Category Archives: Real Estate Investing

Mortgages for Income Properties

Here is a video from one of my most trusted lenders when it comes to buying income properties. He has helped many of my Kansas City real estate investors to buy investment property without any surprises at the end.  This information is accurate as of March 2017.

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Filed under 4 Benefits of Real Estate Investing, Real Estate Investing

Questions About Kansas City Real Estate Investing

I received an email this morning from a young, would-be real estate investor here in Kansas City.  Rather than talk about it I just thought I would share his well thought out questions and my answers.  My hope is this correspondence will help someone out there as they begin to start their real estate investing journey.

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 Hello (name hidden),
I wish you luck.  Proceed with caution but calculated risk.  Years are your friend. You have a lot of them.  Save a minimum of 5% of everything you earn, 10% is better.  It will look ridiculous at first and you will be tempted to accelerate the process with too much risk.  Again, time is your friend.
See my comments below.
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Hi Chris,
I am contacting you today because I am a recent University of Kansas graduate who is looking to learn more about real estate investing and I am particularly interested in the Kansas City market. I happened to stumble upon your website and really enjoyed getting some useful information! I was hoping that you may be able to find some time to answer a few questions?
1) Who would you consider to be the top real estate investors in Kansas City in the last 10 years and why?  I have no idea. I don’t think of it in these terms.  You have to determine your plan and sit down with someone that can help you make a solid plan that is do-able and realistic.
2)What would be the top 3 things that separates the Kansas City market from the rest of the country? Affordability is first.  Affordability is second.  And affordability is third.  We are median.  The west coast looks at our housing prices and rent ratios and it looks like a candy store to them. 
3) What would be a realistic goal for a number of properties to buy within a 5 year time frame on a salary of about $30,000 a year?  So much depends on your strategy and starting capital.  If you tell me your starting capital is zero, we’re going to have to save first.  Now, you can use hard money…be careful.  There is money to be made here but only by the determined and quick-witted. There will be dozens, no hundreds, no thousands of get rich opportunities for those starting with no money.  Choose your advisers carefully.  Very carefully. 
4) What has been the biggest mistake you’ve made in your career so far? Not fully understanding how money works and how time is your best of friends.
 
Listen, I’ve blind copied a man named Ryan on this email.  Should he be willing to respond to you it would behoove you to buy the man a cup of coffee (probably of the 12 oz beer variety).  Ryan bought his first home with me at 21, I believe.  We’ve clashed over the years as to the amount of risk he was taking but he came out on top.  He’s smart and now in his mid-30s and owns over 125 doors.  
 
As I said, he’d be an excellent “investor” for you to get to know if he chooses to answer this email.
 
As for me?  I’d advise someone with limited capital to get a real estate license and learn to sell.  You can be the “middle man” with little to no risk and make a serious living in an honorable and ethical way.  Yes, it is hard.  But so is everything worth doing.
 
I wish you luck on your search.  Now that you are out of college you can begin to learn how life really works.  Nothing is given. It has to be earned.  It can, however, be earned in a way that you’ll be proud you accomplished your goal.  Never set aside ethics. And never, and I mean never, set aside your dream. It can evolve and change and morph.  But don’t quit.  There will be plenty of nay-sayers.  My wife and I like to reflect on them when we are sipping cold drinks in Mexico. 
 
If I can be of any further assistance, let me know.
 
Rock Chalk.
Thank you so much for your time if you have made it this far.  I really hope to hear back from you! Have a great day!

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Is It Time To Evaluate Your Investment Property

The New Year is fast approaching and I have to ask; Is it time to evaluate your investment property?

Many of our clients purchased their rental properties during the Great Recession.  They bought low and now may be the time to sell high.  Or is it?

The very first thing you need to know in order to make an intelligent decision is to get a comparative market analysis of your income property.  Listen, it doesn’t have to be detailed.   But if you can be plus or minus 3%-5% you can have a good idea as to how to measure your future options.

  • Should I continue to hold because I’m making good money on my investment?
  • Should I 1030 Exchange myself in to fewer but more valuable income properties?
  • Should I sell, pay the tax and relax?

There are, of course, a few other options and variables not the least of which is “where are you in your life?”  What I am saying is that the real estate market in Kansas City has changed by leaps and bounds since 2009 and so may have your investment needs.

So, is it time to evaluate your investment properties?  If it is, give me a call at 913-568-1579.  I’d love to help.

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Filed under 1031 Exchange, 4 Benefits of Real Estate Investing, Kansas City Real Estate, Real Estate Investing, Uncategorized

Mistakes Real Estate Investors Make

Here are some of the more common mistakes I see real estate investors make year after year in the real estate investing business.

