Mixed Use 8 Units 2021 Build Building in Kansas City

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Overview

  • Updated On:
  • March 24, 2022

Update Mar. 24 2022:

  • Lower Price Option: This building is near completion, and we believe one completed Or near completed builder will significantly increase price! So securing a lower price is still an option!
  • It is in the buyer’s best interest to get under contract ASAP, so we can start activating the pre-rental plan and start building a tenants waiting list, so we can have tenants ready as soon as building closes.
  • Builder’s update: mainly setback was related to the underground utility line that created a significant delay. It is now on track to be addressed. As a result, some other tasks could not have been done, such as putting asphalt.
  • Delays are also caused by issues w/ material’s supply-chain delays, labor shortage, and labor sickness.
  • Target completion is May-June 2022.
  • Should be ready in 2-3 months.
  • Check the details about group-purchase.

 

About this opportunity

 

 

  • 2021 built – the building should be completed Feb. 2022 May/June 2022 (within 2-3 months).
    • Simply Do It CEO, Dani Beit-Or, visited the site and the building during Oct. 2021 – site visit videos below.
    • Secondary site visit by SDI‘s local team was done on Jan. 19 2022.
  • The building has 5 residential units on top and 3 commercial spaces on the lower level.
  • Accessing the residential and the commercial are on opposite sides of the building, so they don’t “interfere” with each other.
  • This is a commercial building and will require a commercial loan – we have terms from one lender listed below.
    • The buyer is welcome to use his or her choice of lender.
  • As it sits, the property is approximately 3 acres of mixed-use, with the potential to add 2 more buildings similar to the current one.
  • The total Purchase Price with all the ground is $1,777,000.
    • It may be possible to purchase the building and its immediate area (lot) without the entire 3 acres and to get A price reduction, See photos below (contingent on city approval of split). The estimated reduced price is $1,627,000.
  • Cashflow comparable: this property has the potential of generating ~2x the cash flow compared to our typical SFH investment.

 

Unique opportunity fee: in addition to your regular transaction fee (if you are not sure what they are let us know), this opportunity carries an additional Purchase Fee to Simply Do It $9,500 at closing – paid directly to Simply Do It after you close.

 

Group-Purchase

If you would like to consider investing in this opportunity BUT do not want to do it by yourself OR for any reason would rather be a part of a group that buys the entire project together, as a group, – let us know. Simply Do It assists its investor to get organize around a common interest or an investment opportunity. Feel free to speak with us for more about this investment option and if this is even available to you.

 

Units and Rents

All units are vacant EXCEPT one commercial unit – a national financial advisors firm leased it for $1,900 per month (lease is executed and awaiting occupancy), their space is built, and (almost) ready for use.

Level Unit Spec Projected Rent
Upper – Residential Suite A. 1/1 $1,150
Upper – Residential Suite B. 2/2 $1,450
Upper – Residential Suite C. 3/2 $1,750
Upper – Residential Suite D. 1/1 $1,150
Upper – Residential Suite E. 2/2 $1,450
Lower – Commercial Suite A. $1,900*
Lower – Commercial Suite B. $2,400
Lower – Commercial Suite C. $2,250
Total Monthly $13,500
Total Yearly $162,000

*Pre-leased at $1900/mo.

 

Leasing Plan

  • Since occupying 5 residential units and 2 offices (1 is already leased) may take some time, we have factored in 4 months of expenses ($10,000 x 4) into the costs of the building as a way to mitigate the vacancy.
  • Simply Do It already spoke to its local property management co. about ways to start pre-leasing these units before closing (before the building is even completed). There are a few ways how to accomplish this and we are working with the local teams to put the best plan in place.  The goal is either to have tenants move in before a buyer even closes OR have tenants ready to move in as soon as closing takes place.
    • Note: the building must receive an occupancy permit before any tenant can move in.

 

 

Financial Analysis

Purchase Assumptions My Offer Per Door
Asking $1,777,000 $222,125
Suggested offer (low) $1,627,000 $203,375
Suggested offer (high) $1,627,000 $203,375
Suggested offer (options) $1,777,000 $222,125
Land Value (%) 25%
Building Value (%) 75%
 Market Value (after improvements) $1,777,000 $222,125
 Improvements (lower) $2,500
 Improvements (upper) $4,500 $3,500
 Closing Costs $17,770
 Mortgage Costs $17,770
 Other Fees At Closing $51,465
 Total Cost $1,867,505

 

