Help me adjust my expectations - first deal pending
Member since 2025 · 16 posts · 8 votes
Help me adjust my expectations - first deal pending
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Nicki ThiessenBusiness Member
Property Manager · Kansas City, MO · Member since 2017 · 2 posts · 8 votesI would be happy to talk with you about our property management if you are still looking. Most of our owners / investors are out of state and several in Colorado as well. Make sure you are working with a Realtor who specializes in investment properties because it isn't rare to think the property is rent ready and then it isn't. Unfortunately, we see that a lot. We are happy to help our investors who are growing their portfolio and work with their Realtors. We might even go out to a property prior to you purchasing and give you a scope of what will be needed to make it rent ready so you can make a good decision. At minimum we can give you accurate rents for the area to do your analysis.
As an investor (and previous Appraiser) myself, I have a little different way of looking at the vacancy, maintenance, and cap ex. Without doing a deep dive explanation on this forum, I will say that everyone can play with numbers to create whatever picture you want. Those numbers are arbitrary unlike taxes and insurance and they vary based on age, condition, area, landscape, PM, and other things. Yes, you have to consider those expenses and I'm not suggesting that you don't but why not 3% or 10%? Especially if you haven't seen the property and don't know what the variables are. We manage several properties where the tenants have been there for several years, and there is little maintenance. We also manage properties that have been neglected prior to us managing them and they require more. I'm not saying this is one, but don't miss out on a good opportunity based on arbitrary numbers. However, make sure you have reserves and know the condition of the property in case you have unexpected or initial expenses. I agree with @Gregory Schwartz that as long as your eyes are open, you are asking good questions, you have resources and have surrounded yourself with a good agent and PM, take the leap and learn as you go. I also know and have worked with @Caleb Brown and he certainly can be a good resource as well if you need one. Good Luck!
36 Replies
- Member since 2020 · 351 posts · 329 votes1y
Without knowing KC, I would be hesitant because given the price and rent, I suspect it might be a less desirable area of town—again based on prices in completely unrelated cities. The rental game is funny in that you want to responsible enough to always make rent, but not successful enough to easily afford buying a house. (Expenses are primarily realized on turnover).
What I don’t like about the plan is you likely have negative cash flow. I also don’t like out of state investing especially for the first because part of what you are doing especially with the first is learning—it’s a easier to be responsive in your backyard.
What I like about this plan is it is a good entry into residential real estate. Relatively low cost means you aren’t betting the farm—really just your down payment. I suggest the first property should be turnkey, the second should be a light rehab (finish basement, redo bathroom). And then you continue to find ways to add value to property.
Best of luck
- Member since 2025 · 16 posts · 8 votes1y
Quote from @Andrew Syrios:
It's very difficult to get SFR to cash flow these days with interest rates as high as they are. Honestly, I think you're estimated expenses are a bit low. You can probably beat $2000/year insurance, but the management fee should be 10%, you need to factor in turnover too and 5% is probably not enough for both maintenance and turnover and I assume you added it, but you didn't mention property taxes (which have been terrible in Jackson County lately since Frank White decided to jack them through the roof).
Thanks for this Andrew. I'd like to know in your experience what I should be calculating for my estimated expenses? And do you have a guideline for estimating taxes in KC? BTW, I'm currently watching your interview on BP from like 9 years ago. I was born in Portland myself and moved to Denver in 2001 when I flew the coop.
- 1yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
you said you "need properties that I can get at a good deal that cash flow and appreciate while minimizing the trouble commonly associated with real estate"
well... yeah, everyone wants those properties. and because of that demand, people will accept lower returns, and the good inventory gets snapped up before a lot of us even see it.
the 'best' investments right now are the higher effort / higher risk ones. not saying you should get into those, but those are the ones that have the best returns. plain vanilla LTRs are still great. they just aren't going to shine until after you've owned them for 10+ years.
i'm personally trying to buy on seller finance right now. i only break even but i can put less down. then hold forever.
- Member since 2025 · 16 posts · 8 votes1y
Quote from @Nicholas L.:
you said you "need properties that I can get at a good deal that cash flow and appreciate while minimizing the trouble commonly associated with real estate"
well... yeah, everyone wants those properties. and because of that demand, people will accept lower returns, and the good inventory gets snapped up before a lot of us even see it.
the 'best' investments right now are the higher effort / higher risk ones. not saying you should get into those, but those are the ones that have the best returns. plain vanilla LTRs are still great. they just aren't going to shine until after you've owned them for 10+ years.
i'm personally trying to buy on seller finance right now. i only break even but i can put less down. then hold forever.
