Property Management Blog

Swine Flu Had Yours Truly

Chris Lengquist - Tuesday, October 6, 2009
swine-flu1I literally went from feeling normal (such as that is for me) to feeling achy and knowing I was going to be sick in less than an hour.   Most of last week I had a temperature and still this week I have a lingering cough, cough, cough that comes along with full recovery.  Yes, folks.  I had the swine flu.   Pretty cool, eh? But in our modern world of political correctness we cannot upset the swine so I'm told it is now called H1N1.  Whatever.  Four of us got it.  Myself, my second son and my first daughter and the little friend from across the street.  My wife, oldest son and youngest daughter have skated through unharmed.  Funny.  We all live in the same house and breath the same air.  Guess I'm just one of the weak ones. As I sat reading and researching all last week and weekend I learned a lot about our current real estate market.  More of that to follow.  Till then, cough, cough.

Schizo-phrenic Real Estate

Chris Lengquist - Thursday, September 24, 2009
Dictionary.com describes schizo-phrenic as;  2.  a state characterized by the coexistence of contradictory or incompatible elements. jackFrankly, I think our current real estate market here in the greater Kansas City area fits that definition about perfectly.  Nearly every day people call or email me to ask me what I think of our current real estate market.  On some days I think "Hey!  It's not too bad."  On other I think "Is this ever going to end?" Proof of Recovery My office, Keller Williams Realty, Diamond Partners, Inc of Olathe, Kansas has had two record months very recently.  I believe I was told that June and August were the best June and August months we've ever had.  (Keeping in mind our office got started in 2003.)  Personally, my June kicked hiney and July wasn't too shabby.  Olathe housing inventories have been down a little and DOM seems to be holding steady after having dropped a bit. Proof of Lingering Slump It's all around.  While many agents are keeping up or dipping only slightly from previous highs most have seen at least a 10% - 15% dip in sales volume from 2007.  A great many of the agents that are still in the profession will quietly whisper that they are down 20% - 25% from 2006.   I don't know about you, but if your income took a prolonged 20% hit when would your spending habits and lifestyle have to change?   Over 3,000 agents have fallen off the MLS rolls and more are expected to fall off this renewal season.  I've heard the local builder's association rolls have been devastated.  Forget housing starts, equity statistics and talking heads.  Look at the incomes and sales volumes of your local real estate agents.  If the amount of agents is going up and their incomes are even or going up you have a good housing market.  And the opposite is true if all that is dropping.  We can bend statistics (politicians, CNN and Fox are masters of this) all we want.  But if people are or are not earning a living in real estate then there is your answer.  A Last Word About This Administration's First Time Home Buyer Credit While the first time home buyer's credit has been an excellent resource for a great many people...and I have helped five different home buyers take advantage of the credit...I still don't like it.  First, four of those people would have bought a home anyway.  So there is money that didn't have to be given away.  Second, I believe it provided a false bounce to the market by accelerating the purchasing time frame of a great many people so as to not miss the arbitrary deadline of November 30, 2009.   Now they want to extend it.  But realtors I know here in Olathe aren't finding very many takers.  I believe you have taken current and future home buyers out of the market for at least the next six months.  Extending the credit will not magically provide us with new home buyers that are credit worthy.  What to Expect? Listen, the sky has shaken but it hasn't fallen.  I still believe 100% in the long term value of real estate.  But the dips hurt, no doubt.  For me, an average guy with an average income in an average city in the middle of the country, to sit here and give you answers would be folly.  I suspect, however, more of the same.  First we heard this would end in the latter part of 2008.  Then the Summer of 2009. Now I'm hearing recovery is just around the corner in 2010...but maybe the last quarter.  I wouldn't necessarily count on it.  This could linger.  Our houses are no longer just easily accessible piggy banks.  You have to use good sense.  Move when you need to.  And most of all, look at your local market independently of even your city or state.  As always, real estate is very local.

Dear Peter Gammons: Shut Up.

Chris Lengquist - Wednesday, September 23, 2009
zack greinkeSo I heard Peter Gammons explaining the other day that Zack Greinke isn't really his Cy Young candidate because despite his MLB best 2.14 ERA and having won 14 games with the Kansas City Royals (who have a win total of 62 games before last night) who offer no run support at all to his outings. Gammons' reason. "Well, he doesn't have to pitch every night against the Boston Redsox or New York Yankees."   Hey, are you aware that there is baseball not found on ESPN's eternal promotion of Sox v Yankees?  Ever heard of Chicago White Sox or the Los Angeles Angels?  Have you seen the Angels' team batting average?  Just because you live in Boston, work in Bristol, and slurp up NY doesn't mean that baseball isn't also played elsewhere.  Idiot.headUpAss But don't take my word for being an idiot.  Take last night.  The famed Boston Red Sox that Zack Greinke cannot compete against LOST 5-1 in Kansas City.  Zack had SIX SCORELESS INNINGS and lowered his ERA to 2.08. Is the Cy Young for the best pitcher in the league?  Or is it for a pre-designated east coast baseball player?  Peter, just leave a comment and let us know here in KC so we can figure out if you ever watch baseball.  Hopefully, you stayed up late last night and watched that game. Now I'm off to go argue about one of the most ridiculous appraisals I have dealt with in a long while.  Probably an east coast appraiser.

