All Forum Posts by: Chris Dawson

@Matthew McAlarney send me a PM if you need some references for PM companies and contractors.

@Rustin Dowd I have several questions for you:

1) What repairs are needed?

2) What area of KC is this property located (city and zip code is good)?

3) How many beds/ baths?

If you are getting this for $47,900 and it is truly worth $103k, why don't you flip it?  Assuming it needs less than $25k worth of work, it would potentially make a good flip.

@Alan Sue, the title companies are the ones who insure that the title is clean, so they will always be the ones to require extra documents like the marital waiver to make sure there is no chance of a cloud on the title.  Ever since the financial crisis, title companies have come up with more and more documents to cover their asses.  If you find a title company that does not require the marital waiver for a Missouri property, then I would be weary of using that title company. 

@Matt Moldenhauer, you need to review your lease.  You should have it spelled out in your lease agreements what exactly will happen if your tenants break the lease.  If it is not explicitly stated what happens when a tenant breaks a lease, then there should at least be a paragraph that deals with tenants that don't pay rent on time which is essentially what you are dealing with. 

The leases we use have the following wording in regards to early or late termination of the lease:

"If Tenant remains in possession of the Premises after the expiration or sooner termination of the Term without Landlord’s written consent, such holding over shall constitute a default hereof and, without limiting any other right or remedy of Landlord at law or in equity, create and be deemed to be a tenancy at sufferance, terminable without Notice of any kind except as may be required in accordance with law, but subject to all other terms of this Lease insofar as the same may apply to such a tenancy, except that Tenant shall pay, in addition to all other charges payable by Tenant hereunder, for each day that Tenant holds over, Rent at an amount equal to two (2) times in Missouri and one and one-half (1-1/2) in Kansas the rate (on a per diem basis) of Rent herein provided to be paid during the last month of the Term. Landlord’s receipt of holdover Rent shall not relieve Tenant of liability to Landlord for damages resulting from Tenant’s holdover."

Basically, our lease states that we can charge a Missouri tenant up to twice the amount of rent that they don't pay.  

Also, as far as security deposits go, you CAN use the deposit to pay for lost rents in Missouri and Kansas.

"Landlord may withhold from the Security Deposit such amounts as are reasonably necessary to (a) remedy Tenant’s default in the payment of Rent; (b) restore the Premises to its condition at the commencement of the Term, ordinary wear and tear excepted; or (c) compensate Landlord for actual damages sustained as a result of Tenant’s failure to give adequate Notice to terminate this Lease pursuant to law or the terms hereof; and as may otherwise be permitted by applicable law."

If you are going to manage your own properties, make sure you know the law and make sure you cover everything in your leases.  DO NOT USE a generic lease that you found from a Google search.  It needs to be specific to your state/city and it needs to be approved by a real estate attorney and/or your local real estate board.  

If you are going to use a property management company to manage your properties, make sure the leases they are using have been approved by an attorney and/or their local real estate board.  You would be surprised to know how many PM companies out there are using weak or illegal leases!

@Andrew Quinn, what services are you needing?  Contracts, evictions, or something else?

@Rohan J., here are my responses:

1) Finding good deals is definitely harder to do in this market. Finding a good rental property that needs less than $5k worth of rehab and that isn't overpriced, is just about impossible to find. What we have been doing is going after the properties that require a lot more work to get them rent ready. Flipping in this market is supper easy to do AFTER you find a good property to rehab. Finding the property to flip is the hard part. You really have to use alternate means to find these properties and by alternate, I mean anything outside of the MLS.

2) On the Kansas side, you can't hardly ever go wrong with Johnson Co.  Rents and property values always seem to be increasing in this county.   On the MO side,  I am seeing rent and property values increasing just about everywhere, except in those D areas that should be avoided at all costs.  Personally, I am a big fan of the North side of Kansas City.  Areas like Gladstone, NKC, Liberty, and Parkville are all seeing rents and property values increase.

3a) This is one area that I would disagree with Andrew and probably a lot of other investors.  Yes the Cerner Trails Campus in south KC is worth keeping an eye on, but not for SFRs.  Let me explain why. 

For those who don't know what we are talking about, the Cerner Trails Campus is a 10 year, $4.5B office building development on 290 acres in south Kansas City where the old Banister Mall used to be.  

This has been a C class area both for residential and commercial, for as long as I can remember. The first of 16 phases was just completed after about 1.5 years of construction.  This phase consists of 2 office towers that will hold about 3000 engineers.  The finished project will have 16 office buildings and will hold around 16,000 Cerner employees; mostly IT jobs.

Since the project was officially announced back in 2014, I have seen countless investors scramble to scope up as many SFRs in this area as they can, betting on increasing rents and property values. If you look at property values and rental rates from 2014 to now, you will see increases in both rents and property values. I could find rent ready properties under $50k all day long here in 2014, but now its tough to find anything under $70k that is rent ready. I truly believe the rents in this area are quickly approaching their maximums while property values will probably continue to increase a little bit more due to an over-inflated market; mostly perpetuated by SFR investors and this Cerner Trails Campus. Why do I think the rents are maxing out and won't continue to increase due to all of this development? Simply put, those 16k new employees DO NOT want to live in a Class C neighborhood. They want to live in Johnson County or down on the Plaza. That means the current tenants in these neighborhoods will continue to live in these neighborhoods and continue to earn the same level of income that they do know, which means they can't and won't be paying higher rents. Check out this article in KC Star for more thoughts on this: http://www.kansascity.com/news/business/developmen...

Now, if you are a commercial investor, especially in retail, then this area should ABSOLUTELY be on your radar. There is huge potential for retail and restaurant services in this area! As for SFR investors, you are quickly approaching the top of the buying curve in this area. I would hate to see the same thing happen here that happened in neighborhoods like Ruskin Heights before the mortgage crisis.

3b)  OK, now for my recommendation for a notable commercial development..... "One North".  Haven't heard of this yet?  One North is the new $134M mixed use redevelopment of industrial land at the south east corner of HWY 210 and I35 in the city of North Kansas City.  North Kansas City, MO is a small separate city from Kansas City, MO., which, as it's name would suggest, is just north of Kansas City, MO.

This area has also been traditionally a Class C neighborhood for both commercial and residential.  This specific project area has always been Industrial with just a few retail spots sprinkled in.  Why do I think this has so much potential?  This development is focused both on increasing residential and commercial property values.  The potential for commercial AND residential properties in North Kansas City to see an increase in value due to this development is high.  Another great benefit to this area is it's proximity to downtown Kansas City.  It literally takes 5 minutes to get from downtown KC to NKC.  

4) See 3a.

5) The KC market is not yet saturated, but I think a lot of the "popular" areas to invest in are getting too saturated.  The key is to do your research and find those areas that have real potential to become the next "popular" area to invest in.

Sorry for the long post, but I hope this helps.

@Sam Allred, any title company should be able to do an assignment.  The real problem is getting the seller to agree to it; especially if the seller is a bank!

@Jack K.

@William Sumnicht, yes, of course you can message me!