Kansas City, B-Class Single Family Homes, Buy & Hold Long Term, Cash Flow Investments

[Luther Wilson III]

Buy & Hold and Cash Flow investors who have the Kansas City market in your radar:

Why purchasing move-in-ready single-family homes is a solid move right now?

Caveats: When purchased well and managed efficiently; using an investment model that creates more sustainable monthly or quarterly cash flow for the long term?

Significantly less time and stress involved in getting revenue.

No lengthy scope of work to have been approved or completed.

No short-term debt necessary.

No hard money loan to pay back in full within 6 to 12 months.

No renovation or construction project to go over budget and past the deadline on.

No need to refinance or resale within one year.

Here’s another example of a property that would be a good one:

7614 Elm Ave, Raytown, MO 64138
MLS #: 2493668
Listing courtesy of Regina Drone – Regina's All Access Realty LLC

Current list price: $219,000.

This home has 4 bedrooms, 2.5 bathrooms, a 2-car garage, a full basement and it was built in 1968; Square footage approx. 2,896

Here are the estimated out-of-pocket costs for a purchase using a non-QM loan; a 30-yr fixed rate at 8% interest:

Down Payment (25%): $54,750
Closing Costs (3%): $6,570
Placement Fee: $10,000
Reserves: $5,000

Total estimated cash needed: $76,320

The total monthly payment (PITI = principle, interest, taxes & insurance) for this investment:

approximately $1,625

How do we make this type of investment work, for the long term? By offering seller financing to residents as opposed to renting the property.

As a 10-year lease option here's how the cash flow & ROI could look:

Option fee received: $6,500
Monthly lease amount: $2,125

In this scenario there is approximately $70,000 "left in the deal" or tied up in the property. This type of investment will produce:

Monthly cash flow of approximately $500 =
Year-one ROI: 8% cash on cash

Remember, once the lease option residents exercise their purchase at or before the 10-year period, you will receive a very large, back-end payout, which can then be 1031 exchanged, reinvested or simply enjoyed some other way. A $219,000 home today at that point could be worth $325,000.

It's a different ball game now. Plug in with us as we maneuver through the shifts & newness of the market. Learn how you can create more residual income & cash flow from real estate for 2024 and for years to come.