An Open Letter to Tenants of Rental Property

Dear Tenants,

I would love to discuss a couple of items before you rent from us at Ad Astra Realty, Inc here in the Kansas City area…and beyond.

  • We really do not want to keep your deposit.
  • We are not perfect but we are human beings.
  • Do not file an application, pay the fee and ask for your money back when you don’t rent with us.

THE DEPOSIT
We seem to have three kinds of tenants… and heck, I fell under one of these when I was a tenant many years ago.  In fact, I remember once that the landlord called and said they’d be keeping all of our deposit for damages.  And you know what, he was right.  We were not great tenants. I was young, single and didn’t fully respect the man’s property.  Here’s the thing; I didn’t blame him.  I took responsibility. Here are the three tenants we tend to work with…

  1. Get all their deposit back.
  2. Get most of their deposit back.
  3. Get none of their deposit back.

A great many of our tenants get all of their deposits back.  The house is reasonably in the same condition as when they leased the property the previous year, or two or three…save normal wear and tear.  Normal wear and tear includes, but is not limited to, the carpet being worn down by walking patterns or the walls getting a little dirtier or the blinds starting to sag.  Normal wear and tear does not include chunks of wall being torn out on move in or move out, or your pet urinating on the carpet in twenty different places, breaking stove tops, etc.

When we are required to keep some or all of a tenant’s deposit the owner is the one who almost always loses out.  Most deposits do not actually cover the damages done because what most people do not take in to account is that while the work has to be done to repair the damages the owner cannot rent the property.  Therefore, there is a time loss.  And, as we all know, time is money.

As for disputing your deposit, should we keep any, we are happy to discuss.  We do a very extensive move in- move out report that you have access to on your move in, and your move out.  We take pictures of everything.  This is to your advantage, and ours.

WE ARE HUMAN
For me to sit here and tell you that we are perfect, well, that just wouldn’t be true.  We can miss things.  So if you have a challenge with us, let us know.  The best way is in writing, therefore we both have a record.  If you feel strongly about something, set up a time to discuss the matter.  Heck, you may be right!!!

Calling and immediately cussing at us because we kept your deposit because of damages, well, it is a non-starter. So is threatening to sue right off the bat.  Once you threaten to sue, our conversation is over.  We will simply advise you to contact your attorney and they will contact us.  Once that happens, we will forward it to our attorney.  There can be no more discussion between us.  Your attorney will advise the same.

APPLICATION FEES
When you submit an application you trigger a series of events that cost both time and money.  If you take the fees we pay for the credit and background checks and combine them with the time our employees take to sift, review and verify, we actually don’t even cover our costs.  So when we continually hear that our Application Fees are a scam, I know immediately this is someone who has never owned a business.  And that is fine.  Yet, on our listings, on our online application forms and before you hit APPROVE, you will see something very similar to this…

We never encourage anyone to apply for a home before seeing the inside of any property, as the $35 application fee is non-refundable. Without first touring the home, you truly will not know if it going to work for you. Applying for a property and paying a $35 non-refundable application fee before viewing it, is completely at your discretion.

Look, we know it is a super heated rental market and FOMO makes people make decisions they would not otherwise make.  Yet, if you choose several times to read this and move forward then how can it possibly be a scam on our part to get your $35.00?  Apply if would like to rent from us. However, we cannot incur the costs you initiate and then give you your money back if you don’t like the result.

Now, as with everything, there certainly may be a circumstance now and again where we will refund an application fee. Maybe it was a mistake on our part on the listing or maybe we told you a property was available then the owner reversed the decision.  We are happy to listen and examine.

Fundamentally, owning and renting housing is a business.  We are not the owners off the properties we manage.  Most of our owners are people hoping to retire one day and use owning income property as one of he vehicles to make sure they can retire.  The owners make money when they provide clean safe housing and the tenants pay their rent on time and don’t damage the house beyond normal living wear and tear.

And tenants, you want your deposits back, right?  Help us help you.  By signing the lease you are agreeing to the rules that the will govern our relationship.  Take care of the property.  Ask us to do the same when you have a maintenance concern.  Do that and we will got to bat for you, as we have in the past, if the owner doesn’t want to fix something or feels we should be keeping the deposit when they don’t rightfully have a leg to stand on.  The landlord-tenant relationship doesn’t have to be one of tension and controversy.  For most of our owners and tenants, especially when each party is looking to keep their end of the bargain, things go pretty darned smoothly.

Regards,

 

Chris Lengquist
Owner/Broker
Ad Astra Realty, Inc

Leave a comment

Filed under Property Management

Appreciation versus Cash Flow

Here in the Kansas City real estate investing market the conversation turns time and time again to whether you should go for the long term stability of Johnson County, Kansas versus the higher cash flow returns of Jackson County, Missouri.  Yes, there are a couple other counties you may choose to invest in. Yet, these are the big two.

