I’ll be unveiling it this Saturday to the workshop attendees. Whatever is left will be on this blog.

Kansas City v Los Angeles…Again

I had to laugh out loud yesterday after speaking with two different people from California. They were complaining about Kansas City’s weather. You know, snow, how cold it gets, etc.

“How can you live there? It’s 68° and sunny here!”

Then I open up this morning’s business section of the Kansas City Star and see an article showing that the most recent study of California real estate is that prices are down 15.2% from last spring/summer’s highs. My question to them is;

“How can you live there? Prices are stable here!”

And, we don’t get earthquakes, unimaginable crime, traffic at 10:00 pm, etc.

We all live where we live and have advantages over other parts of the country. Though you will ALWAYS hear me complain about the cold I have to say I like the change in seasons. Well, except for the whole raking leaves thing.

But from an investment property owner’s standpoint, there is no question that there is a stark difference between owning income property here in Kansas City or anywhere in the SoCal area.

Kansas City’s advantage: Stability and affordability. Slow and steady growth. It’s not sexy. But neither is KC.

SoCal’s advantage: At times, spiraling appreciation that can make you wealthy beyond your dreams. But if you don’t time it right…look out! And just try to make the numbers work.

Do what you are gonna do. If I can help great. But just know each area has it’s pluses. 🙂

8 Comments

Filed under City Comparisons

January 14, 2008 · 10:33 pm

Quality Income Property Attracts Quality Tenants

Do you want to spend time with your family and at your profession while your money works for you? Or do you want to fix toilets, paint walls and chase rent?

Personal Finance Client Profile: Working professional. High credit score. Cash to invest greater than $15,000. Other retirement vehicles in play including home equity, 401K and/or IRA, stocks, mutual funds and/or bonds.

I’m about to say something here that has gotten me more negative phone calls, demeaning emails and upset readers than any other subject.

Buy property that will attract quality tenants.

Where I get into trouble is when I start describing what a “quality” tenant is. First, let’s get one thing straight. I do not, in any way, shape or form advocate violation of any federal statue concerning fair housing. Regardless of race, religion, marital status or whatever I’m looking for a tenant that will take pride in their home.

To me a quality tenant in the Kansas City area will fit into many if not most of the following desirable traits:

Rent to income not exceeding 33%.
Has enough cash upfront to pay first month’s rent and full month’s rent security deposit.
Solid past concerning rental housing. Check references where possible.
No sexual predator or violence charges in the past.
No drugs. Ever.
No dangerous animals.

A quality rental property to me will usually fit into most of these traits:

Rent range between $750 and $1,750/mo.
Either a 1-5 year old property or an older property with major expenses already accounted for. (ie., roof, water heater, furnace, air, structure)
Neighborhood with 5% vacancy rates or below.
Within 10 minutes of highway.
Desirable school district.
Close to job centers and shopping.
Not on major thoroughfare.
Bedrooms and baths that are the norm for said neighborhood.

Both of those lists are off the top of my head and you can add to them if you like. (Just leaving a comment would be welcome.)

People will jump on me immediately and say “Chris! What about people who cannot afford $750/mo rent? Do you not like working class people?”

The reason I generally do not like to recommend properties with lower rents is that they seem to find themselves in neighborhoods where future growth is limited (at best) and where tenants tend to be more transient. And like it or not there is a direct correlation to the amount of troubles you will have and the amount of rent you charge.

Don’t believe me? Take a chance. Better yet, ask around.

Now there are places and times and neighborhoods where I make allowances. Usually on a case by case basis. But if you fit the client profile above you are probably more concerned about finishing that project up at work so that you can get home to your son’s basketball game than you are hoping to get by your rental property so that you might catch the tenant home on payday.

4 Comments

Filed under Property Management

January 13, 2008 · 9:06 pm

Kansas City’s World War I Memorial

The National World War One Museum at Liberty Memorial is located in Kansas City, Missouri. If you are a student of history it’s a must see. If you are grateful for the sacrafices made for this country, it’s a must see. If you are a Kansas Citian, it’s a must see.

Sunday Ramblings

Only two chairs remain for the 9:30 session on Saturday with Jeff Brown and 5 chairs remain for the 2:00 session. Email me if you want in. This will be worth your two hours. Trust me.

***

Jeff wrote a blog today that sparked a thought and a praise for my wife of 22 years. I Marie don’t come from a privileged background and have had to earn everything I have. I could not have done it without the love and support of Marie. Let me give you an example.

We have 4 kids and all the bills that are associated with a family of 6. No great shakes. You have responsibilities, too. But never once has Marie complained or made negative comments when I would choose to spend $300 on mailing out marketing materials to my client list and that meant we only had money for PB&Js or macaroni & cheese.

I’ve seen spouses kill their significant other’s incomes and dreams. They have to have the new dress or the jet ski or the car to impress someone. Marie has always supported my decisions. Even when they were obviously incorrect, in retrospect.

Why does this matter to the real estate investor? Because there will probably be times when outgo is greater than income. But with proper planning and calculations it doesn’t have to stay that way. Get on the same page with your spouse. Keep the goals in front of you. And support each other.

***

Kansas Jayhawk basketball update: We look good. I’m about ready, though not quite, to say that Bill Self’s 2007-2008 team is every bit as good as Roy Williams’ 1996-1997 team. That is a big statement. We’ll see where it goes.

***

My 10 year old daughter that has been challenged with cerebral palsy since birth played in her first basketball game last night. You should have seen the smile. It lit up the whole room.

3 Comments

Filed under Kansas City Sports, Personal Real Estate Opinions, Uncategorized