Real Estate Investing Goals

What are your real estate investing goals? It’s one of the first questions I ask would-be or experienced real estate investors. Some of what I hear is;

• Flip a house to create cash
• Create monthly cash flow
• Replace my income
• Secure my retirement

To be sure, there are other goals out there, but for income property owners, these are the four I hear most commonly.

The best way to determine which of these is best for you is to sit down with someone to talk over what you are looking to accomplish in the end. Are you looking for a certain amount of built up cash? Or equity? Are you looking for monthly cash flow? If so, how much?

And as far as “Secure my retirement”, well, there are so many factors here. What other investment vehicles are you currently utilizing? What percentage of your retirement are you looking for real estate to contribute to?

For those income property owners that we work with at Ad Astra Realty I’m always happy to set aside 20-30 minutes of my time on a regular basis to coach them through their goals and execution. If you are not yet a rental owner or buyer with us, feel free to reach out so that we can have an initial conversation to see what may be right for you. After all, I am a certified coach as well as a real estate investing broker here in the greater Kansas City area, licensed in both Kansas and Missouri.

Our team is here to help you create your “Retirement worth having.” So give us a call. We’d love to talk about your real estate investing goals.

National Appreciation of Real Estate

From Keller Williams’ Mega Camp Gary Keller discussed this slide. I, too, have many thoughts around this. Knowing the market is power. If you are a current or future real estate investor looking at Kansas City, please reach out. We are here to help.

Chris Lengquist
Ad Astra Realty, Inc.
1127 W Dennis Ave
Olathe, KS 66061
913-839-2953 o
913-568-1579 m

Kansas City Housing Market Continues Hot

The Kansas City housing market, especially where it pertains to Kansas City real estate investing, continues to run hot. And frankly, I don’t see it changing anytime soon. Below are some random, bullet-point thoughts.

• There is a shortage of “affordable housing” for both rent and sale. In Olathe, Kansas, (in the 66062 zip code) good luck finding a turn-key home with 3 bedrooms, 2 baths for less than $250,000. At the time of writing this there were only seven 3/2 homes and only one of those was priced below $260,000.
• Corresponding rents in this area START at $1,695/mo.
• With interest rates hovering about 3.125% to 3.5%, even for real estate investors, money is cheap so margin is certainly possible with 20% or 25% down.
• In Raytown, Missouri, especially east of Raytown Road, there are four 3/2 homes currently on the market, with the lowest price being $159,900 and the highest being $199,900.
• Rents in Raytown start at about $1,050 and go up from there.
• The 1% rule is long gone unless you want to go into real estate markets that we don’t care for.
• We don’t care for those 1% rule markets because qualifying tenants become in short supply, income is often less stable and the schools are not on anyone’s list as “great.”
• What has been true since I started selling here in KC is still true; Generally speaking, you buy in Kansas for appreciation and Missouri for cash flow.

Because I coach real estate offices all around the United States I get a very good look at what is happening on a national level. Because I am an Owner/Broker here in Olathe, Kansas, I get a very good look at what is happening in the Kansas City area, especially with rental properties. (We currently manage just over 640 doors.) Here are some thoughts heading into the future.

• On a national level we are expecting 2021 to look a lot like 2020 with the possible exception that pricing gains may (finally) begin to level off and/or slow (considerably?).
• Unit counts sold will probably break records for both new housing and existing stock.
• Interest rates should continue to hover around the 3% – 3.5% bracket.
• The Fed seems to have painted themselves into a corner on interest rates. I’m not sure how we are going to ween our economy off nearly free money.
• The competition between first time home buyers and real estate investors will continue to heat up.
• Someone is going to begin to unlock building more affordable housing stock.
• Our Kansas City culture may finally begin to realize that townhome living, as is popular on the east and west coasts, may not be such a bad idea for first time home buyers and those scaling down. (Do I actually believe this? Not sure. Our culture of 3-4 bedroom homes with lawns to mow runs deep here in the middle of the country.)

I hope this helps to bring you up to date on what is going on. Should you have any questions or comments. Feel free to reach out. I love talking about real estate and property management.

Paying Too Much For Rental Property

Are you thinking of buying Kansas City area real estate investment property? Are you wondering;

• How do I keep from paying too much?
• What part of town should I buy in?
• How do I go about managing the property, setting the rent, screening the tenants?

