Property Management Blog

Is Time On Your Side?

Chris Lengquist - Monday, August 17, 2009
Thinking the market for investment homes is going to get better?  You might want to think again.  For about 18 months I've been hearing that this fall, the one staring us in the face, would be the worst period of foreclosures this real estate market has seen.  Well, it's here.  Are you ready? The White House is busy convincing us the worm has turned in our economy.  Now, the people still losing jobs (or not find them) and the people not spending money on retail anything may disagree.  And I'm somewhere in between.  I don't believe we're going to be in a "V" recovery.  I'm think more of an "L" or possibly a slow "J".  In any case, I think we've seen/are seeing the best we're gonna see. If you have cash that's been sitting on the sidelines now is the time to think about jumping in.  Seriously.

What I'm Seeing Right Now

Chris Lengquist - Thursday, August 13, 2009
What I'm seeing right now...
  1. Johnson County, Kansas has a red hot single family home market under the $250,000 price point.
  2. The single family home market is very hot in Brookside, Red Bridge and other State Line corridor neighborhoods of Kansas City.
  3. Duplex inventories are steady with too much inventory.  What's worse, of the 47 current duplexes for sale in Johnson County, KS there are only 4 I'd invest my time in seeing based on their rent to price ratio.
  4. Investors with steady income can hold out for a price they want.  Single family home owners in financial duress have to move now.
  5. Vacancy rates aren't too bad in areas I generally recommend.  They may get even worse in areas of town I've advised people stay away from for years.

Has Kansas City Been Abandoned?

Chris Lengquist - Monday, August 3, 2009
i_am_legend_will_smith__1_Yahoo! has a story titled America's Abandoned Cities.  And guess who comes in #1?  That's right, Kansas City!  I hadn't realized that the streets were so empty!  :) Seriously, I don't doubt their numbers at all.  But I will say I'm almost 100% positive that the bulk of the vacancies on rental properties and home-owner foreclosures alike are mainly in 3 different zip codes. There are a increased vacancies in a lot of areas surrounding those 3 zip codes.  A true 5% vacancy neighborhood is not too hard to find.  But it's not all that bad in the key suburbs.  That's until you get out on the fringe/new-growth cities.  There vacancies climb back up a bit.

Buy Your Investment Property Right To Sleep At Night

Chris Lengquist - Friday, July 31, 2009
The following is  a true story about a California real estate investor who bought his investment property here the right way.   The names and minor details have been changed to protect identities. *** *** *** *** Real estate investors here in Kansas City, California and everywhere else hear all the time "you make your money when you buy."  But what does that mean?  Can I give you an example?  Well, yes, I can. Steve has been an investor client of mine for about four years.  He owns property in California (one investment house, I believe) and a couple here in Kansas City.  He's in the local business of Los Angeles which is to say he's works with television.  He's paid very well for what he does and he's been nominated for many an award.  (May have even won a few for all I know.)  When a television series is a hit he can have job security for years.  When it closes down you just don't know when your next steady check will be. dragon_unemployedSteve hasn't had a steady check for just about a year.  He's done odds and ends jobs but that just doesn't cut it.  He's been spending his savings and while he's not anywhere near destitute it was time to take some drastic action while waiting for his next big thing which begins this fall.  Which brings us to his current rental property holdings. One place he has through me is a duplex that has not only his original equity from four years ago but also about a 10% -  12% gain in value since his purchase.  The place more than pays for itself each and every month, attracts high quality tenants and has a huge upside when this economy ramps back up...whenever that may be.   Another place he has through me is a single family home that he bought about 18 months ago.  We got it at a steal.  At the time the going rate for that house in Kansas City proper was, in my opinion after accounting for condition, neighborhood, etc., about $110,000 to $112,000.  I helped Steve buy this potential investment property for $97,500 with the bank kicking in $500 for closing costs. Of course, to get it at this price we had to do some wrangling and looking.  And we had to put in a brand new heating and air conditioning system that ended up costing about $2,600.  We rented it for $925/mo and the first year or so went great.   But then the tenant lost her job and rent stopped shortly thereafter and we had to get rid of her.  We tried to rent but forty days and nights went by without a new tenant (about average for the neighborhood) and that just happened to coincide with the monetary pressures of our Steve. Still 3 months from steady work, savings dwindling and one rental property vacant it was time to do something.  We looked at the entire situation.  Not dire.  But why wait to get there?  Why not use the assets at hand to ease the transition.  Kansas City will have more rental properties available when the time is right.  Of that, I'm sure. I worked the numbers for Steve who said if I could get $110,000 for the place he could cover his initial investment, closing costs, HVAC and some vacancy along with my commission and he would be tickled pink.  Also, there would be very little capital gains and/or depreciation recapture to worry about since he had owned just shy of 2 years.  Vacancy losses would offset some of the taken depreciation.  They key was he could get his hands back on his initial equity investment and use that as his cushion after writing another huge tuition bill for his daughter's college. Now, because this house was located in a part of Kansas City that does pretty well regardless of economy and because this house is attractive to home buyers and renters alike and because this house was functional but not fancy it was not too difficult to sell.  I showed it to a different out-of-state investor who jumped on it.  A house right down the street had just sold for $129,500.  Now that house had about $3,000 worth of closing costs built in as well as a modernized kitchen and bathrooms.  USA Costa Rica Not to drag out the story too much, the buyer got the house for $108,900.  He got a house he could make money on and then modernize when the time comes to sell. He'll have a modest equity gain when that happens and a quality rental house/house for his son going to UMKC in the mean time. He's happy as punch. Our seller, Steve, is happy because his gains/losses are absolutely negligable especially when you consider he only owned 19 months!  No, he didn't make any money on this particular investment property.   But he also didn't lose any.  And he bought the property in what some have called the worst housing crisis since the Great Depression. I just want to hammer in the importance of working with a professional real estate agent that understands and works with investment property when you are looking at acquiring more rental property.  If you do, just about no matter what, you won't lose money.  Here is a perfect example.

