All Forum Posts by: Jeff Kochtanek

You mentioned its "zoned as a SFR". If you truly mean zoning AND your house in KCMO proper know that their residential zoning districts are all based on allowed density. For example zoning district "R-2.5" means you can have one unit per 2,500sf of gross site area, for example in that district your lot has to be at least 7,500sf for three units. You can lookup your property's zoning district on KC's Parcel Viewer map then do the math on square feet required for three units, if your lot is smaller than required then yes the zoning district is wrong. You can review KCMO residential zoning districts by finding KCMO's Zoning and Development Code, see section 88-110-01 - DISTRICTS.

KCMO staff is hard to reach via email and sometimes impossible over the phone as they are short staffed. Keep trying and you'll hear back, or go in-person if you're local. You can find more on their rezoning process on their website. The process takes weeks/months and you need City Plan Commission and then City Council approval. I've seen the process only through the lens of commercial real estate but not yet a single residence to know the barriers or likelihood of getting approval, but hopefully the planner you work with can help give you an idea. Hope this helps!

@Patrick Martone To flip your question around, when I was an engineering student I had interest in real estate and chose civil engineering to work with developers. Flash forward and I have enjoyed a decade of both civil engineering and investing in Kansas City. In general, the engineering mind lends itself to REI through problem solving skills and making logical decisions over emotional reactions. A few CE experiences that cross over include researching county records, understanding drainage issues, spotting zoning district opportunities & restrictions, and of course understanding how to leverage consultants. REI experience also helps an engineer to better understand the client's priorities and financial considerations...bringing up cap rates or accelerated depreciation opportunity will peak interest!

Welcome @Ryan Landon to BP! I too am from Columbia and went to Mizzou, still own rentals there. If you're listening to podcasts then you know about many great resources. Don't wait too long to take some form of action to start learning by doing, even if you partner for lesser terms initially. Feel free to reach out if you have questions.

Hi Sam, welcome! I live in Kansas City, am from Columbia, and invest in both locations with a similar goal as you have. I have several single family rentals in both locations but looking into MF. Continue reading/learning and start to develop your network. PM me if you want to trade notes and thoughts and best of luck on your path toward financial independence!

Thanks for the responses!

@Vanessa Ryder great tip, but unfortunately the seller is retired and looking for lump sum rather than payments. Could you please explain how carrying a note would minimize CGT for the seller? Would it reduce GCT or just spread it out?

@Angelia Kinston from early discussions my feel is 80% ARV is lowest I could get. The house require minimal rehab. The Kansas City market is hot right now (~2 months inventory right now) and most on-market listing quickly go over list in my price range. I am only interested in B Class or better locations, but that is another conversation!

Vanessa Ryder

Vanessa Ryder

I am negotiating an off-market SFH in Kansas City and need help quantifying the seller's cost savings of selling to me as-is rather than listing on the MLS for more. I have already peaked their interest with the facts below and would love to hear additional suggestions from the community.

1. Avoid realtor commissions
2. Reduced CG tax
3. Avoid cost of minor repairs and deep cleaning to make market ready
4. Avoid potential additional repair costs if not sold as-is (termite, radon, other repairs, etc)
5. Avoid cost of home warranty (any other closing cost extras to mention?)
6. Time value of money, I will close 2+ months sooner so they can invest proceeds sooner
7. Value of time, seller accelerates timeline to move out of state after they sell
8. Seller just walks away with far less effort to sell 
9. Lower risk of seller backing out

Background...seller has rented out this house for 23y and is moving out of state. CG tax is a big concern, they even considered moving in for 2y to reduce CG! Seller cannot begin prep to make market ready until current lease ends late June. I have no bidding competition, if seller does not take my price they will list on MLS in July. Seller not under contract with a realtor and owns free & clear.

Thanks for your feedback and feel free to lay down points that may also help others, even if not relevant for me. Hopefully we can build a strong list helping others venturing into off-market deals!

Thanks guys, great to hear what others are doing while obviously keeping in mind our situations are different. My RE attorney has a PM background and agreed a separate PM LLC was a good plan, but my information gap seems to revolve around taxes/accounting. Hopefully I can find a Kansas City area accountant specializing in RE.

@John Van Uytven thanks for the info, I don't plan to hire PM staff yet but perhaps my direction is like what you former employer had. BTW I love DFTBA and may have to borrow that!!

@Jonathan Towell congrats on your success so far. Seems your PM LLC is the same theory I am planning but at a larger scale. I was very intrigued by the Series LLC but my attorney talked me out of it due to lack of case law. Interesting that banks have made it more difficult, general lack of knowledge seems like a common theme with the series.

What's up BP!

First of all, thank you Josh, Brandon, and all the great contributors for your tremendous knowledge!! Brief first post intro: I'm a B&H investor and have been reading & listening to BP for a while and gaining momentum. I live in KC and have several rentals, am currently constructing 2 townhouses, and am actively searching for more deals. Short term goal is 10 Class A/B self-managed rentals to capture historically low fixed rates creating a “passive” income base in addition to my great full time job. Bigger picture I want to find my niche and move into larger deals or more volume.

Now to my question...I have an umbrella policy and am looking to add LLC(s) for additional protection. Considering future rental portfolio growth, is a separate LLC for self-property management beneficial in addition to LLC holding companies? Assume I soon will have >1 LLC regardless of this question to limit equity per LLC. I see the PM LLC acting as the funnel for all incoming rent & outgoing expenses (1 checkbook, 1 debit card, etc) that regularly distributes profits to LLC holding companies AND keeps tenant interactions with an LLC that doesn't have assets. Downsides include trickier reporting of transactions between LLCs and other complexities/expenses. Would this make my accounting easier or unnecessarily more difficult? I already have a general CPA and a RE attorney but don't have good feedback on structure yet (currently seeking KC area REI CPA if anyone has suggestions!). Thanks in advance for your input or links to related posts.