I Know I'm Supposed To Be A Cheerleader, But...

Chris Lengquist - Friday, September 18, 2009
After my blog post titled Kansas City Set To Rebound the other day I got a few private emails and a telephone call asking me for the real "facts."   :) Also, I've been doing a couple of investment property analysis for people and in some of my down time reading up on other articles.  So I thought I'd point you to a few places that aren't necessarily as rosy as the traditional media would have you believe; Agent Genius:  Housing Market Resurgence or Political Spin? (Realtors come together to discuss the current housing market...the comments are worth reading, too.) FHA Reserves Drop Below Base (The Washington Post reporting yet another housing crisis looming.) Feds Seek To Limit Pay (Again, The WP reporting.  Personal feelings?  Since when does our government for the people and by the people come in and tell people what they can/should earn?  Oh, belly ache at the evil bankers all you want.  Your job description may be next.) I'm just glad I don't live in Ohio.  Haven't these people suffered enough?  (A Yahoo! story.  My title.)

Kansas City Set To Rebound?

Chris Lengquist - Wednesday, September 16, 2009
reboundDriving in this morning I heard on the radio that Kansas City is one of the first cities expected to rebound in 2011 from our current recession.  Dallas, Houston and some other midwestern cities were on the list as well.  But not Milwaukee or St. Louis. They are still expected to struggle.  I cannot remember the name of the study they were quoting.  I just heard it.  Then I get here and hop on to the Kansas City Star webpage and see that Warren Buffett says we've hit the bottom and leveled out.  He's not expecting a double-dip recession. It would be nice if his economy would begin a slow to moderate climb up.  I suspect, however, that we're where we are gonna be for a while.   Japan in the '90s?  I don't know.  I'm not an economist.  I'm just like everyone else.  Trying to hang on.  Trying to build a future for my wife and family.

Where There Is Development There Are Jobs

Chris Lengquist - Wednesday, September 9, 2009
And where there are jobs you can expect housing to be more in demand.  And if housing is more in demand you can expect an upward pressure on prices.  kansas city wizardsToday I logged on to KansasCity.com and about spit out my orange juice.  The Kansas City Wizards soccer team owned by OnGoal LLC (think Cerner) has decided to abandon the Bannister Mall (now a huge pile of nothing since it's been torn down in anticipation of building a soccer specific stadium) and keep the team in Kansas City, Kansas just a few thousand feet from where they currently play.  See the full story hereMy Initial Reactions Kansas City, Kansas continues to out-fox Kansas City, Missouri.  Which, given the leadership of KCMO over my lifetime really isn't saying too terribly much.  But KCK was a wasteland twenty years ago, commercially speaking.  Now western KCK is alive and vibrant....but taking a hit in this current economy.  KCK's property taxes are too high.  They need these 4,000 jobs that Cerner will bring to the area in conjunction to the Wizards and fans to generate spending which then generates more sales taxes which can help to alleviate the problem of highest property taxes in the KC area for the residents of western Wyandotte County.  That's 4,000 people eating lunch, shopping and a good portion of them looking for housing somewhere close to their jobs. Kansas City, Missouri could screw up a wet dream.  'Nough said. It's brilliant for the Wizards.  Fans are already used to driving to that neighborhood for the games.  There is plenty to do before and after the game with all the shopping and restaurants (see the polar opposite of what KCMO did with The "K" and Arrowhead Stadium) and of course there are some pretty nice bars if your festivities head into the early evening.  Note to Jeff Brown:  This is the area where we all had that steak dinner before you left town.  I knew Google Search would alert you to your name being mentioned.  ;) This really sucks for the people of the Bannister area.  They could use some positive news.  But sadly your city government blew it again.  Something tells me this wasn't all about money.  In fact, I'm quite sure of it.

Things To Think About: Watch Your Money

Chris Lengquist - Monday, August 31, 2009
I have spoken by phone or email with six different would-be or current real estate investors for the Kansas City real estate market.  Here are some things to think about that run current to all;
  • Watch your money.  Today you will need a minimum of 25% down for multi-family homes and usually 20% down for single family homes.
  • Watch your money.  After you have enough for the down payment, closing costs, etc make sure you leave money for repairs, a start-up business account and an Emergency Fund of some size.  (Individual counseling probably necessary here.)
  • Watch your money.  Use market fundamentals when determining current worth and projected income/expenses.
  • Watch your location.  Location.  Location.  Location.

