Updated over 5 years ago on . Most recent reply
Investing in Lee's Summit
Good Morning!
So I'm a total newbie here. I'm looking to get started in investing and would like to start close to home here in Lee's Summit, MO. I'm having trouble finding anything with above a 10% ROI, unless I move more to Raytown or Independence. Is this accurate or am I maybe missing something? I'd love some input!
Most Popular Reply
Great ideas on both counts. It's just too much to give my opinion on how to accomplish what you want in this thread. Keep digesting info and seeking education until you feel comfortable. As for me, I focus on C class properties in south KC and along the Troost corridor also (redevelopment happening and a lot of investor money going in between the highway and Troost, north of 80th St). My buying criteria is a value add model, seeking at least 1.4% rent ratios (monthly rents are 1.4% of my all in number). I'm accomplishing this by purchasing homes from $30-$70K, doing rehab and renting to stable tenants. My expenses are:
1 month vacancy divided by 12 months
10% repair and maintenance per month
Taxes/Insurance
I don't pay utilities and never buy something that's not separately metered. I do my Capex work up front so don't do reserves on that. I buy, rehab, and in most cases refi within 4 months and leave an average of about $5k in the property, earning $200/door minimum net cash flow. So, on $5k investment, I'm getting ~50% ROI. In some cases, when I refi I actually get money back and get infinite ROI.
This is definitely not the only way to do it and many will have different ideas out there. but so far it's working for us and we are clever in lease structure so our actual repair/maint is more like 4%.
Hope that helps.