Chris Lengquist - Thursday, May 12, 2016
Here is an email I sent to an owner regarding a property he purchased back in the fall of 2012. He was trying to get an idea of how he had done on his property. What do you think?
Please find attached a report from 10/1/2012 - 7/1/2013. The tenant moved in on July 1, 2013, so that income shows.
It shows your total expenses to that point of $60,517.73. Your purchase price was $81,000 on 10/12/2012.
You paid some closing costs but I don't have the Settlement Statement with that amount readily available. I can dig that up if you like but it wouldn't have been too awful since you paid cash. Probably around the $900 range.
That means your "all in" expenses on the house before it was set in to service are $142,400, more or less.
Hope that helps.
Now, let us have some fun.
From Day 1 through Today you have spent $66,541 on expenses plus your purchase with closings costs of $81,900 totaling $148,441. You do not have the property leveraged so that is all your money in.
From Day 1 through Today you have earned income of $50,100.
Today's estimated value is between $175.000 to $188,000 depending on a few things. Let's say $175,000 to be conservative.
I'm going to go ahead and subtract sales costs of 7.5% (for commissions, closings costs, etc) to figure our real return...which would add up to $13,125. Plus you've paid your own home owner's insurance and property taxes. I don't have those exact numbers. But let's say since October of 2012 those have added up to $12,500 ( a rough guess).
Therefore, your true value is $161,875.
Your "all in" minus the income you've earned is $110,841.
You have invested $110,841.
Your current market value is $161,875.
That is a 46.0% increase in your monies.
Kinda fund to figure all that, right?
Chris Lengquist - Wednesday, September 8, 2010
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Chris Lengquist - Wednesday, September 8, 2010
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Chris Lengquist - Tuesday, October 20, 2009
Most of our readers here at Kansas City Real Estate & Investing are residential investment property owners...or owners of primary homes. But I like to keep an eye to commercial real estate as well since my wife and I also own a small business: Portraits Today Studios
in Olathe, Kansas.
So when I read stories like this one from today's Kansas City Star
it catches my attention. It's a longer article so let me just show you the key paragraphs.
A new study by real estate researchers Reis Inc. found that shopping center vacancies rose in the third quarter to a 17-year high as unemployment climbed, consumers cut spending and stores closed. Vacancies at neighborhood and community shopping centers increased to 10.3 percent — the highest level since 1992 — compared with 8.4 percent in 2008. Vacancies at regional and super-regional malls rose to 8.6 percent from 6.6 percent a year earlier, a high for this decade.
Rents also have dropped, to $39.18 on average at regional and super-regional malls from $40.62 a square foot a year earlier. The 3.5 percent decline is the worst year-over-year deterioration in a decade, Reis said.
“Until we see stabilization and recovery take root in both consumer spending and business spending and hiring, we do not foresee a recovery in the retail sector until late 2012 at the earliest,” Victor Calanog, Reis’ research director, said in a statement.
In my lifetime I cannot ever remember seeing so much empty space in our local shopping centers. Trying to think back to the recessions of the late '70s and early '80s I just don't think I remember as many shopping centers. Big companies have fallen in droves and closed up shop. True to American history, it will be the Mom & Pops that will rebuild the retail sector. Mark my words.
For those that long to be commercial real estate investors I would have you look at today's economy. I think, by far, those that purchased residential rental property on proper fundamentals are weathering this storm in far better shape than the non-corporate commercial investors.
Chris Lengquist - Monday, October 19, 2009
I'd love to have you go on over to my new facebook page promoting real estate in and around Olathe, Kansas. As regular readers know, Olathe is a fast growing suburb of Kansas City, Missouri. The name of the site is Olathe Real Estate Keller Williams Realty
Now, it's a new page so there aren't very many bells and whistles...yet. But I'd love to have you join if you are a facebook member and a regular reader of Kansas City Real Estate & Investing. What I discuss here and what I discuss there could be, will be, two different things.
Chris Lengquist - Sunday, October 18, 2009
I'm putting together a newsletter regarding Kansas City real estate. Many of you have sent me your contact information before and I've kept it. But if you are a newer reader and you would like to sign up for periodic mailings and/or emails I send out regarding Kansas City real estate...including some real good deals...you should just drop me an email today.
listwithchris at kw.com
Chris Lengquist - Friday, October 16, 2009
Today is a national holiday for this Kansas Jayhawks Basketball nut. Today is the first day the NCAA allows teams to hold official practices. It used to be Saturday. But Lefty Drisel back in the day at Maryland decided he wanted to get a jump on the rest of the ACC and so he would hold practices at 12:01 am on Saturdays. A few schools soon followed suit and Kansas jumped on board 25 years ago today. Thank you Larry Brown!
