One Bedroom Houses

When buyers call to find out about properties they all have a idea of what they want to purchase.

• Suburban house with 3 bedrooms 1 1/2 to 2 bath, 2 car garage that will resell
• Three bedroom, one bath house, with basement for resale or rental.
• Two bedroom house with one bath.

I never seem to have anyone who want a one bedroom house?

But why?

I know if you are buying to resell, you want the resale value and one bedrooms don't appeal to a lot of people. But what if you are planning to rent the house out and you are in an are where many of the potential tenants are very low income? A one bedroom house might be perfect.

Consider the elderly person who does not get around very well, doesn't have any family left who will be coming over to stay, she wants a room to sleep in, a functional bath, a place to prepare her meals, and a place to spend her days. She doesn't want any uneccessary space that needs to be cleaned. She is on a fixed income and the lower the rent, the better. A one bedroom home that you can offer at a lower rent price may be just what the elderly single person wants.

Now why would we want to attract an elderly tenant? In my experience, the elderly tend to be responsible, keep their place clean, pay their rent, and overall are excellent tenants. Give a family with 4 kids or a elderly person or persons and I would probably favor an elderly tenant over the family every time. More likely to pay rent and less likely to tear the place up.

Consider the young single person who wants their own place and doesn't want to have a roommate or to live in an apartment. A one bedroom house will provide thier own private place and be more affordable over the 2 bedroom. And a single young person will take better care of the home vs having two roomates.

In all of our rentals that we have in inventory, our one bedrooms here in Kansas City seem to be fairly easy to rent and our tenants who move into the one bedrooms seem to take better care of the properties and pay their rent on time.

We currently have two one bedroom houses for sale right now. What makes them unique is that they are both side by side and are being offered as a package. I visualize this being a perfect matched set to rent to two family members who want to be close but not live together: sisters, mother & adult daughter.

One of the one bedrooms has the layout of a one bedroom, one small bath, a living room, decent sized kitchen, enclosed back porch, front porch, full basement, yard, and private driveway.

The other one bedroom is very similar to the first one except their is a huge extra room off of the bedroom, making this a 2 bedroom home if you want to use it that way. You do have to go through one room to get to the other. I could see this one being rented by a monther with a small child under 5 or a married couple using the extra room as an office or extra living room.

We are offering the two houses together as a package at $20,000. Both need about $20,000 to $25,000 in repairs, I would say less as the contractor can make one trip to work on both houses at once. All in you should have between $40,000 and $45,000.

With good credit you would be looking at an interest rate of under 6.5% (yes really, I have had several lenders tell me that investor rates for good credit people are under 6.5%). That would give you a mortgage payment of about $450 to $500 a month. Based on rental comparisons from www.socialserve.com I see that most section 8 landlords are asking about $450 a month for a one bedroom house. So if you rent one for $400 a month and one for $500 (bigger than a 1 bedroom) and you are getting $900 a month. Do the math, that's about $400 a month free and clear every month to bank for future repairs and profits.

Screen your tenants well, get one that will not move a lot and will not tear your place up (back to trying to find an elderly tenant) and you will not have to worry so much about a lot of cosmetic repairs between tenants.

Find out more, go to http://3689.goinetusa.com/property/index.cfm and look at 5216 and 5220 Norton. Then call Don at 816-523-4400!

Bankruptcy

Last night I took a break from the Iowa Caucus - boy I am glad I don't live in Iowa or New Hampshire- 3 years of presidential campaingers might drive me to drink.

Anyway taking a break from the latest polls and watching Law and Order on a cable chanel I saw an ad for a local KC bankruptcy attorney. The person in the ad had a bunch of bills and he wanted to get a bill consolidation company to help him. I am sure the guy was going to consolidate all his bills into his house - not the best move on the planet, but if he could still afford all the bills after the consolidation, probably a smart move rather than getting behind.

Then a new face appears - the attorney - "don't consolidate loans, declare bankruptcy and wipe out all your bills. Bankruptcy will not affect your credit that much and is really easy to live down.

Seems a like a shister to me. . . . .

Why Invest in real estate

Why invest in real estate?

Well I have read over and over again that their are more millionaires made in real estate that in any other field. I don't have the data to actually support this, but I can look at a list of rich people and almost all will be involved in real estate.

But why is it so lucrative?

Leverage - in real estate unlike anything else you can invest in, you can gain control a piece of property for very low money down and many times no money down. You can even profit from it with out every owning it with options.

For example: House worth $100,000 can fairly easily be purchased with $20,000 or 20% down and with good credit be purchased with $10,000 or 10% down. And if you are really creative in the way you acquire it, you could obtain control or ownership with no money out of your pocket - we will talk about no money down in a later post.

Appreciation - ok so the market is not that hot right now with actual depreciation. But if you look at historical averages, the property will increase in value in the long term - 5 years or more. Look at the historical appreciation in your area to see how the value of a property can increase.

Someone Else Pays the bills - This is where real estate really gets fun. You acquire a property with very little or no money down. You get a mortgage to pay for it over time. Then you go find someone to rent it from you. The rent pays the mortgage - someone else buys the house for you in essence. You may have a few months of vacancy here and there, but for the most part as the property is appreciating in value, your tenants are reducing the amount you own on the mortgage with their rent payment every month.

Cash Flow- if you are lucky enought to be able to purchase a property at a value and finance it at a payment that is lower than what you can rent the property for, you may find yourself with positive cash flow - rents coming in are higher than mortgage payments going out, you put money in the bank.

Be aware that you do need to put a significant amount in the bank for future repairs or you may end up with negative cash flow if you have to come out of pocket to fix a roof or replace a furnace.

Tax Benefits - all the while that the value of the property is appreciating and your tenants are decreasing your mortgage, well the government is letting you depreciate the value of the property as a loss. Some investors who have large incomes from other sources - say doctors or lawyers for example - they may choose to obtain a property that just breaks even so they can not have any cash flow income on the property and take depreciation on the property for a net loss against their other income. Then when they retire from their high paying job, their income will be very low, their property (ies) will be paid off and they can sell for income, or rent it out for a very high cash flow as they have no mortgage payment to make.

1031 Exchange - further if an investor has a property that they want to sell, they can sell and move the profit and equity to a different property through a 1031 exchange and not have to pay taxes. In theory you can acquire investment property and keep trading up through 1031 Exchange indefinitely and never have to pay taxes on the profit. But talk to your tax advisor on this one.

Hopefully you will get the idea of investing in real estate. If you need any help with any of these concepts or finding property, please visit with us at Tucker One Properties, we may be able to help you. You can find us on the web at www.TuckerOneProperties.com or by phone at 816-523-4400!

Kansas City Missouri - Rental Property Program

Calling all Kansas City Lanlords - you have from January 1st until January 31st to get all of your rental properties registered with the city.

To get complete details follow this link and for the form to register your property, go to this link.

I did make a call down to the city and if you have a property that is rented or you are currently attempting to rent, then it needs to be registered. But if you have an old rental that needs extensive repairs and you are not currently renting - say you boarded up till you can get to it - well I was told those do not need to be registered until we are ready to rent them. If it is vacant they will also want to do an interior inspection and may be able to use the Section 8 inspection.