Rental Property Investor · Long Beach, CA · Member since 2015 · 61 posts · 38 votes
Hi everyone,
I just recently had an offer accepted on a property 2912 E Linwood Blvd, Kansas City. It is a sixplex. Three out of the six units are rented because the building has just been completely renovated. The rents are $650, $650, $695 ($1995 total). My offer was $250,000. No bank seems willing to finance me because of the vacancies and the fact that I am an out of state investor. I barely have enough for the down payment/closing so I think that one issue is that I don't have much cash reserves. I do have a real good income so I can afford the mortgage even with half the units not rented. I really don't know what the issue is. Is this a bad deal or should I keep calling small banks? Thank you!
I can't speak much on your deal or where to get financing, but I'm an investor from the L.A. area and have been here in KC for two weeks now and have been speaking with lots of local banks, property managers and working with locals who know good and bad areas. I'm in the process of starting my investing here. I've found that with a non-owner occupied property all the local banks want to see cash reserves, some of the local banks don't want to work with out of state investors period. Also I was told by a BP member that the zip 64128, where your sixplex is located, is not a very desirable area, aka hood. I haven't been up around that area but I'm focusing more on the BRRRR strategy in other areas. After being out here, I can truly appreciate the advice of at the very least visiting the areas you want to invest in, especially when you're out of state. The real estate here is very different from CA.
Good Luck with everything, KC is a great city on the rise in my opinion.
For a property that's half empty and needs work you're going to have a hard time finding a bank to loan on it without a long track record with that bank. You'll probably need to find some private money.
That being said, that's in a pretty rough area. As you can see here: http://www.clrsearch.com/64128-Demographics/Household-Income, the per capita income in that zip code is only around $13,000. I would be very hesitant, especially as an out-of-state investor, to invest in that area.
I grew up in Kansas City, MO near 47th and Troost, a really crappy area. But when I saw the address in your post, I was like WOW! That is a really bad and dangerous area. When my wife and I now visit KC, she says in areas like that, if the light turns red and somebody approaches, run the light. I'd look elsewhere if I were you. Raytown is a solid area for investment. Independence is another. Areas of south KC, not SE, are ok as well.
64128 is a high-crime area. It's scary especially at night time. Are you sure you want to put $250K into an area you wouldn't even dare walking alone at night time without a gun loaded? Most likely you'll have to rent to section 8 tenants and not everybody takes care of their properties. A lot of them are dirty and you'll see rats coming out of their apartments. With that much money, you're better off attending tax sales auctions or regular auctions if you know what you're doing.
Thank you all for your responses. My agent said it wasn't a "great" area but she never portrayed how dangerous it was. She also said there is a big commercial development that is being done that will improve the area. Because of everyone's responses, I decided to cancel my inspection tomorrow because it doesn't sound like this is a good deal and the inspection costs are over $1000. I am still flying out to Kansas City tonight to check out the different areas of the city. I won't make a decision on this property until I check out the area for myself.
If any of you have any suggestions of areas I should go look at while I am in Kansas City this weekend, please let me know. I really appreciate all the help. I will definitely drive around the 64128 area to see how rough it is and how far along they are in the commercial development.
I had been looking in that same neighborhood and I would be curious to hear what you think. After all the learning that I have been doing it does seem like I will need to step up a level to the $50k - $100k area.
I am like you, I have a great job and great monthly income, but not a lot of cash saved up for down payments. Would be great to hear more about what I can do to get into my first property.
Look at a map and see the are where the I-635, I-70 and US 71 intersect. This is a high crime area. Go off away from it at least 1 mile. Now, the are to the North of 23rd street can be a little rough as well. I'm sure there's money to be made but it's not an area for somebody trying to invest there for the first time.
Nice places include Independence South of 23st , Lees Summit, Raytown, Grandview, West of Troost Avenue, Gladstore, North KC.
So, sounds to me like you just dodged a bullet with this ... personally, I would not only reconsider this property, but also reconsider your entire strategy of investing out of state in rough areas (whether you realize it or not) where you are clearly unfamiliar with the market, a newbie to REI all together, and 100% reliant on realtors and such that may or may not have your best interests at heart. It is a very risky thing to do, as you nearly found out the hard way. You already live in a great market for investment and are literally surrounded by RE investment opportunities in your own backyard if you can learn how to operate locally and hands on here as a real estate investor. I know first hand it can be done in SoCal and how hard it is to do out of state ... I've tried both over the last 15 years of investing, so speak from personal experience on both fronts. Please, for your own financial well being, reconsider your strategy.