Cash Investment in the St. Louis Real Estate Market
A real estate cash-flow model approach, in most depreciated areas of St. Louis, offers the potential for excellent investment returns. In this part of the plan you will be purchasing homes in lower income areas of St. Louis. The goal will be to acquire properties between $12,000 and $21,000, invest around $10,000 in renovation, pay a fee to KVG (see below), turn around and rent the renovated unit for between $700 (2 bdrm) and $800 (3 bdrm). KVG can locate the properties, secure the deals, handle all phases of renovation and inspections, lease and manage the property. Prior to placing a contract to purchase, you will receive a full cost break-down for the renovation for your approval.
RISKS
These properties are long-term holds in most cases. You can refinance out your money if there is a need, but the likelihood of the properties selling on the open market for what they are worth is not as likely in this economy and income bracket. Another risk with these properties is tenant issues such as turnover. We openly accept Section 8 tenants to help eliminate this concern. Section 8 tenants are pre-screened and must follow strict guidelines in order to receive assistance.
UPSIDE
Strong margins between cost and rental income. Along with the rental income benefits, you will also gain excellent tax write-offs and the immediate appreciated value of your asset.
Rentals, Tenants, and the St Louis Housing Authority
In many cases with residential rental properties, KVG recommends accepting Section 8 vouchers. This ensures that you, the owner, always get paid on time or at least a portion of it. Tenants with Section 8 are easier to hold accountable should they cause damage to your property during the duration of their lease.
If you wish to rent your home to a market rate renter, KVG will perform a full background and credit check, and require three references and three months of paycheck stubs from each adult member in the household. This service is free to the owner and paid for by the tenant’s application fee. No tenant is ever approved without owner consent.