Bank of America Makes Me Laugh

Chris Lengquist - Thursday, August 27, 2009
BUSINESS-US-BANKOFAMERICA-LEWISI went home for lunch today.  While sitting there eating my baked ham sandwich (with Cascone's Creamy Italian Dressing, umm, umm, good) and watching CNN a commercial from Bank of America came on with several very caring individuals showing empathy and letting us all know how much they care about your housing situation.  I think the point was that if you are having trouble, contact them, tell them your situation and they will help you to work things out.  Ha!  Almost without exception every interaction I've had with BOA loan servicing has been a complete joke.  I've actually taken my sign out of people's yards that I was trying to help because of Bank of America's caring and responsive attitude.  I can promise you that they don't care and they won't respond.  Or, more truthfully, they are so over-whelmed and under-staffed that they don't know which direction to head first.  I think it's a step in the right direction that Bank of America is putting on such a commercial.   It means they may finally be realizing that they have a problem.  Doing something about it would be nice, too, don't you think? Now let's be clear.  I think BOA is a great place to get a loan.  Just don't expect too much if there is trouble.

Bad Advice Leads To Real Estate Investing Disaster

Chris Lengquist - Friday, August 21, 2009
I remember years ago when a good acquaintance of mine used a better-buddy realtor friend to buy three fourplexes up in Kansas City, Kansas.  He followed a few simple mathematical formulas that he had learned (his Realtor buddy leading him all the way) and decided that not only would these properties pay for themselves but they would also kick-off cash flow.  After all, they were priced about $15,000-$20,000 under the available comps in the area. Titanic sinking - mcaronNow, I have never, nor will I ever, advise a client of mine to buy investment property in this area of Kansas City, Kansas. The value of the investment property there was not realistic for KC rental property.  Way over-valued.  Crime is/was abundant.  Quality tenant?  No.  Housing voucher bums that float from apartment to apartment after dismantling the one they are in were plentiful.  (No.  Not everyone that uses a housing voucher is a bum. Just most of them in this area.)  And they weren't in that great of repair, anyway. Have I ever been in his units?  No.  I don't need to.  I've seen others in the neighborhood.  He bought at $140,000.  Rents were about $525/mo.  Slam dunk, right?  NOOOOOOOOOOOOO! He called me earlier this week.  He had comped the area (with the same agent he used before!) and said that the values were down to about $40,000 each in today's market.  That's $100,000 less than what he paid for each of the three four years ago.  Vacancy?  He's currently half full. He's going to attempt a short sale and was seeking buyers.  What's worse is his notes are held by Bank of America.  Now, Bank of America can get you loans.  They can even service them to a certain extent.  But when it comes to work-outs and short sales I cannot imagine a more incompetent bunch of case managers.  I mean, without a single exception, none of them understands what is going on and how long buyers will/will not wait around. And there could be more trouble brewing.  What if he does get them short saled?  When does the statute of limitations end for BOA to come back in and try to recover their losses from the personal assets of this individual?  He has a nice income, an even nicer personal residence and other assets.  I like this guy.  I really do.  But it's frustrating when I hear people choose to let the banks take the loss or share in the loss and hope to have no more responsibility.  If he had made $100,000 per unit would he have allowed anyone, BOA for instance, to share in the responsibility of the profits? You simply must get professional advice before investing in real estate.  QUIT USING REALTORS THAT DON'T KNOW WHICH WAY IS NORTH ON A MAP REGARDING INVESTMENT PROPERTY!!!!!!!!!   (Phrase borrowed from Jeff Brown. - I had another phrase in mind.)  Or it could cost you just about everything you've worked for. I pray for this guy and others like him.

Real Estate Values and School Districts

Chris Lengquist - Wednesday, August 19, 2009
logoI've said it a million times and I'll keep saying it.  "Real estate values are almost always tied to the performance of the local school districts." At least in relationship to like communities around any city.  Kansas and Missouri both did really well.  The Olathe school district did remarkably well compared to the local and national averages.  Read more here. The Kansas City real estate market, at least regionally, has fared pretty well.  Kansas City has a joke of a school district.  Guess where there real estate values have gone.  On the Kansas side we have the Shawnee Mission, Blue Valley and Olathe School Districts here in Overland Park, Olathe, Lenexa, Prairie Village, etc and guess how those real estate values have held up.  Why?  Because people who care, who have children, who are wage earners tend to want to live where there are quality schools.  They don't abandon their homes at the first sign of macro economic trouble because there are emotional and practical reasons to stay put. I haven't done the research, but I would not be shocked to find out a few of the suburban Missouri school districts have done rather well, too.  And I'm not saying that if you are a parent and live in a different school district that you aren't caring.  I'm just simply speaking on a trend that tends to show itself over and over again. Real estate is about location, location & location.  School districts can help define if it's a good location or a bad one.

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