We have just had offer accepted on 3 bedroom property in Fairlane district of Kansas City Mo.
Rehabbed and tennant ready to move in.
Net return of approx 15%. I am pretty happy.We have been looking for a while and now have our offer accepted and awaiting paperwork prior
to transferring the funds.Time will tell if it the best or worst decision ever made
Sounds like a good return. Did you buy this through a buyers agent? And is there a tenant signed up or is it being advertised?
I would be interested to hear how you go.
Cheers,
LukeA net return of 15% is pretty good, although you can get higher in some other states – Michigan, Ohio and a few more for sure. Even in Florida, double digit yields are becoming the norm these days. What made you settle for Kansas City over other markets that might offer higher yields, with the same chance of capital values staying or increasing?
Just out of curiosity, perhaps when quoting ROI's, we can show some numbers to see how we got there. A lot of ROI's are based off of fixed expenses. Soft expenses or usually left out. For instance if you have:
Taxes: $3,000
Insurance: $1,000
Property Mgmt @ 8%: $2,000Does property management include lawn care? Does tenant pay for that? How about turnover or vacancy expense at 5%. Reserves? You don't have to put much in reserves if the property is newer, but perhaps everyone should account for them. A problem I ran into last year….I swore I wouldn't invest in the midwest. Not because it's not a good market, but I know nothing about. Just personal preference. I had a ROI advertised to me at 21%. My more conservative numbers showed 15%. At the end of the year, I ended up with 7% due to issues with unforseen repairs. So when you calculate your numbers, throw in some soft expenses or miscellaneous figures. In New Jersey and Florida our rule of thumb for 1-4 unit homes is to take your Gross Income and expect that your expenses are going to be about 30% of it. Just my 2 cents.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeHi Guys,
The basics are:
Tennant in place prior to closing : Yes
Rehabbed – prior to rehabb the advert for the property listed it as being very good condition needing only minor
cosmetics.
The total price is $49,000 : Zilow Estimate: $65,000 and prior sale in 2007 was $95,000.Rent of $10,000 p/a less the normal expenses of property management insurence and taxes
for net return of just over 15%.
With the work done maintanance will be minimal.The reason i went for Kansas City is have have researched this area for nearly 6 tms and while better returns in other states, from what i see vacancy rates are very high particularly in Detriot (sorry wouldnt go there).
Finally : yes i used a buyer service. I went through housebuyersusa in the end due to lower costs.
I have been dealing with 2 buyer services one for 5 mths and housebuyers for only a few weeks.
BOTH provided great service one was pay all fees up front and one was pay on closing of property.
I would be happy to reccomend both services.RickH wrote:We have just had offer accepted on 3 bedroom property in Fairlane district of Kansas City Mo.
Rehabbed and tennant ready to move in.
Net return of approx 15%. I am pretty happy.We have been looking for a while and now have our offer accepted and awaiting paperwork prior
to transferring the funds.Time will tell if it the best or worst decision ever made
Congrats on finally getting an acceptance… I am scoping out Myusa and will also look at 888…as i don't mind paying for less fuss on my part. despite all the naysayers…
Rosa,
I ended up going there HouseBuyersUSA. The fees were lower and the service was first rate (myusaproperty also were very good on the service side)
We didnt end up using any US sourced finance which made the whole thing alot faster and easier.On my experiences. I have come across 3 buyer agents and all three have different approaches and different fees.
I found HousebuyersUSA was the most seemless process as far as setting up company, opening us bank account and openness on listed properties.
MyUSproperty were very good on commumication we would have purchased through them some time ago if the finance application hadnt been soooooo painful and drwn out (USA Banks – no fault of MYUSA or LOANS USA) – fees a fair bit higher.
Both compnies having bases in aus and USA as well as a team on the ground in the us and reliable links to us attornies and property managers. – Both were one stop shops . Housebuyers USA was a little more streamlined.
Third person I had contact with was a KC local named Mike Cantrell. Lowest on fees and has a good association with KC property managers.
Mike is solely US based and looking after the greater KC area.The property Mike offered was very well priced and well presented in a good area with good numbers. We were too late to grab it.
All in all IF you are looking into the KC property market I have had only good experiences with all 3. The 2 full service companies Aus?Us based and Mike KC based traditional buyers agent with great local knowledge and contacts.hope this info helps others
I don't know anthing about Kansas, if you have done your homework and it came up as a good place to invest then great. The issue i have with most of the US services is the lack of available finance. 15% return on capital is not great compared to what you can get on a leveraged return on a +ve cashflow property in Australia, also if you aren't borring in US dollars you are far more exposed to exchange rate risk. This may end up in your favour, but it is still an extra layer of risk. I hope it goes well for you and congratulations on taking the plunge, too many people come up with great ideas then sit on their hands and do nothing, Investing in the US at the moment seems like a once in a lifetime opportunity and i'm sure some people will do very well over there.
