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.

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

 

Understand Your Criteria When Buying Income Property

When it comes to securing your retirement through rental properties it is best if you understand your criteria when buying income property.  Today I sat down with a fellow realtor here in the Kansas City area and two investors that own one rental property with plans to add many more.

What I found is what I usually find.  You see, I asked them what their criteria was for what they were looking to acquire.  I’m not picking on them, I’m really truly not when I say they did what most newer real estate investors do… they went silent.

Investment Property Criteria Part 1

Investment Property Criteria Part 2

Those links above the picture are the links to a series of videos I did for real estate agents seeking to work with investors and for the investors themselves.  Here are a few things you should know what you are looking for before going too deep in to your next investment property search;

• What return are you expecting?
• How do you measure the return?
• Location?
• Bedrooms?
• Single Family Home or Multi?
• Rehab or Turn-Key?
• Is the school district important?

I could add a whole bunch more.  Or, you could watch those videos.  Listen, I know the videos are boring.  I don’t know how to make real estate investing more exciting unless I stand in front of a rented garage full of luxury sports cars and half dressed women.  Oh wait, for the gurus out there I’m sorry (not) if I offended you.

 

Don’t Forget The Mileage

Remember that when you own residential income property that you own a “business.”  Everything you do that is an expense is deductible from the income of that business.  And don’t forget the mileage.

Each time  you drive over to show a house, fix a door knob, check on the trash the tenant left outside the house, etc. you are conducting business and those miles are tax deductible.  So don’t forget to have a log book that logs the mileage and purpose of each trip, as required by the IRS.

I use a digital log book on my phone called TripLog.  But there are several good apps out there.

Mileage adds up quick! Don’t forget this deduction.  Plus, it helps you to think of your rental properties like a business.

Maintenance and Property Management

Maintenance is by far, and it’s not even close, where most of our time is spent in property management. Why?

• Everyone has different expectations
• Houses are constantly deteriorating
• Trees
• Sewer lines
• Where trees and sewer lines intersect
• Tenant turn-over
• Bad weather

But nothing, aside from tenant selection, is as important.  Proper maintenance keeps up the value of the house.  Proper maintenance attracts a better tenant. Proper maintenance keeps repair costs down when it’s time to sell.

If you haven’t figured maintenance, and updating, into your costs of owning residential income property, you need to go back and do so.  Because selling a “melting ice cube” doesn’t leave much at the end.

Would You Live In It?

People often ask where I draw the line at what homes we sell to buyers or what homes we will manage for owners.  My answer is always a question.

Would you live in it?

We want clean safe homes in decent neighborhoods when it come to real estate investing.  Now, decent is a relative term. Where you come from, how much money you make, etc have a lot to do with what you consider decent.  But to me,  decent has to do with the relative value of a home in proximity to it’s surroundings.

Let me explain further. If the neighborhood the house is in is mostly rental property, it’s probably not going to appreciate along with the city or county rates. Too many rental houses bring a neighborhood down.  Lack of maintenance or tenant care are usually the biggest reasons for that.

There are several neighborhoods around Kansas City where investors (usually out of state) have come in and bought so many homes in an area that I worry about the long term viability of those investments.

Clean. Safe. Maintained. In a neighborhood of “stake holders” and one that has long term viability as far as expected appreciation relative to city averages.  That’s what I’m looking for in property to recommend to my investor clients.  And those are the kinds of homes we love to manage.

REALTOR Referrals for Kansas City Income Property

 

Ad Astra Realty works with real estate investors every day.  We manage over $26,000,000 in assets here in Kansas City.  We know investment and income property.

We also know that many of our readers here at BBQ Capital are real estate agents. We just want you to know that we are happy to work with your real estate and property management referrals.  You can read our Realtor Referrals web page to find out more.