@Nicholas L. This is the kind of answer I was looking for to be honest. I'm not saying it's the answer I was hoping for because that would be different. If what you explained is really what I should expect, then so be it. It helps to know that it's reasonable to break even or have a small cash flow on a good property in a good neighborhood with expectations of appreciation and increased rents and call it a "good deal".
I've been mulling it over and trying to articulate to myself what I'm really looking for and I guess what I've most recently settled on is if a deal works that will give me better total return for the money and the time, then I'll call it a good deal. I already know that I can BRRRR a property (or something similar) and it'll yield a better return but I'm not interested in spending the time. I can make more money spending the equivalent amount of time in my day job. So that time element is important for me to consider.
Thanks for giving me a platform to word vomit as I rattle around these under-formed thoughts in my head!
- Real Estate Agent · Lakeland, TN · Member since 2015 · 214 posts · 105 votes1y
@Jack Cottrell you post caught my eye. Couple of questions.
Are you from KC or just interested in investing there?
Is this purchase on the MLS or through a turnkey company?
Are you only interested in KC or are you open to other markets where you can still have some cashflow with all the expenses you mentioned in your post? - Member since 2025 · 16 posts · 8 votes1yKC is just closer to home. I have my businesses in Denver. If I expand on those, it'll be to KC so it seemed to make sense to invest there.
Quote from @Jared Smith:
@Jack Cottrell you post caught my eye. Couple of questions.
Are you from KC or just interested in investing there?
Is this purchase on the MLS or through a turnkey company?
Are you only interested in KC or are you open to other markets where you can still have some cashflow with all the expenses you mentioned in your post?
This listing is off the MLS. Not turnkey.
I'd be open to other markets if they make sense. I plan to own 15-20 eventually and maybe more if I can find the success I'm expecting. I wouldn't plan to have all of them in 1 market anyway, so I'm always open for alternatives.
Tenessee is another I was interested in initially since I have some friends that moved there and I hear nothing but good things. - Real Estate Agent · Lakeland, TN · Member since 2015 · 214 posts · 105 votes1y
@Jack Cottrell, that all sounds good. I sent you a connection with some more info on our markets and we can schedule a call to discuss just what we do here.
- 1yNicki ThiessenBusiness MemberProperty Manager · Kansas City, MO · Member since 2017 · 2 posts · 8 votes
I would be happy to talk with you about our property management if you are still looking. Most of our owners / investors are out of state and several in Colorado as well. Make sure you are working with a Realtor who specializes in investment properties because it isn't rare to think the property is rent ready and then it isn't. Unfortunately, we see that a lot. We are happy to help our investors who are growing their portfolio and work with their Realtors. We might even go out to a property prior to you purchasing and give you a scope of what will be needed to make it rent ready so you can make a good decision. At minimum we can give you accurate rents for the area to do your analysis.
As an investor (and previous Appraiser) myself, I have a little different way of looking at the vacancy, maintenance, and cap ex. Without doing a deep dive explanation on this forum, I will say that everyone can play with numbers to create whatever picture you want. Those numbers are arbitrary unlike taxes and insurance and they vary based on age, condition, area, landscape, PM, and other things. Yes, you have to consider those expenses and I'm not suggesting that you don't but why not 3% or 10%? Especially if you haven't seen the property and don't know what the variables are. We manage several properties where the tenants have been there for several years, and there is little maintenance. We also manage properties that have been neglected prior to us managing them and they require more. I'm not saying this is one, but don't miss out on a good opportunity based on arbitrary numbers. However, make sure you have reserves and know the condition of the property in case you have unexpected or initial expenses. I agree with @Gregory Schwartz that as long as your eyes are open, you are asking good questions, you have resources and have surrounded yourself with a good agent and PM, take the leap and learn as you go. I also know and have worked with @Caleb Brown and he certainly can be a good resource as well if you need one. Good Luck!
- 1yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
@Jack Cottrell You Vacancy & Maintenance percentage are aggressive and may only work for a Class A rental/tenant.
If the is a Class B or C rental that will attract Class B or C tenants, you should strongly consider increasing those percentages.
NOTE: we deal with a LOT of Class B & C rentals, so we replace "Vacancy" with "Vacancy/Tenant Nonperformance". Tenants in lower Classes will have lower credit scores, which means higher chance of defaulting on their lease payments.
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