Regards
Alistairthat's a great help rick…i will feel out house buyers…
Hi Alistair,
We have had property in Australia in the past and to find a property that nets ove $600 p/m i havent seen.
We didnt borrow in the US and I dont believe the aussie dollar is going to remain at historical highs for ever.
Even a 10% drop in the aussie dollar over time is all in our favour.
The area we purchased is within 2 miles of major shopping complexs, smaller shops, churches ect and easy access
to highways ect for easy commuting.
Also this area is approx 70% owner occupiers and average income in this area is above state average.
So we will see how it all goes. I feel comfortable with the location and i have a team on the ground in KS to look after management, legals accounting and so on.Only time will tell in the end-
I'll give you the actual numbers on a deal a client of mine did in San Antonio with Nigel:
Property – 3/2 House
Val – $80-$90K (Property was already Presold under a lease option agreement for $82,900)
Loan – $31K (30 Year Loan at 7.10%)
Cost to Client (Net of fees & minor rehab): $20K
Rented – $825 / month
PITI Payment – $525 / Month (Includes all principle, interest, taxes & insurance)Regards
AlistairThat sounds fantastic! Alistair who did he get the finance through?
USA wrote:That sounds fantastic! Alistair who did he get the finance through?It was a she, and she didn't get it through anyone. It was a pre-forclosure deal and she assumed the existing loan.
Alistair,
I just wanted to ask (feel like I have to) did she (your buyer) just agree a deal with the seller to assume the mortgage payments, or did she actually sit down with the banks and get them to sign off on it?
Reason I am asking is there are thousands of people out there willing to let you assume their mortgages – they might owe 100K on a home that is "worth" (based on tax value, mortgage value, appraisal, whatever….) 250-300K, but the banks would never sign off on it, if they knew. This will be fine for years, except when your buyer wants to get title or anything else goes wrong.
There have been scams like this in the past, where a mortgage is assumed often by a foreign buyer and a fee of 20-30K is paid, which is usually just pocketed by the agent.
I'm not saying at all that this is what is going on, but I know Texas is a really harsh state in case of foreclosure, so most buyers would rather walk away and let someone assume the payments, wheter they do it legally or not, I can't tell you.Rick H,
Congratulations on the purchase. And also thank you for the kind words on the service I provide here in Kansas City. Very much appreciated. If you should need any further assistance just let me know.Regards
Mikeno worries Mike…… to be honest 24 hrs earlier and we could have been doing the deal. I am sure that property will go fast if it hasn't already. Well present well priced.
The place we bought is only about 5 mins away that that place.I will reply to your email as soon as i can. I hopefully have saome ideas that may help you out
Congratulations Rick.
I’ve been watching your journey with interest over the last few months, and felt your frustration with the finance roadblock you hit. Glad to see you’ve brought this project to fruition.
I’d be keen to know how you go with the next big challenge – the ongoing management. Do you have direct communication with the property manager(s), or is it all via the agent/broker you used?
HighIncomeProperty wrote:Alistair,
I just wanted to ask (feel like I have to) did she (your buyer) just agree a deal with the seller to assume the mortgage payments, or did she actually sit down with the banks and get them to sign off on it?
Reason I am asking is there are thousands of people out there willing to let you assume their mortgages – they might owe 100K on a home that is "worth" (based on tax value, mortgage value, appraisal, whatever….) 250-300K, but the banks would never sign off on it, if they knew. This will be fine for years, except when your buyer wants to get title or anything else goes wrong.
There have been scams like this in the past, where a mortgage is assumed often by a foreign buyer and a fee of 20-30K is paid, which is usually just pocketed by the agent.
I'm not saying at all that this is what is going on, but I know Texas is a really harsh state in case of foreclosure, so most buyers would rather walk away and let someone assume the payments, wheter they do it legally or not, I can't tell you.You will have to get Nigel to give you details on this. I'm just her broker in Australia and I had her send me the details of her deal out of interest. My understanding of the process is that the property is sold into a land trust which is owned by the Australian Investor, with the Bank's consent.
Hi Treasure hunter,
Happy to say i do have direct communication with property manager attorny ect. I would be a bit concerned if couldnt contact them directly without having to go through the original buyers agent.
So I am looking forward to finding out if my decision was good or bad …….
I think/hope for good !I puchased my property through HouseBuyers USA. Tennent to be in place prior to closing.
Over my journey I have had nothing but professional service and I believe the fee charged was
within reason as it really is a one stop shop and everything is made clear and i found no details of cost
were ever hidden.
House looks to be well fitted out and I had no problem obtaining up to date photos inside and out.All good
For those of you not needing a "full service" and wanting to buy in the Kasas City area. I found Mike Cantrell
to be someone offering well finished property at good prices.
There are good companies and people out there….you sometimes need to look
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