Johnson County, Kansas – Appreciation
Johnson County is the home to cities that constantly show up in the “most livable” reports of the different magazines and websites; Overland Park and Olathe.  Yet there are other cities of great import; Leawood, Lenexa, Merriam, Mission, Mission Hills, Shawnee, Gardner…to name a few.

What they all have in common is great school districts.  I think most of us who live in JoCo would rank the Big Three school districts in this order;

  1. Blue Valley
  2. Olathe
  3. Shawnee Mission

In the interest of full disclosure, I chose Olathe because I have two kids that had some special needs and Olathe was a far better choice. Blue Valley is an exceptional school district for the gifted and Shawnee Mission, though it has fallen on some tougher times, it time tested and continues to exceed when compared nationally.

Let me simplify real estate for you; home values are always strong and appreciate more based on the school district. 

Whether you are rich or poor, black, brown or white, muslim or Christian or agnostic, don’t we all want the best for our kids? Therefore, when you invest in Johnson County, KS rental property just know that because the home values will be higher and therefore the returns will be lower.  Sure, the rents are higher, too, though not 1:1.

All that is to say that yes, you should buy smart.  You should put enough money down so that you have positive cash flow.  Yes, you will have a lower cash on cash return and yes, you will outpace almost all other areas of the Kansas City metropolitan area in appreciation time and time again.  Johnson County is a proven economic engine.

Jackson County, Missouri – Cash Flow
Following the exact same arguments as above, because the school districts are widely considered “lessor” the home values tend to trail that of neighboring JoCo.  Sure, Lee’s Summit sometimes ranks in that “most livable” category with a good school district.  Yet, it continually stands alone.

And make no mistake, it’s not that Jackson County, Missouri is a bad place to hold income property.  Kansas City proper ranks as a great place for the young over and over again, and KC is home to the amenities that bind a city together; art museums, great parks, a revitalized downtown, the Chiefs, the Royals and the Kaufman Center.

Yet, per capita and per household income tends to track lower, the school districts rank lower and there wasn’t the community planning involved in the growth of the city in the early days like there was in JoCo.

Again, Jackson County is a great place to live.  And to invest.  You will get better cash flow.  Appreciation, for the most part, tracks at just above inflation though last year Kansas City was one of the highest appreciating cities in the country at 9%.

Appreciation versus Cash Flow
In general, with exceptions to the rule to be found, if you are looking for a higher cash flow return you will want to be looking in Jackson County, Missoui.  If you are looking for investment property and don’t need the cash flow to live on and can wait years until you retire from your profession as an engineer, doctor…whatever… you may find Johnson County, Kansas more desirable.

 

Leave a comment

Filed under Kansas City Real Estate, Real Estate Investing

Example of Real Estate Investing in Kansas City

This is the tale of a small, two bedroom, one bath rental property in Raytown, MO.  I wrote this email, with some editing done for privacy, to our Ad Astra Realty, Inc property management team regarding some repairs that were being recommended to one of our owners.
This example shows the power of time when owning rental property.
**************************
THE PURCHASE
This home was purchased with cash on 6/17/2011.  Then the home was renovated and leased out…all within a period of about 100 days.
The purchase price plus closing costs plus all repairs totaled $39,280.
SINCE 2011
The home has had an “average” performance since then.  It hasn’t been a rock star and it hasn’t been a dog.
There have been 91 possible rental months since the property has come on line.  And the rents have never been under $775/mo…we are currently marketing at $825 and have people submitting applications.  So let’s say that the home has had 5% vacancy (our MO average).  That means that home has been rented 86 months at $775/mo.
Therefore Gross Rents have brought in $66,650 m/l.
In other words, after ALL expenses the home has already paid for itself.
CURRENT VALUE
RPR, a pretty reliable price aggregate algorithm  (more reliable than Zillow because it uses actual MLS data) puts the price of the house at or about $74,000.
Realest Tax values have the price at $50,000.
And yet, the price tables I have attached tell a more complete story.  Pay close attention to the Comparison Plus report and the status; Active, Pending, Sold (in the last 181 days).
And then look at the Statistical Market Analysis report, paying careful attention to the
averages.
CLICK FOR DOC ATTACHMENTS
MY CONCLUSION
It is my belief that if this house needs a roof and a furnace that yes, that does cost quite a bit of money.  Yet, it is money well spent regardless of whether we rent or sell.
Those two items, along with a foundation, are the most expensive repairs a home will need and yet the repairs last twenty years, or so, in most cases.  It is highly probable that COMPANY X will dispose of this property before the practical life of either is dissipated to a point of needing re-replacement.
If we were to:
Sell “As Is” the value of the home is $40K m/l
Sell in Top Condition then $80,000 – $85,000 *
     *This is with an estimated $37K being spend on upgrades.
In any case, selling as is, selling in top condition or continuing to rent, COMPANY X is winning big on this “average” property.
It is my hope that this will help us all to learn just a bit more about why investing in real estate is such a great, long term thing.  And that keeping homes in good, safe, clean order is of importance whether you are renting or selling because either way, the repairs will have to be done at some point.  And while the home is in rental service it absolutely should be kept up for the protection of the asset, the benefit of the owner and the benefit of the tenants.