First Time Home Buyer Success Stories

Chris Lengquist - Monday, July 27, 2009
congratsOver the weekend I had the opportunity to help two different first time home buyers close on their very first homes.  Both home buyers were married couples.  One bought a new construction home in Gardner, Kansas and the other an older home in an established neighborhood (read: fully grown trees!) over in Lee's Summit, Missouri.  Both have taken a great step towards financial security later in their lives. Your first home purchase represents many, many things;
  • Your hopes.
  • Your dreams.
  • Your commitment to one another.  (If married.)
  • Financial responsibility.
  • A desire to put down solid roots.
  • A desire to own something.
  • A desire to have a huge nest egg at retirement.
Owning a home is no easy task.  When they were renters (and one was a tenant of mine for the past three years...never late on rent) they could call their landlord and say "Hey, the furnace isn't blowing cold air."  But now that they are first time home owners they take on that responsibility.  It was my job as their REALTOR to help them to make good choices and to help them think through future expenses before putting their names on that initial offer.easybutton Home ownership is a step I highly recommend for most people.  Though, quite frankly, there have been a few times in my career that I've recommended people to continue renting. Thinking about the first time home buyer tax credit?  You better hurry.  The first time home buyer credit expires November 30.   Call me at 913.568.1579 (same as pushing the Easy Button) to discuss whether it can work for you, or not.

Real Estate in Kansas City is Forever Evolving

Chris Lengquist - Thursday, July 23, 2009
I'm not an old timer in real estate like BawldGuy.  I've only been practicing since May of 2002.  I'll never forget my first open house in Tulsa.  My broker said hold it open.  So I put out a few signs and put on a tie. Thinking back, that may be the very last time I've worn a tie in real estate.  :) The real estate boom was on around the country.  It just hadn't found it's way to Tulsa.  As late as 2005 Tulsa was still considered an under-valued real estate market by most that watch the national trends.  In the summer of 2004 I packed up and headed home for Kansas City.  How many realtors have moved after establishing a $3,000,000 a year business in a city where my average sale was only about $93,500?  But move I did. Real estate is real estate.  But how realtors in Tulsa and Kansas City practiced was as different as night and day.  In Tulsa the brokers always met each other.  Original signatures were a must in Tulsa along with a lot of other "old time" traditions from real estate agents.  When I got to Kansas City, Olathe actually, I knew a house was a house was a house.  But I had to learn the different accepted practices. evolution Most of you know my specialty for most of my real estate career has been working with real estate investors.  Those looking to own, manage and maybe fix up houses for rental purposes.  When I first started I was working with mostly "regular" home buyers and sellers.  From about 2004 to 2007 my business was about 90% income property owners.  In 2008 I had to evolve and adjust to the new mortgage realities regarding real estate investor and their money.  My investors to regular home buyers mix went to about 70% - 30%.  This year, more like 50% - 50%. With the new changes coming concerning multi-unit investment properties here in Kansas City and around the country I can see that evolving even more to 30% - 70%. Contracts change.  Monies change.  Client bases must change, too.  You may see more attention paid to "regular" home buying and selling here in Kansas City on these pages now and in the future.  It's a simple matter of survivability.  I've had to adapt my whole life.  It's the beauty and agony of being self-employed.