  • Hiring a “home” agent to help them buy or sell.
  • Not double checking their assumptions regarding rents, expenses and loans.
  • Over-leveraging.
  • Under-leveraging.
  • Not choosing the right property management company.
  • Buying when prices are at their peak.
  • Multiple bid situations.
  • Buying too much too fast.
  • Not acquiring to a strategic plan based on future need.

Just a little food for thought for you.

 

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Investment vs Speculation

One of the topics I like to revisit over and over is the idea of real estate investing versus real estate speculation.

Real estate investing is the thoughtful approach to building wealth through the acquisition of good, solid properties and then allowing the 4 Benefits of Real Estate Investing to do their thing.

  1. Cash flow before taxes
  2. Principal reduction
  3. Tax benefits
  4. Appreciation

Real estate speculation is the hopeful approach to building wealth as quickly as possible (or possibly losing wealth) through the acquisition of properties “on the come”.

  1. Your guess could be very wrong about a neighborhood.
  2. Your guess could be very wrong about the economy.
  3. Your guess could be very wrong about the rents.

I’m not saying people don’t make money through real estate speculation But it’s more of an “active” way to earn income versus a “passive” way to earn income.

Feel free to call us should you have any more questions about the difference.  It’s better to know beforehand what you are getting yourself in to when it comes to real estate purchases.

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Real Estate Agents – Learn Real Estate Investing

real estate investment trainingThis post is a shout out to my real estate agent friends.  I know a lot of you are readers of this blog because I can filter it in the stats and through the comments and emails.  It is time you know that now you can learn real estate investing on another website I have.

REI Academy is an area of a coaching website I am putting together that is now ready to fly.  Would be and established real estate investors here in Kansas City and around the country are welcome to go in and poke around, as well.  The numbers easily transfer to you, too.  But know that the site is designed to help real estate agents to better understand the following:

  • How to work with real estate investors
  • The terms and math a real estate investor utilizes
  • Which investors you want to work with
  • Which investors you want to pass on working with
  • 1031 Tax Deferred Exchanges

And there is more.  These are short little 4-8 minute videos that you can watch over and over again until you get a good understanding of the principles.  If you need to drill down deeper, feel free to contact me directly through email or visit my Coaching page.

As it is with all websites, there will be more content coming in the future to help real estate agents maintain their businesses in any market, grow market share and to raise their professional and ethical standards.  It should be fun and I’d love it if you’d join me on the journey.

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The Supreme Court, Disparate Impact and Property Management

Well, in the opinion of this author, we’ve moved yet another step closer to hell.  Today the Supreme Court ruled that Disparate Impact lawsuits for discrimination can move forward and are part of the fair housing acts enacted in the 1960s. This is a HUGE expansion of fair housing and I’m not really sure it can be defined.  And that is what make me nervous.

I am all for the seven protected classes that fair housing protects.  No question. And we are very careful to not violate those classes.  But now the definition of discrimination has grown so broad that I don’t know when we’ll be discriminating and when we wont.

See this link for an example.
http://www.kentucky.com/2015/06/25/3917235_supreme-court-opens-door-to-housing.html?rh=1

Here is the important paragraph:

A “disparate impact” arises when a practice produces different effects across racial groups, even if the practice wasn’t racially motivated. For instance, if a mortgage lender establishes borrowing standards based on income and net worth, and some racial groups are less likely than others to qualify for loans under those standards, this could result in a disparate impact

And I had a Kansas City housing official tell me about a year ago that in his opinion (now green-lighted by the Supreme Court) that because I refuse to lease homes to people with violent criminal pasts and that disproportionally people of color go to jail because of violent criminal behavior that I am discriminating against people of color under the broad definition of “disparate impact.”

Here is the scary, scary thing. It doesn’t have to intentional.  And we all know it doesn’t have to be really even proven in civil court.  So regardless of the fact that I won’t rent to a white guy with a criminal past I may still be discriminating under disparate impact because I won’t rent to a person of color with a criminal past.

Where does this stop?  Read carefully and think about the two examples given. Then take time to shiver.  Government has taken another step into allowing housing to become a populist right.

Again, to answer some of the arguments I can already hear, I am not discriminatory. Not in my nature.  But I’m not stupid, either.  This will be used against property managers, landlords, realtors and lenders to the tune of hundreds of millions (billions) of dollars in lawsuits.  And that will “trickle down” into your expenses, too.

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Filed under Property Management, Real Estate Investing, Social Issues