Leave a comment

Filed under Real Estate Investing

Kansas City Real Estate Market Report

I thought some of you may enjoy catching up on the Kansas City real estate market report.  Simply click here to be taken to YouTube.

kansas city real estate investment property

Leave a comment

Filed under Kansas City Real Estate, Uncategorized

Kansas City BBQ – May Be the Best Part of Investing in Real Estate Here

Okay.  I love BBQ.  It’s one of the main reasons I ride my bike so much.  Well, BBQ and Mexican food.  Heck, Kansas City BBQ may be the best part of investing in real estate here.  Sure, the returns are great and our property management is awesome. And when you visit I’ll buy you a sandwich at a barbecue you’d like to try.

Kansas City barbecue

Smoke grilled pork ribs BBQ

Here are a few of my favorite haunts…

LC’s BBQ – Down in the close-in suburbs of the city, this place is my all time favorite.

Q39 – Kind of a modern, “yuppie” bbq with great recipes.

Kansas City Joe’s – World famous and quite fashionable. Great sausage.

Zarda’s BBQ – I grew up working here.  My favorite burnt ends, anywhere.

BB’s Lawnside BBQ – Good BBQ.  And, hands down, the best Saturday night.

Of course, I’ve left off quite a few that I like to visit.  Here in KC you can get in to a fist fight about the best BBQ.  The only thing we all agree on is it is definitely better than Memphis, Carolina and certainly Texas BBQ.  🙂

 

 

 

 

Leave a comment

Filed under Kansas City BBQ

Free Military Retirement Financial Planning

On May 9, 2019 I will be speaking for The Moreno Group at their Free Financial Planning for Military Retirement workshop.  I think it will be a great deal of fun.  We’re gonna talk a little about how real estate investing is a good thing for just about anyone AND as a military professional it may just be crucial to a “Retirement worth having.”

Why would I help other agents sell real estate when I sell it myself?  Well, that’s easy.  First, I love teaching on this topic.  Second, I truly believe in the power of real estate as a great investment vehicle for most people. And lastly, heck, I get to promote our property management business over at Ad Astra Realty.

If you’d like to find out more about the event and invite yourself on out, check out the link provided above.  I’m sure the Moreno’s would love to have more people hear how to maximize their retirement incomes through the buyer/seller services they can offer.

Leave a comment

Filed under Real Estate Investing

Two Promises from Ad Astra Realty, Inc

Working in the field of Kansas City real estate investing and property management is not rocket science and yet it is not easy, either. Everyday both myself and my team look at the Kansas City market, make evaluations and recommendations as to which properties look promising and which we’d walk on by.

When it comes to property management, this is a little more complex.  So many things can go right, and wrong, with a property.  Tenants, pets, local laws and policies, weather, bad luck, good luck, etc. work as variables to make each property and each year unique.  To that end we here at Ad Astra Realty, Inc offer these two promises that we will not waiver on;

  1. We will watch your money.
  2. We will tell you the truth, even if it hurts.

WE WILL WATCH YOUR MONEY
Do you know what the #1 reason rental property owners have for moving from Company “X to Ad Astra? It’s because property owners have grown tired with their property management company not paying them on time or not giving a full accounting of their expenditures.

So when I say “We will watch your money.” I’m saying that, while not perfect, we will always be able to tell you what you spent your money on and we work very, very hard to get our owners paid on or about the 10th of each month when funds are available.  I say “about” because if the 10th falls on a Saturday or Sunday we may not fund until Monday.

We know how important it is for you to know about and to receive your money. To that end, we take our jobs quite seriously.

WE WILL TELL YOU THE TRUTH
Let’s face it, sometimes the truth hurts.  Maybe we made a mistake.  Maybe you are trying to delay and expense because money is tight and yet the tenant needs air conditioning because nighttime temps are still up around 85 degrees.

I call this “Having fierce conversations.”  And property management is full of fierce conversations because of all its inherent moving parts that were mentioned earlier.

When we have a relationship based on trust and honesty, nearly everything else can be worked out.

Thank you for taking the time to learn a little more about Ad Astra Realty, Inc.

Keep up to date with Ad Astra Realty Inc
Sales and Property Management

1 Comment

Filed under Property Management, Real Estate Investing