These are some of the questions, and more, that you are asking yourself right now.

Paying Too Much
Look, let me make this simple. If you are a first time reader here it may take you a while to understand that I don’t mince words nor do I speak in absolutes. Here it is; It is really, really, really, really difficult to get the “bargains” all the books, tapes and seminars keep telling you about.

Real estate is on an 11 year climb. Yes, I said eleven. Sooner or later we KNOW there will be a correction to the market. There has to be. History demands it. Having said that, if you buy “at market” and you rent “at market” and you allow time to be on your side, there are precious few ways you can actually lose money.

Real estate investing isn’t easy. It is not rocket science, either.

Let’s just say you buy “at market” a 3 bedroom 2 bath home in Olathe, Kansas. Most likely, you’ll buy in the $220,000 – $260,000 window. I’ll assume you’ll put down 25% (the best way to get the best interest rates) and that you will amortize the loan over 30 years.

$260,000 purchase price with 25% down ($65,000)
Principal and Interest Payment $842
Insurance and Taxes $465
Total payment $1,307

In Olathe, this house would rent between $1,675 and $1,775 depending on the time of year, location, etc. So your Cash Flow Before Taxes would be somewhere in the $372 – $400/mo range, before property management.

This return doesn’t even take into account the other 4 Ways You Make Money Owning a Rental Property.

If you’d like to know more about our real estate services, reach out to us. We can go into depth on this conversation. I’d love to hear from you. Send me an email to Chris(at)AdAstraKC.com

You know to use the at symbol. I’m just keeping the bots from harvesting my email everyday.

Open Letter from Ad Astra Realty, Inc

This is an open letter from Ad Astra Realty, Inc to our employees, contractors, owners, tenants and applicants.

These are interesting times. Not in my lifetime have we had a health crisis such as the one we now face. Before us is a novel coranavirus named COVID-19 and the information and misinformation surrounding top topic can become overwhelming. I will do my best to parse the information and, therefore, our response as best possible to each of you.

EMPLOYEES

Effective immediately I have asked our employees to work from home by telephone, computer and video conferencing as much as possible. When necessary, and they are in the office, I’ve asked them to keep their distance from one-another and to disinfect the building a minimum of once per day.

CONTRACTORS

Our independent contractors who primarily work on maintenance issues are, well, independent. Each contractor has a choice to make as to their exposure in regards to their health, their well-being and that of their loved ones.

MAINTENANCE

For the near foreseeable future, maintenance will be systematically prioritized as to whether this is an emergency, urgent, important or preferable. We will be in close communication with our tenants, contractors and owners to determine necessity, timing and risk.

This is NOT to say maintenance will not be taken care of. This IS to say that should contractors become harder to book and should tenants decided not to allow “strangers” into their homes for the near term, maintenance will have to prioritized properly.

OWNERS

We will continue to monitor and manage your investment properties diligently. When necessary or highly desirable, we will be in contact with your tenants and yourselves. Our fiduciary responsibilities to you have not changed.

TENANTS

We are asking each of you to stay in communication should you have maintenance issues and to exercise patience as we work with you to schedule.

We prefer when tenants make their rent payments online. Talk about your social distancing. We are also asking that for those of you who prefer to pay by check in person are asked to deliver your payment to our drop box closely located to the right-hand door of our office. Please do not enter the facility unless absolutely necessary. We love seeing you and will again… just right now we are looking to comply with the best advice our medical professionals are giving to us.

APPLICANTS

This may/may not slow down the process of renting our properties available. We hope not and will do everything in our power to alleviate any time constraints. We thank you for your patience in advance.

SUMMARY

We do not know how “big” this will get or how long this will last. If we look overseas to Iran, Italy, Spain, France and Germany, well, the forecast looks a little bleak. When we look to the past we know that most pandemics last somewhere in the three month range.

Yet, we also know that we don’t know exactly how THIS virus reacts in comparison to its cousin viruses of similar values.

We do know this; For the coming weeks we will be in new territory, inconvenienced and there will be economic impact. Of what magnitudes we can only wait and see.

Should you have any questions or comments, please do not hesitate to reach out to either myself or Jimmy. We are here to help.

