All Forum Posts by: Eric Scheele

@Summer Timms while as you can see from the thread and comments, the common train of thought is that Turnkey providers are selling at or near retail price, our experience and reality is much different.  There is even a comment on profit is made on rehab which is not always the case, in fact, rehab (especially for non established investors - local and OOS - - even experienced investments groups like ourselves) the rehab is where profit is lost almost each and every time.  Over finishing, undiscovered issues, over charging contractors is exactly where much of the profit goes on bad or low equity investments.  Any established investor will tell you investments are won the day of purchase - not the rehab.  The purchase is where you need to focus with your investments and turnkey providers.  How are they acquiring properties?  This is where equity is obtained each and every time.  Well established turnkey providers and investors have created conduits to acquire properties off market and in channels not available to the public, realtors or the average and even more experienced investors.  So ask the question - 'where do your properties come from?'  You may not get a direct answer as they will be protecting their proprietary sources, but you will get an idea.  From our experience here is Kansas City, we consistently secure homes in off market channels that allow us to show equity to investors prior to sale as part of the pre-purchase research and vetting package and ultimately deliver homes with equity at part of the turnkey package.  In fact, from our perspective, providing equity is the philosophy from which we act as we assume most investors are seeking equity in their investment goals.  So instant post rehab equity is definitely a line item we include when presenting an opportunity to investors.   

We are constantly asked to value our services and rationale is simple.  Its very easy to rationalize our services when the initial purchase of the property allows for our packaged services bring equity to the table.  Aside from the bulk discount pricing on material, savings on labor with dedicated professional, multi disciplined crews and the general passive nature of building safe investments and organic wealth is our rational and I am sure the rational of any established turn key provider.  

Good luck on the research and happy investing...

High, but always good to estimate as worst case scenario.  The mold remediation is probably what should be more concerning than the sheet rock and PEX work.  Water leaks and damage tend to be remedied by removal of a 12x12 in sheet rock and section replacement which can be done very affordably and sheet rock replacement is always easy - scope it a worst case $2.5 / ft.  As a check spot check, we recently secured an off market property where previous tenant pulled all plumbing and wiring through sheet rock which required a full house re-plumb and re-wire.  Plumbing replace in 2200 sf was 6.8k and Electrical was 4.1k.  My costs tend to be much lower than most given our volumes but it at least will give you a barometer.  5k on plumbing sheet rock and 15k as worst case on mold remediation as a sight unseen ball park and you are under 20k worst case.    Good luck on the project.  Bigger squares = bigger bills - keep this in mind!  

Happy Investing..

@Michael Glaser what area of KC are you is the property?  Acreage homes can be tricky depending on which quadrant of the city your acreage is located.  General rule Kansas over Missouri  and Kansas - southwest over Kansas - northwest / Missouri - tight northeast similar to Missouri - southeast.   Rents tend to drop dramatically 10 miles outside suburb lines on either side of the line.  

There are totally exceptions to these high level markers so define the area and the house specs and may be able to give a bit tighter range for you considerations. 

@Carly White - Welcome to BP and Kansas City RE Investing.  Tons of great advice here.  What is your appetite as an investor?  What are you looking for - buy / hold - fix / flip?  Budget? Areas? Short term and long term goals?  Many folks simply want to start in their RE investing as an interest which is fine, but those that develop an upfront strategy that meets their short term and long term goals catered to their investor profile tend to be more savvy and smarter investors overtime and avoid so many of the tragic first time and early investment mistakes, especially as markets become more competitive.   

Dive in and assess yourself and put it out there to the BP world and I am sure the feedback will start to pour in and will help mold and evolve your investment profile and goals.  This will only ensure a much smooth launch into your world of investing. 

Good luck and happy investing. 

@Saravanan Varadan Your money can go a lot further than that in the Kansas City market.  I would recommend you find a good, trusted set of local eyes and find 2 turkey home  or 3  rehab homes for the same money.  You will be diluting your risk and finding a bit economy of scale for the investment.   Dilute your vacancy rates / risk at a minimum.  Good luck on the search. 

@Michael Ryland.  Welcome to BP and welcome to Kansas City.   

Happy Investing.

Eric

With your financial metrics and MF fourplex target, I would suggest you find a trending investment market and then travel 60 miles outside the metro in commuter towns to scout your first property.  For 60 miles,  especially as an OOS investor, you will find a higher quality product in a bit higher class neighborhood and if you do your research and ask your questions, you will find rehab trades - contractors, property management, insurance companies ect willing to travel with in 60 miles for your business.   Expect older properties that need deferred maintenance and lower rent caps, but on your financials on a fourplex, you wont need higher rents to meet your ROI goals and safe investment targets.   

For us in Kansas City, we tend to recommend up start, entry level OOS investors like yourself, we target smaller commuter cities like St. Joe MO, Excelsior Springs MO, Atchison KS, Leavenworth KS.   Good luck in the search and happy investing.  

Eric

@Account Closed I think you have already self - assess my biggest concern.  As an OOS investor, i would encourage to hold your designer self and attraction to historical districts out of the investment analysis if you are looking for self sustaining long term cash flow MF investment strategy.  This is a conversation we have with OOS investors of your like during our initial consultations and property scouting and acquisition.   But even with that said, we also recognize every investor has their own tastes, desires, goals, intent and financial means of investing.  For example, a investors with excess means and simply looking for a hobby interest may seek target properties much differently than a upstart, young executive millennial seeking their first passive income investment properties.  Both scenarios paint a much different reality and call for a different drip / scout campaign for target properties. 

All that said, your Scarritt Renaissance area is part of the 64123 district.  It is a buyer beware district of Kansas City.  There are some good pockets in 64123 and other area I would encourage to stay away.   Secure a good set of local eyes if you are set on this area.  There is a good inventory of 4 - 8 plex units in the area, some of which are available in off market channels, but depending on your goals, budgets and risk assessment levels, the target properties may be fewer than what appears from OOS.   Good luck in the search.  

Eric

Kansas City > Kansas City KS - SFH - Owner Occupant or Buy / Hold Investor

Updated SFH in Kansas City KS ready for buy / hold investor or owner occupant. New carpet and full interior paint. Homes in area rent $750 - 875 / month. Full rehab ranch across the street recently sold at 109k. Full rehab on Delavan home 70 - 75k ARV. New HVAC with qualified offer.

Full pics available on Realtor.com link - 

Zillow - https://www.zillow.com/homedetails/3614-Delavan-Av...

Realtor.com - https://www.realtor.com/realestateandhomes-detail/...

Contact for details.  

Great SFH in Kansas City > Shawnee, KS ready for buy / hold investor on cash + redemption. Homes in area rent $1350 - 1700 / month. Level of finish will determine rent. Newer siding, window, roof. Water in basement caused by sump pump back up per owner. No water evident since our demo. See Realtor.com link below for full pics.

LINKS -

Realtor.com Link - https://www.realtor.com/realestateandhomes-detail/6122-Hauser-Dr_Shawnee_KS_66216_M87019-74454

Zillow link - https://www.zillow.com/homedetails/6122-Hauser-Dr-Shawnee-KS-66216/75562981_zpid/

Prices listed on both sites inaccurate. Acquisition in mid 170s. CMA 218k.

Contact for details.