Real Estate Purchasing in Expanding Markets Strategy
Real Estate Purchasing in Expanding Markets
Strategy

The Management Group will initially be purchasing single and multi-family homes, to begin with, in the Kansas City, KS/MOarea. This does not preclude investments in other areas. Kansas City, at this time, provides a very unique opportunity. See the Section Current Kansas City Real Estate Climate for more information. Each property will be in its own LLC with The Management Group acting as the managing entity. Investment goals will vary by property but will fall into one of the following categories.

1. Single family homes for rehabilitation and resale

Kansas City, MO currently sponsors a federal program called HOPE. This program provides lower income families with a 70% guarantee on the purchase of a home. A local bank supplies the other 30%. If the family keeps the loan current for three years, the federal portion is forgiven and the family only has the 30% loan left to pay. Houses in the program must met certain minimum habitability standards. Sales price of a home cannot exceed $52,500. Many homes in Kansas City are selling for under $25,000 and require $2,000 to $15,000 in rehabilitation. There is a waiting list of over 300 people for this program.

More expensive homes are also available. Many are in areas that are currently under renovation and the homes in the area need paint, yard work and other minor cosmetic changes to dramatically improve their value. Some 4Plexes that are in the area are actually renovated homes. These could be converted back to homes (with extra bathrooms included!) and sold as single family homes at a premium.

2. Single family homes - income

These homes can also be rented out and used as an income property.

3. Multi-family homes for rehabilitation and resale

Kansas City has many older homes that have been converted to six or twelve plexes and many apartment buildings that have been in dangerous and economically disadvantaged areas. Over the last 18 months the city has demolished over 2,000 apartment units in the area and has over 1,000 marked for demolition in the next few months. This has created a housing shortage with vacancies under 4% in the entire area. As the worst areas are destroyed, the properties near them are still undervalued and can be purchased inexpensively, rehabilitated and sold at much higher values. This properties will be much more valuable as the urban blight areas are further reduced. An example, on one block there are three sixplexes (these are properties I visited) one has had a complete cosmetic rehabilitation, the second complete inside only cosmetic rehabilitation, the last has had four of the six units rehabilitated on the inside. The first is selling for $120,000, the second for $114,000 and the last for $76,000. The estimated rehabilitation cost for the third building is under $20,000. For an investment of $34,000 (20% down plus the rehab) the profit would be about $17,000 ($120,000 less purchase price and rehab, less 6% broker fee to sell.) This is a 50% return on investment in about two months.

4. Multi-family homes - income

These homes can also be rented out for income property.

For a copy of the full proposal please E-Mail your name and address to us. Ask for the Purchasing Proposal.

or write:
Kaim Chigh, L.L.C.
PO Box 1417
Golden, CO 80402
or call:
(888)323-1488

Return to the Executive Summary.