Financing Assumptions
 Down Payment (%) 30%
 Down Payment Amount $533,100
 Financed Amount $1,243,900
 Interest Rate 5.00%
 Mortgage Term (Years) 30
 Monthly Mortgage Payment $6,678
 Cash Outlay (Total Out of Pocket) $623,605

Financial Assumptions Monthly Yearly %
Rent (upper) $13,601 $13,950 $167,400
Rent (lower) $13,253 $159,030
 Property Tax Rate (Approx.) 1.42%
 Property Taxes $700 $8,400 5%
 Insurance $400 $4,800 3%
 Repairs $400 $4,800 3%
Variable-Cost PM 7.2%
Property Management Fee $979 $11,751 7%
 Leasing Fee 68% $382.5 $4,590 3%
 HOA $0 $0 0%
 Vacancy Rate 7.0%
 Total Fixed Expenses $3,745 $44,944 28%
 Total Expenses (Fixed + Mortgage) $10,423 $125,075 77%
Financial Analysis / Deal Attractiveness
Years: 5 10 15 20
 Cap Rate 6.9% 7.9% 9.0% 10.2%
 Net Cash Flow $214,834 $493,728 $843,349 $1,271,060
 Equity Increase $486,635 $1,085,481 $1,822,770 $2,730,962
 Total Gain $701,469 $1,579,209 $2,666,120 $4,002,022
 Average Cash Flow/Year $42,967 $49,373 $56,223 $63,553
 Average Cash Flow/Month $3,581 $4,114 $4,685 $5,296
 Average Gain/Year $140,294 $157,921 $177,741 $200,101
 Average ROI 112.5% 253.2% 427.5% 641.8%
 Annual ROI 22.5% 25.3% 28.5% 32.1%
 Projected Property Value $2,161,992 $2,630,394 $3,200,277 $3,893,626

 

 

 

 

Who can buy or consider buying it?

  • Property can (and probably should) be purchased in the name of an entity (LLC) – buyer’s choice.
  • A buyer can be an individual or a group of individuals as one entity (LLC) – if you want to group a few of your friends into this transaction that can be done.

 

Mortgage terms

  • A newly establish LLC is OK

Here is possible mortgage info based on a conversation with a local bank:

  • This is considered a non-owner occupied
  • Terms:
    • Downpayment for a mixed-use: 20% (15 yrs amort.) to 25% (20 yrs amort.)
    • ~4% interest rate
      • The more is put into the escrow account the rate can improve
    • Fixed for 7 years (with either a 15 or a 20 amortization schedule)
    • 3 years pre-payment penalty (3%, 2%, 1%, 0%)
    • At 7 years renewal is needed to new rate or refi – after 7 years it is pretty much a refi process
  • Estimated costs/fees based on a $1.7MM price:
    • 1% origination fee
    • title fee 1.5%
    • Appraisal – 3000-4000
    • Environmental: $300
    • Survey: not required (most likely builder has one already)
  • Borrower qualifications:
    • Guarantors that can float the property’s expenses
    • Assuming PITI+costs is $14k/month
    • Will ask for 6 months upfront to be escrowed (negotiable) – normally to be escrowed
    • If multi-member LLC: full guarantees from all members – will require to be an underwriter
    • LLC can/is the borrower
  • Loan timelines:
    • Underwriting takes 3 weeks
    • Appraisal and titles can take 45-60 days
      • Can be done an As-complete appraisal

 

Open Item/s & Questions

  • What does the warranty cover and for how long?
    • Builder: “Warranty is essentially bumper to bumper for 1 year.”
  • Are you still on track to finish by the end of the year?
    • Builder: “To be safe I’d like to say February 2022. With Thanksgiving and Christmas in the near future, along with the new year, our trades and suppliers seem to always slow down so I’d feel more comfortable allowing some extra time.”
  • Do you have a market rental research you can share w/ us?
    • Builder: “I can share the lease in place for one of the units as well as pull some other information. May take a little time to compile, but the data is out there that we can help get.”
  • Do you have a recommended lender for such a building we can explore terms? –
    • Builder: “Yes we can make the intro”
  • Since this is property is not ready yet, when do I start making payment?
    • At offer acceptance, you will need to send a deposit or earnest money. The next time funds are needed is when closing takes place.

 

Site Videos – taken Oct. 4th 2021

 

 

 

 

 

 

Commercial Floor

 

 

Site Visit Jan 19 2022

Address: Kansas City
State/County:
Zip: 64080
Country: United States
Open In Google Maps
Property Id : 38765
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walkscore89 / Very Walkable more details here

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