With the huge interest in Cash Flowing Rentals in Kansas City from investors nationwide, I thought it would be interesting to compare it to another rental market I have been seeing promoted on many blogs and websites as a cash flowing market.

I have also included info about the area from which many of our investors come from.

This information is according to Yahoo Real Estate neighborhood profiles.

Kansas City Detroit Los Angeles

Population 450,375 916,952 3,834,340

Population Growth 1.9% -3% 3.5%

Population Density 1424 6265 8388

(residents per sq mile)

Median Age 36 33 34

Medium Income $43,574 $32,426 $42,529

Median Home Age 42 yrs 57 yrs 34 yrs

Median Home Value $146,400 $32,426 $606,375

Ownership % 51.45% 46.05% 36.4%

Rental % 37.04% 38.54% 60.36%

High School Grad 82.9% 69.6% 66%

Unemployment Rate 7.8% 17.7% 7.8%

Returns of 20%-40%, stable economy, availability of affordable housing and an average price of $57,500 for Postive Cash Flowing Properties makes Kansas City a FANTASTIC market to invest in.

Kansas City Investment Properties & Cash Flowing Rentals

Missouri Real Estate Exchange

11333 Hickman Mills Drive

Kansas City, Mo. 64134

Office(816) 761-9400

Fax(816) 761-9401

Toll Free (866) 451-MORE

Email: danreedy@morekc.com

BLOG:  http://activerain.com/blogs/reedy6799

There are plenty of ways to find the owners of that little jewel you just found.  We will go over the ones I use the most in this blog.  The first thing you want to do is ask the neighbors around the house.  Tell them you’re an investor in the area and hand them your business card then ask them if they know who owns the house, if they know where the owners live now or have their phone number.  If they seem hesitant tell them your going to ask everyone on the block and the first one that gives you the info will give 20 dollars.

The next thing I do is go to my county web site.  Go to your tax assessor’s site on the county web site.  There you can put in the address and the property will come up.  From there you can find out the property owners name and where the taxes are being sent to.  This is also a good place to find out additional information about the property.

At this point you can either go to the address were the taxes are being sent to and talk with the owner.  See if you can get their phone number from the white pages.

You could put them on your post card list and start sending them post cards.  I make sure to send them 4 post cards in 6 weeks.

If you can’t get their info from the county web site you can send a post card with (Address service requested) on the post card. If none of that works you can go to www.HomeInfoMax.com and for about 20 bucks you can get their info.  Although I would recommend you exhaust all other avenues first.

Good Luck,

Sean Marmoy
MOKSRealEstate.com

MAO simply stands for Maximum Allowable Offer.  To come up with MAO we first have to know what the property will be worth when all repairs and updates are done.

ARV (After Repaired Value) – There are a few websites you can use such a www.Zillow.com or you can become good friends with a realtor and have them pull comps for you on the MLS.  A comp is at least 3 comparable sales no more than 6 months old within a mile without crossing any major landmarks.

Rehabber Finished Costs – The Rehabber will usually want to have invested 60% – 70% of the ARV into the property.  This gives room for unexpected costs as well as profits.  This also allows the rehabber to lower the sale price of the house for a quick sale.

Holding and Loan Fees – 5% of the ARV should allow for any financing costs involved in the rehab process.

Rehab Costs – This is the total materials and labor costs involved.  If you are not an experienced rehabber I would recommend getting an estimate from a reputable contractor.

Wholesalers Costs – This is the amount that you will charge if you are wholesaling the property.  If you are the rehabber and did not find this property through a wholesaler then you can omit this from the calculation.

Once you have figured out all of your costs involved you can get the MAO.  Simply subtract your Holding and Loan Fees, Rehab Costs and Wholesalers costs from your Rehabber Finished Costs to get your MAO.  Your negotiations should go much easier when you have a hard MAO number rather than a “gut” or roughly estimated value.  Your Rehabber’s and Investors will keep coming back for more when they are finishing their properties at 65% to 70% of ARV.
The Math:

Retail Value –                                   $100,000
X 70%
Rehabber Finished Costs –                $70,000

Holding and Loan Fees -                     $5,000
Rehab Costs (Will Vary) -                  $20,000
Wholesaler’s Costs ($2500-$5000)-   $5,000

MAO                                                  $40,000

Good Luck and Happy House Hunting,

Sean Marmoy
MOKSRealEstate.com (Under Construction)