Of course, the NCAA can mess up anything. Just look at how they randomly choose to enforce rules and eligibility. It's atrocious. Then someone said that having 16,300 people up late in Allen Field House was too late. Oh, please. So now it starts at 6:30 pm and ends at 9:30 pm. Oh, I long for the days of old when not everyone was so concerned with legislating the fun out of everything. I remember Late Night as a student in 1985. Sure my grades stunk. But darnit! I had a lot of fun! :)
Anyway, MY Kansas Jayhawks are supposed to be the favorites to win it all again this season. There is a long way to go and injuries or unexpected chemistry problems and the usual NCAA red-hot tournament team can show up in your path...but I'm hoping and praying (like God cares) for another NCAA championship. (To my Missouri fan clients, sorry, you know my bias!)
Chris Lengquist - Thursday, October 15, 2009
As I am helping a young couple to buy their first home in Olathe and take advantage of the First Time Home Buyer Tax Credit I wanted to bring you this little discussed caveat: It's up to 10% of the home's purchase price to a maximum of $8,000.
Now most people won't have any difficulty with that because they will buy a house priced over $80,000. But this young, soon-to-be-married couple are looking at homes priced between $70,000 and $100,000. So they could potentially be under the $80,000 purchase price. Just something to be aware of.
By the way, these first time home buyers are smart. Between the two they could qualify for a home up around $175,000 to $180,000. But they'd rather stay out of debt and being newly married they want their own house but not the massive debt that can come with it. Ah, if I had the chance to do it all over again...
Chris Lengquist - Thursday, October 8, 2009
ecoming a series, this post will discuss the cost of property management. At least here in the Kansas City area. I do follow costs in other parts of the country but with the diversity of our readership, I'll just discuss Kansas City rental property management. You can talk to your local real estate agents for your local details.
Property management here in Kansas City is pretty homogenous, at least in cost structure.
Monthly fees for collected rents run anywhere between 7% and 10%. There are a few companies that charge one flat fee per door.
Lease-out fees are running between 50% and 75% of the first full month's rent when the property manager has to find a new tenant.
Then there are additional fees many of the companies offer. There are eviction protection fees and rent protection fees. These are usually add-on services that can run anywhere between $5 and $45 per month. I'm not a big fan of those. Sort of like the extended warranty on your Best Buy electronics. They wouldn't be offering it if they weren't coming out ahead so...
When you are considering buying a new residential investment property you want to factor in your property management fees. Quite possibly even if you intend to manage yourself just in case you change your mind later. So if you have a place with a $1,000 per month rent and it changes over once a year you might want to consider;
- $960 property management fee.
- $500 to $750 in lease out fees.
This doesn't absolve you from figuring other costs/expenses as well. You know, your vacancy and repairs...just to name a couple.
Chris Lengquist - Wednesday, October 7, 2009
Let's face it, the toughest and sometimes most frustrating aspect of owning and operating residential investment property is managing the property...or even just working with the property manager. Let's look at your choices, shall we?
Self managing your rental property really isn't too tough if you own one or two or three houses. You can still work your full time job, show the place every now and again when it becomes vacant and there really shouldn't be too much maintenance on just three rental homes or less. You will save the property management fee and you'll be able to keep a handle on expenses better since they come directly out of your checkbook.
But then again, maybe you are a softie. Or you are a professional that really is very, very busy at work and you need all your personal time. Or maybe you just would rather be at your son's baseball game.
Choosing a property manager is a very important process in your real estate investing career. Sadly, most just go with whomever they find in the phone book or was recommended to them without ever really doing any research. There are some good property managers out there. But property management also lends itself to the shadows. After all, if the owner is California and his property is in Kansas City will he/she ever really know what the condition of the air conditioner really was?
Then there is the time issue. If y0u own more than a few properties you have to decide if you are going to be a whatever you are or a property manager. Where do you make more money? What is a better use of your time? Heck, even if someone else charges you 9% and then overcharges you occasionally are you still not better off using a property manager? (Not advocating the latter position. Just asking.)
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