Rental Property #17 in South Kansas City

9 Replies

With #17 we are back to SFRs. This one is interesting (to me at least) and may end up being a very high return SFR. I bought it from a wholesaler - the seller was elderly, had already moved out, and in fact passed away during the process but the sale was being transacted by his son and it continued on in spite of this hiccup.

This is a 3/1.5/1 ranch in a very desirable (for moderate home prices) area off Red Bridge Road called St. Catherine's Gardens. It needs floor refinish and paint on the main level and some light remodel/modernization on the baths. The roof is great, it has metal siding in good condition, and good exterior paint, drive, and all concrete. It cost $49,000, with ARV of $85,000.

The bonus part of the house is the full basement.  There are two more bedrooms down there with closets and egress windows (one of the egress window is not quite to code size so it's not legally a bedroom) and a full bath (needs major work though - never finished).  It's a walk out (private door) with ample room to make a large apartment down there.  The steps up go to the garage which also has a rear exit door - there is no direct access from the basement into the interior of the house.  The basement could be finished out with small kitchen, and three bedrooms and still have an unfinished area for storage, mechanicals, and w/d.

The basement needs finish out/remodel work, I haven't decided what to do with it.

The upstairs with light cosmetic remodel (around $8k) will rent for $950 easily.  With investment into the basement area, I can make it a 4 (legal) bedroom, a 5 (non conforming), or a totally separate apartment (although there are not split utilities so it's not going to be simple or cheap).   So the rental potential on this property will range from $950 (do nothing with basement) to $1600 (separate apartment).

Other updates:

#4 - the eviction is complete and the tenant is gone at last.  Did not trash the house but left it dirty.  Locks changed and carpet/junk removal completed.  Hope to get started on the rehab week of 8/30 and get it productive again - it was a $45k house I haven't spent anything on it yet.  Light remodel will get it to rent at $775 3/1/2 with downstairs living area (raised ranch with half basement).  I may look to sell this one to investor or lease option after I have it fixed up and rented out.

#14 - remodel is just about complete on this grandview 3/1/0.  It looks really good (refinshed hardwood floors, all new interior, spruced up exterior) and I had my first showing Saturday morning.  The couple (with a one-year old) gave me a deposit right on the spot conditional on background check - they said my 'like new' house was much nicer than what else they had seen in the price range.  That is two rehabs in a row that went to the very first showing on the house.  I may be able to get a higher premium to market rents with the quality of product we are bringing to market but it's very nice to get these quick rentals to quality applicants.

#15 - this South KC (bannister area) remodel is a couple weeks behind schedule, but on the plus side I haven't even shown it but already someone has said they wanted it.  This is a tradesman and his wife who has done some work for me, I already have his sister as a quality tenant in a nearby house.

#16 - The couple I inherited in one side of the Belton duplex recently both found jobs and instead of moving out have paid for a month rent and I've agreed to a month-to-month trial for them so I have some unplanned income coming from that unit (it is in dire need of remodel but the current tenants are content with it). In the meantime the remodel on the other side is in full swing and planning to wrap it up before end of month.  My guy on that house will move to house #4.

#18 is closing 8/31.  It is a short-sale that I started a LONG TIME AGO  it had two mortgage holders but it's finally worked out and signed off on.  This one is coming with 20% instant equity and needs "nothing" to rent out in the heart of grandview it's already a bit overdone for the area - granite, stainless, hardwoods, outbuilding) - I think this one will rent as soon as I take possession and market it.

On the financing side, I took my relationship with portfolio lender a step further and moved some security assets I've been holding a long time (income oriented things like bond ETFs) for free to their asset management division, which allowed them to give me a line of credit with those as collateral at 3.5% "interest only". So I tapped this to buy #17 with absolutely nothing out of pocket. I think #17 is going to appraise really well after rehab giving an option to get close to everything back out of it with a 75% LTV loan - or I can just keep some of it in the LOC and have high cash flow. I'm excited about having this tool to use for future downpayments, future cash purchases, or use for rehab costs.

That is all for this update - I'll post another after #18 at end of month.  I hope everyone is doing well with your projects and investments.

regards,

Cliff

Congrats Cliff!

As always, it's encouraging to read your updates and success.

Great updates @Cliff Harrison , very encouraging for a new investor to read. Have you considered putting these types of updates in your member blog so people can subscribe and be notified when you have new posts? That'd be something I'd be interested in. 

Kansas City BRRR update - close out update on Property #17.

In case you are doing/considering BRRR I wanted to close this out and let you know how the final numbers worked out.

I finished out the lower level with a shower bath but am not making it a separate apartment. So the house is a 5 bedroom 2.5 bath with 2 beds and 1 bath in lower level.  My all-in rehab cost was $14,000, and purchase was $49,000.

My hard appraisal for the cash-out financing was $93,000, and my lender lends up to 80% of appraised value up to and not exceeding the all in purchase + rehab cost so I could get all the cash back out if I chose but I am leaving a little behind to meet cash flow and equity goals.

I have a tenant lined up on a two year lease at $1150. The rehab took a bit longer than I would prefer but I did not have any HML to worry about.

So this particular BRRR deal seems to have worked out and I have the cash back to do it again...and again..

great update closing the year strong keep the momentum going !! 

That is a great rental amount for that house. I would be happy to buy a house with those numbers. It sounds like 2016 will be good for you.

@Cliff Harrison it is always great to hear success stories like yours; especially local, Kansas City stories.  Let me know if you ever need help finding properties or managing your properties.

Originally posted by @Chris Dawson :

@Cliff Harrison it is always great to hear success stories like yours; especially local, Kansas City stories.  Let me know if you ever need help finding properties or managing your properties.

Hi Chris - I am always interested in a good deal on buy-and-hold properties.  Keep me in mind.  I prefer outside the loop south kc (not ruskin) and grandview, belton, etc.  Bannister areas are ok depending. I also prefer properties that need some rehab and are priced to sell.

You inspire me! Thanks for sharing your success stories.

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