Sleep Better with Real Estate Investments

With the Coronoavirus (Covid-19) garnering headlines in regards to the financial markets all across the world, I thought now may be a good time to for a reminder about the relative security of real estate investing as part of your investment portfolio. While all around you there is panic, feel free to rest peacefully.

Look, there are no certainties in any kind of investments. Like most of the readers here, I too own rental property. I too invest in stocks, bonds and mutual funds. And, I too have watched approximately 11% of my investments in said stocks, bonds and mutual funds simply evaporate in the last week.

Yet, my real estate stays steady At least for the time being.

Most our income property investors here at Kansas City’s Ad Astra Realty are buying rental properties within the bell-curve of income for their respective states, Kansas and/or Missouri. As such, you need to know that demand is still incredibly high on the buy side. There are simply far more buyers than sellers at nearly any price below $250,000 in Kansas and $200,000 in Missouri. Vacancy for rental properties is hovering right around 5% in Missouri and 3.5-4.0% in Kansas for most price ranges.

Will Covid-19 change that? I doubt it. Not because I buy, sell and manage real estate, but because when all the hysteria is peeled back, Covid-19 isn’t as damaging as pneumonia or the flu. There are numerous stats about this.

UPDATE: This released by WHO on March 4, 2020.

As an aside, I am a believer that one day we will have a virus that we simply have difficulty combating. This may be a progression to that. I concede. Yet, it would appear to me that any disruptions to the housing market will be slow to come and short lived. In fact, if the Fed’s reaction to this is to slash interest rates further, it could be a boon for the home buyers and investors.

There is no doubt real estate investments carry risk. Being knowledgeable about those risks, hiring good help and having good insurance should mitigate much of the exposure.

As always, feel free to reach out to us with any questions, thoughts or concerns. We are here to help you obtain and enjoy your “Retirement worth having.”

Investment Property in Emporia, Kansas For Sale

In September of 2017 I bought a cabin at Lake Kahola which is about a 22 mile bike ride away from Emporia, Kansas.  And since I usually drive through Emporia, KS on my way to and from Lake Kahola I’ve come to know the town pretty darned well.  I ride my bike there.  We buy groceries and house supplies and what-nots in Emporia.  And we eat there as there are some great little dives there.

I say all that to say I’ve really been studying this small Kansas city.  They lay claim to having the first Veteran’s Day, they are home to the Dirty Kanza some say they invented Disc Golf there, too.  You can read more at Visit Emporia.  And folks, if you are a real estate investor…this market is ripe.

For instance, I have discovered three fourplexes for sale by a co-op broker.  They are priced at $79,900 for the building with four one-bedrooms, $119,900 for four two-bedrooms, and 129,900 for the one with two one-bedrooms and two two-bedrooms.  All the rental properties are 50% leased.

While I have not yet walked the properties I can see from the pictures that there is quite a bit of deferred maintenance.  What I like is;

• The neighborhood is solid.  I’ve ridden my bike through there a few times.
• The neighborhood is in a great location….and not too far from the University.
• Hospital right down the road.
• I believe rents could be raised when condition is raised.

In my research of Emporia I’m stunned by how little professionalism there is in property management in regards to marketing and condition.  And I believe that sets us up nicely.  In that regard, we have requested rents and rent rolls a few times and have not heard back.  Sadly, this has been par for the course.

I’m guessing/estimating rents for the one-bedrooms to be in the $425 – $450 range while two-bedrooms are closer to $500 – $550 depending on condition.  Note that most are window unit air conditioning systems.

So, if you had two and two (one and two-bedrooms) your Gross Rents would be $1,850 m/l.  Take a purchase price of $129,900 and you end of with a Gross Rents to purchase ratio of roughly .17.  That’s nearly unheard of in Johnson County, Kansas and is even getting more difficult in Kansas City, Missouri…at least in neighborhoods we choose to recommend in regards to intangible value.

There are other rental homes that would be excellent buys as well.  Should you have any interest, reach out to me at your earliest convenience and we’ll send you a link to what we are seeing.  We’d love to help you with your “Retirement worth having.” by capitalizing on this market.

And the best part?  Jimmy and I have secured a local real estate broker to help us with the sales and management processes.  We have it all set up.  We just need a buyer.

Contact me or give me a call at 913-568-1579