There was a point in the last real estate boom where I literally, without exaggeration, received 15-20 calls a week from California real estate investors looking to buy rental property in a part of Kansas City now referred to as The Murder Factory.
The Murder Factory is the 64130 zip code in Kansas City. And trust me, you can also throw in the 64132 zip code as well. To see where these zip codes are in the city click on this zip code appreciation link from a blog post I did last year regarding Kansas City real estate.
To get a full appreciation of what I’m saying you’ll need to visit the Kansas City Star’s article on The Murder Factory. Read both parts. Go ahead. I’ll wait. I’ll be here when you get back.
(The photo above was taken from the Kansas City Star. Click on link for full photo credits.
“What I’m going to do is buy these homes for $5,000 – $15,000, put in $3,000 – $5,000 in repairs and upgrades and then rent them to Section 8 tenants for $825/mo. Then I can sell it for $70,000. Will you be my real estate agent and help me find these?”
No.
I realize this is a family blog. But it was bullshit from the beginning and it still is. Today, I receive about 1-3 calls a week from people who bought these dogs begging me to help them sell them. Last week I had a call from a New York real estate investor who swore to me he was willing to let a few of his houses go for 35 cents on the dollar just to be rid of them.
Trust me. At that price he was still making a profit and leaving someone else with headaches unimaginable. This is not a Kansas City problem. It happened (still happens) all over the country. Heck, I still get calls today asking me to participate in this stuff.
If you are participating in this kind of activity in these kinds of neighborhoods then shame on you. You are continuing the raping of these people for your own personal gain. And I won’t be a party to it.
If you really want to help, be a part of these neighborhoods. Put the money into a house, find good tenants and then put some of that money back into the neighborhood. Spend your dollars at the local restaurant. Get your oil changed there. Be a part of something.
But if you are looking to just make a quick $5,000 – $15,000 you run a big gamble. It could backfire on you. You could end up another real estate investment casualty. You could end up hurt or dead. At the very least, you will have sold a piece of your soul.
Kansas City Investment Property and Property Management 
Fixing this problem is much more complicated than asking individuals to invest in these neighborhoods. It will take a public/private partnership to clean this up. It starts with zero tolerance of criminal behavior. Law enforcement must be a constant and consistent presence and it must offer real protection. The drug dealers and thugs must be removed and not allowed to cycle back in. It doesn’t matter whose brother, child, or grandchild is involved, out they go. The other residents must be offered a way out of their predicament with real work at the same time the welfare subsidy of the non-working lifestyle is ended. If you can remove the drugs and violence and give the residents have some hope and self respect through paying work, there will be incentive for investment, from inside and outside the community. Any other approach is just a waste of money.
You are right that it will take EVERYONE to make this right…if it can be done at all.
And my point about investing in a neighborhood is that you can’t simply, in any business model, expect to exploit those that will create your income. It must be a two-way street.
At this time, I would not recommend those two zip codes as investment worthy under just about any circumstances.
I was looking to buy property as a rehabber that would eventually convert to rentals during that same time frame. At one point I had to buy a GPS just so that when people would try to jack me as I drove by houses, I could drive off and manage to still get to the next house on my list. Many of the houses I looked at were in that region and eventually I did what you are talking about, I simply just started crossing those zip codes off as something I’d even consider.
If I can’t drive safely into the neighborhood to research a house, then I certainly can’t live there, upgrade a house, leave my tools, TV and computers when I go to work, etc.
Eventually I picked up a house in 66104 at an auction and am now rehabbing it. But you’re right in that it takes not just work on the house, but perseverance in the neighborhood.
I’ve had to help the police run off some illegal immigrants who had two gangbanging sons who were suspected of homicide. And when new people move in, I make myself known to them so that if they need help I’m there. And if they’re there to make trouble they get a polite warning that neighbors on my block are watching.
They finally opened a grocery store on Leavenworth Road again and now I shop there all the time, regardless of sales at other locations. I wave to people as I drive by.
Ultimately, you’re right about these people trying to be predators on other human beings. They’re the same sort of thugs who ran Enron and would do anything in order to make a buck. But they’re hiding behind the honorable title of Real Estate Investor. Great write up, thanks!
That’s an interesting name you go by there….
Your comments are welcome and shows the kind of commitment it will take to succeed with that property. When the “owners” of that neighborhood see you care and aren’t just there once a year they will also look out for your property for you. I know this to be the case from other personal experiences.
Chris,
Great article! I believe whole-heartedly in supporting ones local economy. I have a new site dedicated to local businesses across the Greater Kasnas City area coming soon. Hopefully we can all do our part to “think outside the BIG BOX”.
The out of state investor interest in the most dangerous zip codes in K.C. is baffling to me. I don’t understand how someone can call themselves an “investor” when they know full well that the reason the homes are so cheap is because of the area. Taking your money, putting in a dangerous place for a lightning fast R.O.I. is NOT true investing.
How did they expect to buy a home, rehab it, have $15-25K in it and turn around and sell for $50-75K????!!! I know this scenario really does happen sometimes, but the amount of calls you are quoted as receiving, that is crazy. Tell me how they can have the wool pulled so far down. Are the out of state investors being mislead? Or do they know exactly what they are doing?
Either way I agree that the only way to remedy a situation like this is to be actively involved.
GREAT ARTICLE!!!
Great question: “Are the out of state investors being mislead? Or do they know exactly what they are doing?”
I’d say the following;
33.3% Know exactly what they are doing.
33.3% Are being taken advantage of.
33.3% Think it sounds great so they really don’t want to know the details. Know what I mean?
I do know what you mean. Are there any other specific areas of the U.S. that you know this is happening/ has happened to?? It’s an interesting subject to me. The 1/3 that know what they are doing make me sick. GREED is so destructive. I hold the other 1/3 that don’t ask questions accountable as well.
Good Subject.
I know St. Louis was hit. And Ohio was devesatated by actions like this.
Chris; great read, we have all seen these scammers robbing people for years. I get two or three calls a week wanting me to manage them.
I must have turned down the management of at least 20 units last week.
Too much work… for too little money. No thanks, since the market has slid every other agent is now calling themselves a property manager. I’m just referring it to them.
Probably keeps your life in a much happier place.
And as far as “every other realtor calling themselves a property manager”, well, at least they’re licensed! That’s a step ahead of many of the PMs out there.
Chris, great read! I am new to real estate investing and just bought a property in that area, unbeknownst to find out about the crime that has happened around it. Does this article still hold true today even though the city has made this a developmental area?
As you know neighborhoods can get better or worse. But in the 5 years since I’ve written this article it is still not a neighborhood wherein I believe in long term appreciable growth. It is more of a “cash” neighborhood wherein you are looking to maximize cash flow rather than count on appreciation. I don’t get over there a lot. But I will say I have met some great people there. It’s just that there are enough bad apples that keep spoiling it for so many.
You people need to grow some balls! LOL!