All Forum Posts by: Melissa Robbins

I still have it. I underestimated the cost of repairs and it took a chunk out of my profit. With appreciation, I’m still ahead but it’s been a hassle. Seems like each month there was another new problem.The appreciation made it worth it but if I didn't have that I would be really mad. Good luck with the duplex! 

That seems ok to me. I think your profitability will be dependent on your expenses. If your operating expenses are 50% of your gross rents, which most experts will say to budget for, you may break even or lose money at first.  If it were me, I wouldn't buy anything as-is without knowing exactly what repairs are needed and how much they will cost.  I'd also get an inventory of appliances, water heater and HVAC ages, and age of the roof.  The other big question is can you get more rent after the repairs?  Be sure to use a good rental calculator and enter in all estimates. 

Does that market have all you are looking for pertaining to rent growth, job growth, and population trends?

I speak from experience on the as-is. I bought a house as is in KCMO last year for $40K under the market. In the 18 months I owned it I've spent $20K on repairs, a new furnace, water heater, french drain, sub pump, wiring and plumbing issues. Its in an awesome neighborhood and the appreciation is great. But I had to kick out the renter after they caused all sorts of problems with water damage in the basement. If I do as-is again, I will put more time into the DD process and make an educated decision. I probably would have passed on the deal if I knew I'd be shelling out $20K. Owning from a distance has made it more worrisome. 

@Colton Hahn - What about past performance? How do you find the important metrics on deals they've already purchased and sold?  

I would also consider the decision around which management company will be managing the deal.  Are they going for low mgt fees or the best operators?  

What are your thoughts on 10 year holds?  Too long? 

Hi Manley, 

Congrats on the purchase!  Closing at $15k less sounds like a good deal. And its great to hear there will be positive cash flow.  Is that before or after repairs?   If it's after repairs you should be golden. Anytime there is positive cash flow after repairs that's a win to me. And if in a healthy market you should be able to raise rents over time and get the appreciation. 

It's a little hard to weigh in without knowing all the stats. Did you pay cash or do you have a loan?  How extensive are the repairs needed?  If its major plumbing or electrical, that can get expensive. How much is rent now and can you raise rent significantly to recoup your repair costs?

@Justin Pierce I own three rentals and looking to purchase more. I'm happy to share my experience with you. I agree with @Mike D'Arrigo on the areas. I own one in Blue Springs and like that area a lot.  I also like the Northland area in Park Hill schools. Connect with me and let's chat.

There is talk of one of the stadiums moving downtown so trying to understand the future opportunity of some of the older markets that some investors have ignored. 

@Imtiaz Koujalgi - I have one deal in KS and two in MO. You'll pay higher property taxes on the KS side, for sure in OP, and if you want to move the deal into an LLC, Kansas requires yearly renewal fees with an operating agreement and meeting notes each year. I'm not discouraging the purchase but like @Brendon Pishny also mentioned, the HOA fees can be high. So just look at the whole picture. I think your appreciation would be ok but cash flow might be low. I would search apartments in that area and look for complexes with similar unit sizes, amenities, and finishes, then price comparatively because that is your competitor. Good luck and let us know what you decide.

This is a sad situation. I agree with Nathan on showing compassion for the family and also the other tenant. In my experience, working for a very large property management company, crimes like this have an effect on others who overheard or witnessed the occurrence.

 I'm assuming you self-manage? If so, and there are no other tenants you are aware of, I would change the locks (but be sure to comply with the detective's needs) because you don't know who could have a key. It will take some time to get hazmat there and you do not want to disturb the crime scene, their belongings, or allow anyone else to either. Is there a way to seal off the hallway area but still allow the other tenant access to their door? People can do all sorts of crazy things in a situation like this. We had a tenant once who filmed the crime scene clean-up in action and placed it on YouTube. Very disturbing! But how heartbreaking for the family as well to view the crime scene should they just show up and try to get in. In addition, to me, there is some level of moral responsibility to create a peaceful living environment for the other tenant since they are still next door.  Let us know what you learn from your attorney and insurance agent. I'll be curious to hear your chosen solutions. 

Hi @Scott Willms. My apologies for the delay. I'm happy to share my experience. So far, so good. I bought 2 SFHs and a half-duplex. I will continue to invest here. I'm primarily focused on A-class areas with good schools and job growth. I like the Blue Springs area and sections of Northland. I own one deal in Kansas - Wyandotte County, and I don't think I will buy on the KS side again. Taxes are too high and LLC requirements are a hassle. As far as who I am working with, I made a big mistake on the initial management company I selected and will be moving two of my deals over to a new group soon. If you need those recommendations, we can take that over email.

The challenges are inventory and taxes which are higher than what we are used to in Denver. I would also say my observation is that investors could push rents a little more. In my experience, rental tools like Rentometer have a high level of inaccuracy and base their recommended rates using coverage areas that are way too large. There are many factors to consider when establishing rental rates so do your homework. Check the larger apartment communities in the area. What they are charging could help you establish your baseline. 

Overall, I am still new at this so I have more to learn. I'll shoot you a note with my contact info if you want to chat offline. 

For all the reasons mentioned, I would not recommend a two-year lease. If the rental is located in a seasonal leasing cycle and the renter wants to move in December, I might consider a 14-month lease to get this renter through the cold weather season when there is less leasing activity. At that time, you could consider a rent increase and if the tenant moves, you can still increase rent and get the next tenant on a better leasing cycle - starting and ending in the spring is better. 

Hi Robert, 

I am no expert here.  I own 3 SFHs in KC but just got into investing less than a year ago. I stumbled on your post here and wanted to comment. 

A few things that come to mind regarding influencing the seller - what is it costing them to keep these deals? Adding up insurance, utilities, taxes, etc increases their expenses.  If the price has already gone down, any idea how long they've been trying to sell?  What will they do with the proceeds? Are they moving into senior living or staying in their current home?  Do they want to move? Maybe uncovering this could lead you to a new sales angle.  

Could you get creative with your offer and add an escalation clause that states you will offer $200K each but will beat the next bidder by a certain percent, not to exceed XXXX amount? Maybe play around with how long you want to leave that offer open.  That could give them a sense of urgency if no offers come into them over the holidays.