All Forum Posts by: Cliff Harrison

In Kansas City, as a quick and easy rule of thumb to follow, stay outside the 435 loop on the missouri side to get a balance of rent/price ratio and tenant quality/headache management.  You need some detailed knowledge to avoid trouble inside the loop.

Hi Mitch - That is exactly right. I'm mostly doing this for the income stream, not appreciation. So there may not be much, although I think in some areas it will be ok as more people need affordable housing. It is NOT going to be a 'high appreciation' type of environment. But I don't expect to lose principal. I look at it like buying bonds. Keep expenses down (low vacancy, quality tenants) and costs down and earn 2-3 hundred per month. Having a vacant house one month doesn't hurt too much when it's only $300 month PITI. Get a large number of them working for me and as they get paid off, may be sell them off slowly when I get into my own retirement. Note - I don't think the more affordable areas in JoCo (downtown Olathe, and north of 435 areas, are going to see amazing appreciation either). Different, legit ways of doing it but bottom line I'd rather have 10 houses than 4 houses.

@Phillip Syrios

Hi Phillip - my first loan with Arv was a conventional 30year (my 10th and last) and got competitive terms. This one was portfolio loan and it is a 5 year ARM on 30 year amortization, rate is about 5.25% with about $600 origination fee. It's not the sweet deal I got on my first four loans with my credit union but there is no balloon, which is what my other option consisted of. On the cash-out loan, they are going to be doing 75% LTV.

Who are you going with instead?

Thanks

Cliff

#10 is a super clean move-in ready 3/1/1 in my favorite neighborhood in south kansas city.  2nd house using my portfolio lender Arvest.  Purchase was 62k with market rent around $900.  No work required on this one.

#11 is a house I previously had negotiated on and walked away from.  It sat on market for a month and went back and picked up in for $500 less than my previous max offer.  This one cost $55,000 in good condition, does need some tree work and a roof.  In order to swing the deal quickly this was an all cash deal and Arvest is starting a file today for a cash-out mortgage on it, which I will turn into three downpayments on additional rental properties. The house is a largish 3/1 with an add-on den with fireplace.  Decent blue collar area in south grandview.  I had previously bought a house on the same street and got a high volume of calls/interest on it.  I rented that other house at 800 but I'm sure this one will rent at least 875.  It's larger, still has functional garage, and I really was getting a large number of calls and showings on the other house - I ended up turning down three deposits.

Other Updates:

Had three move-ins for May 1st on new leases.  #8 house renovation in progress, the fence across the back was completed.  Installed the new roof on #7 house and signed a new lease with the tenant I inherited from previous owner - who did not have a valid lease in effect for over 24 months.  Had to pay $925 for an enormous dying elm tree removal on house #3 (Wally) and that was after I saved 575 by shopping around and going with a craigslist guy.  Spent 3 grand on two fences at #6 and #8 but they backyard view is incredibly better now for both.  Also had a microwave die at house #1 (Bella).

Inventory: I have two new-to-me vacant houses to fill and one rehab in progress.  All other units rented out and now occupied.  Hope to close about four more in May/June then take a few months off from acquisition and let things settle in for a while as I will have completed deployment of my primary residence home equity loan and the proceeds from a fancy car I used to have into rental properties.  So future acquisition will be a bit slower than the past five months have been, as one of my goals for this was to pretty much leave savings alone. After the next four I'll get into a pattern using cash flow to pay down mortgages one at a time, refinance out, and redeploy.  Plus the day job is really getting crazy with some initiatives the company has going on.  

@Ken A.

 it is not really an appreciation market on the Missouri side.  Some appreciation in ks side.

Closing on rental #9 in Kansas City area today. This one comes complete with what appears to be a quality tenant (pays on time). It does need some capex in form of new roof. It's located in a good working class area in south grandview very close to Belton around 71/150 interchange. This is also the first property with my new portfolio lender so I have it on commercial type of terms (5 year ARM). The rent is currently a bit below market at $700, which I think I can bring up to $775 and still be offering good value for the area. I bought the house $43,000 and will spend $4500 on roof, gutters, and a few other things. Taxes are $500 and insurance is $560. On the downside, the tenant has a dog and cat.

Other Updates:

#8 - signed contract for renovation and started demo.  Need to put a solid fence across the back yard so potential renters don't have to see the mother-of-all-junk-yard-dogs hanging over a three foot chain link 

#7 - rented it out last night along with #6. 

So, other than #8 which is expected to be vacant for another four weeks during renovation, all the inventory is rented out, including today's closing.  I'm about 1/3 of the way to my goal regarding number of rentals I would like to hold.

thanks

Cliff

i would rather have 10 solid cashflow 300 properties than one awesome cashflow 500 property because i kept waiting to buy perfectly.

#8 is my first largish renovation project. It's a SFR in South KC (near Bannister) in a decent neighborhood. It's been a bit neglected inside and needs about 12k TLC. It should rent about $825 per the RoM. I will have about $46k into it if it goes according to plan. Part of my expense is to put a privacy fence in the back of the house to buffer the house from a huge dog that hangs over the chain link fence - no way in heck anyone is going to live with that. I will probably close on #9 (already has a tenant) and #10 (in my favorite area) before I get #8 finished and leased up.

I've been getting pretty good traffic on #6 and #7 and expect to have them leased soon - but not yet.

Cliff

Wait until August to sell it.  What price are you trying to get for the home, and what is the monthly rent?

 Johnson County is so expensive.  I had the same idea that you did and after searching and waiting and offering I have ended up putting money into the Missouri side (outside the 435 loop of course).  I still wistfully keep an eye on JC (including out to Spring Hill and Edgerton) but it's so hard to find a good deal.  In MO I can find a reasonable deal every time I care to look for one.  And not in Ruskin.  I feel comfortable enough with my property locations.  I love JC to live in though.  Oh, and also take the TK provider's proforma numbers with a big grain of salt.