All Forum Posts by: Vicki Stewart

@Zachary P. I'm glad you're considering investing in Kansas City! It's a great town. 

I'll preface my comments on your deal by saying the area you've identified is one in which I plan to eventually invest in myself so I'm not generally opposed to these neighborhoods. However, there are several things I want to caution you about. 

Although the area is not the worst of the worst, it is not good. Low-income is one thing but high crime and blight also exist. Unemployment in this part of town is high and the schools are appalling. It is not the heart of the hood but it is still the hood. 

It can be difficult to determine ARV on these properties. It can vary block by block and sometimes even from one end of the block to the other. There can be board ups sprinkled among cute well-kept bungalows or gorgeous 3-story homes. Or, sometimes it's the other way around with the good ones sprinkled among the bad. Also, many deals are cash and unlisted so comps are practically non-existent. You're right to not assume any appreciation, cash flow is the name of the game with these properties.

That being said, there are good families who need safe, affordable housing there and some investors are able to provide that and maintain a solid cash flow. My goal is to be one of those investors someday because I work with these families in my day job and see their challenges. I make home visits there often and am comfortable doing so when most people I know won't even think of going near that part of town. Even so, I have to decided to gain investing experience in other areas first. Successful investors I know in these neighborhoods either do their own property management or have, through much trial and error, finally found or built a good management team. 

I'd advise any out of state investor, especially a new one, considering this part of town to thoroughly research the area and wait to move forward until you have a boots on the ground team who has proven themselves trustworthy to you. In other words, start in another part of town first. It's too easy be taken advantage of in low-income areas by unscrupulous wholesalers and property managers. I've seen it happen. Not to say that can't happen anywhere, it's just more risky for reasons I won't go into here.

Sorry to be so negative on this one. I just hate to see off-site investors and their tenants get taken advantage of. I'm happy to be a KC resource for you and help you identify other parts of town if you want to PM me.   

Welcome to the site Michael! Let me know if I can help you get acquainted with the market here. 

@Paul Ortiz Thanks for the book referral and words of encouragement!

Congrats Ryan! Thanks for sharing your experience and starting the discussion. I found the entire thread very helpful.

Definitely the rehab for me. I've rehabbed only one and feel like I got totally ripped off. I let the property manager's contractor do the rehab (now I know that's not a good idea) and they never finished the punch list but tried to bill me for it. Of course, I didn't pay but from that point forward I couldn't trust the PM. I'm self-managing now.

My strategy now is to wholesale to raise capital for the next buy and hold. But I'm stalled because I'm not confident in my ability to estimate the rehab costs. Mentors have provided me with the tools to do it but I'm struggling with the fear of getting it wrong and passing along a deal that doesn't work. 

So I guess what I'm saying is that my biggest challenge right now is me! :-/

@Daniel Alegre I've heard some people include a penalty in their contract, say $100/day, for each day past the completion date.

Not only could you face some pretty hefty fines, as Jim put it, but you, your family (if you’re doing the work at home) and your tenants could face some pretty serious health consequences if not done properly. As a nurse case manager for lead poisoned children, I can’t tell you how many cases I’ve seen as a result of DIY projects or hiring non-certified contractors.

If the paint is merely crackling, not flaking, you can encapsulate it with fresh paint after thoroughly washing the area with soapy water. If it’s flaking, it should be removed.

My understanding is that, unless the work is being done on your own residence, federal law requires you to hire a certified lead abatement contractor to remove it even if the house is unoccupied because it requires thorough clean up afterward. It doesn't matter if the property is in an LLC or your own name.

If you work on your own home, research it first as there are many precautions. For example, lead paint should never be dry scraped or sanded as it creates lead dust which is then inhaled or ingested. You can start your research here .

Any work with asbestos, whether in your own home or not, should absolutely be done by certified contractors and you should educate yourself on the precautions to be sure they are followed.

As an investor, I know these regulations can be a real pain and increase costs. However, the reason the law is so strict is the serious health consequences. Lead poisoning in children can lead to neurological damage that affects their ability to concentrate and learn, cause behavioral problems and result in a lower IQ…for life. It has also been linked to violent behavior when these children reach adolescence and early adulthood. Very high levels can be fatal for children and adults.

As for asbestos, it causes a rare and very aggressive form of cancer. Its prognosis is usually not good.

I apologize for the long post but, as you can tell, I’m passionate about public health. One of the things I like about real estate is that I can incorporate that passion in my investing by providing safe and healthy housing as well as educate other investors on how to do the same.

Regarding your pending purchase, I’d say do the math on safe renovations. If the numbers still work, great! If not, pass. The health, legal and financial risks are not worth it. There will be other deals.

@Ahmed Moussa Rob's right, the dividing line in that area is closer to The Paseo (east of Troost). Since you're on the east corner, it could be iffy. This is pretty much in my back yard so I'll drive by it in the morning for a closer look, PM me and I'll let you know what I find.

Hi Todd, welcome to BP!

I've been talking to several property managers lately as I want to offer some options for my out of state buyers. I'll be happy to share what I've learned, just PM me if you're interested.

Vicki

Welcome Scott!

I'd like to talk with you about your property management services and other ways we may be able to work together. I'll follow up with a private message.

Thanks, Tyler, for asking one of the many questions I have and, Bill, for your thorough response.