It Just Got Harder To Buy Investment Property

Chris Lengquist - Monday, July 20, 2009
Dear Fannie Mae, Thank you for continuing to screw up the mortgage market for real estate investors.  I'm referring to your new guidelines effective September 1, 2009. It's nice to know you have no clue whatsoever.  Why are you punishing the wrong people?  Idiots.  (That's my own personal opinion.) Chris Lengquist Keller Williams Realty Diamond Partners, Inc 913.322.7515 listwithchris (at) kw.com

Quality Income Properties Make Your Life Easier

Chris Lengquist - Monday, July 20, 2009
mapOver the years I've had on-line and off-line discussions with people about my philosophy of owning income property around Kansas City.  I'm basically a snob when it comes to real estate investing.  I want quality rental property.  I want my rent homes to be in good neighborhoods that will attract a middle class tenant.  I want my properties to be in neighborhoods that appreciate. I want a lot of things.  I want my rental property to be in a neighborhood that will sell in good times and bad.  I want 5% or less vacancy in good times and bad.  I want rental property that pays for it's self but doesn't necessarily kick off cash flow. Why? Because of now.  That's why.  I have two clients with income properties that they acquired before we met.  One is soon to be vacant on both sides and we can't seem to sell it for anywhere near what he paid for it.  The other has had a vacant side for the better part of 6 months and quality clients are seemingly impossible to find.  One is in Missouri (Independence).  One is in Kansas (Kansas City).  Neither I would have probably even shown them let alone wrote up a contract without serious counseling from me to not purchase. Meanwhile, my own personal rental property located in a pretty upscale neighborhood (for a duplex neighborhood) has been vacant for zero days and I already have a couple of applications in.  You see, the current renters that are in my income property have been there three years and I just helped them buy a house that closes next week.  I put up a For Rent sign two weeks ago.  On August 1st I'll have new tenants moving in.  The rent will be 8% higher than it was three years ago. manager_rented_signYes, in these "bad" times with increasing vacancies for lower end income property my middle class three bedroom, 2 bath, one car garage half-duplex located in Olathe, Kansas will have new tenants in with zero days vacancy! I stretched and stretched and stretched to afford that half-duplex rather than buy something that was less expensive in a less desirable neighborhood.  And I'm glad I did.  Realizing that not everyone can do the stretch I would encourage you to save and save until you can upgrade if you are thinking of making your first investment property purchase. Now, you need to understand what I'm saying.  Price isn't necessarily the determining factor on a quality neighborhood or property.  Far from it.  But it can be everything.  You probably need professional help to determine the difference. Real estate investing is not rocket science.  But it is a study that needs to be taken seriously.  Finding a quality income property will make your real estate investing life so much easier.

Real Estate Investing and Social Media

Chris Lengquist - Saturday, July 18, 2009
kansas city investingConcerning my real estate investing opinions, comments and communications you can find me all over the net.  You can find me on facebook and twitter.  I've even decided to integrate twitter and facebook wherein I comment on twitter and it shows up on facebook.  Pretty cool, eh.  (Thanks, Lani.) On twitter I'm KCInvestments On facebook I'm just plain ol' Chris Lengquist Or keep finding me here at BBQCapital. Now, won't you be my friend?

Inflation? Stagflation? Status Quo?

Chris Lengquist - Wednesday, July 15, 2009
Recommended reading:  Are We Coming To A Real Estate Investment Fork In The Road?

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