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What All Kansas City Real Estate Sellers Should Know About Selling to Cash Investors

Kansas City Real Estate Leaders Podcast

Live from the KC Property Guys and KC Pier Studio in beautiful Kansas City owned over 200 fountains and more barbecue restaurants per capita than anywhere in the nation. It’s the Kansas City Real Estate Leaders Podcast, a show about industry leaders from the local Kansas City Metro market for Kansas City real estate related professionals and enthusiasts like you. Now here’s your host, Eric and Lucas Scheele.

Lucas Scheele:
How’s it going everybody? My name is Lucas Scheele and welcome to the Kansas City Real Estate Leaders podcast. I’m here today with my co-host Eric Shaley, how are you doing today, Eric?

Eric Scheele:
Good, good, thanks.

Lucas Scheele:
Good, good, good. So you want to tell the viewers what we’re going to be talking a little bit about today?

Kansas City Real Estate Leaders Podcast

Eric Scheele:
Well, this is the Kansas City Real Estate Leaders podcast, out of our studio here in Kansas City, Kansas. And we’re going to be inviting people here on a weekly basis, specifically related to real estate and industry leaders within the realm of real estate. We’re going to have everybody from developers to other co-investors to brokers, to real estate industry professionals themselves and talking about what they do and how they do it.

Lucas Scheele:
Awesome.

Eric Scheele:
At the same time, we, as cash investors and also KC Pier Foundation Experts here, we’re going to do some outtakes specifically with you and I, where we talk about the cash for houses industry and different regulations and things that we recognize on a week to week basis about the industry. I think it’s going to be a lot of fun. I think we’re going to have some great guests in here. We’re going to talk specifically about Kansas City and the regional market. If you’re a fan of real estate, if you’re looking to invest in real estate, if you’re just interested in real estate, which a lot of people are with HGTV and the excitement around that and how many people are sitting down at night and watching Joanne and Chip down in Texas flip houses.

Lucas Scheele:
Yeah, [crosstalk 00:01:56].

Eric Scheele:
Yeah, you bet. And all the different spinoffs of those outtakes. And anybody with a general interest in real estate and wants to get to know specifically the Kansas City market, we’re going to have people in here that’s going to talk about that on a week to week basis. I’m excited about that.

Lucas Scheele, Kansas City Real Estate Leaders Podcast:
Yeah, absolutely. And we’re excited to share it with you guys as well. The topic we have today is actually the fast cash industry. Now, what is the fast cash industry for you?

How It All Got Started

Eric Scheele:
Well, I mean that’s what we do. We’re housing investors and so we rehab and ultimately flip anywhere from 60 to 70 houses a year. We’ve grown quite a bit over the year since we started in 2015 so we’re going to spend some time today kind of just talking about where it all got started and how we look at things from a cash investment perspective.

Lucas Scheele, :
Yeah. And speaking of how it all got started, what was the thing that kind of interests you? What made you want to start getting into the fast cash industry with the real estate?

Eric Scheele:
Yeah, as a cash investor that that just kind of happened upon us. It was a passion. Real estate was a passion, I started … I’ve done many businesses in the past and I owned rentals and through rentals and fixing up some of those rentals over the years it just kind of led to the opportunity to invest in other houses and ultimately rehab them and sell them. We started doing that in 2015 and it just has gone from 11 to 20 to 30 to 40 now, 50 to 60, 70 houses a year over the course of time. It started as just a general interest like everybody else has and something that I just had the time to kind of dive into. And from there it’s a kind of led to what it is today.

Lucas Scheele:
Absolutely. It’s definitely a process going from start to finish with that, or just building from ground up, but why do you do the fast cash industry? What is something that drives you in this market?

Eric Scheele:
Obviously there’s the living aspect to it. So everybody does it to make a living and it’s nice to be able to do something that you love-

Lucas Scheele:
Of course.

Eric Scheele:
And we are able to do something we absolutely enjoy. My wife, Cheryl runs KC PG Realty group, which is the Realty group that sells all the houses from KC Property Guys. And so I get to work with the family and of course you, our running marketing and you get to visit houses on a weekly basis and you’re getting to-

Lucas Scheele:
Yeah, that’s a fun part of the job.

Eric Scheele:
You get a test. Yeah. You get to test your appetite and the future of investment as well. Even looked at a house up in Eudora today or-

Lucas Scheele:
Absolutely.

Eric Scheele:
… And throughout this week and you’re kind of diving in a little bit with interest and you get to see the Pier guys and how they do their work on the foundation side and the experts that we have working on houses throughout the Kansas City area. Just the passion and being able to do what we do, and there’s a part of me that really, as the volume is growing and the living in professionalism is there now, it’s now it’s become as much of just a need to go out there and help people. Because there’s a lot of people that have a need where the house isn’t fun anymore. It’s a deficit.

Lucas Scheele:
It’s a burden.

Eric Scheele:
It can be a burden in many cases, divorces and medical issues and foreclosures and distresses and job changes. The last thing that they have to worry about is paying a mortgage at the end of the month and that can be really tough for some people.

Lucas Scheele:
Absolutely.

Eric Scheele:
We’ve developed multiple, a lot of different options, not just cash for houses. I mean, that’s a big part of it. People tend to contact us specifically for cash, but there’s other options there. And we’re able to use our resources to do that. Helping people has developed over the ages too, as a big part of what we do. I used to say we make Kansas City beautiful and I think all investors that rehab houses do this. We make Kansas City a little bit more beautiful one house at a time.

Lucas Scheele:
Absolutely.

We Buy Houses for Cash in These Areas

Eric Scheele:
From deep in the inner city types of houses and dwellings to outskirt suburban areas, I mean, we’re working in Topeka right now. You’re within an hour’s drive, we can make Kansas City and the surrounding areas a little bit more nicer to see a block by block, house by house one house at a time.

Lucas Scheele, Kansas City Real Estate Leaders Podcast:
Absolutely. So you talk a lot about a growing volume and how you’re branching out into Topeka in Miami … Excuse me, Miami, Missouri, and a few other places. What are some types of mistakes that come along with the volume of houses and what have you learned throughout this process? I mean, I’m sure there’s quite … And there’s probably a little bit more to then you can say and explain right now. But I mean, just give us kind of a view of what comes from flipping houses.

Eric Scheele:
Yeah. Well, lessons come expensively in houses, and you learn through your pocket book. The mistakes you made cost real money, time is money when you’re, when you’re flipping houses. You got to be able to do it effectively, there’s cost of monies involved, there’s cost of lag time of going back to market and cost of monies for the funding to the contractors and the material, and so recouping all those costs is key. When the house gets delayed for whatever reason that comes expensively, there’s unforeseen issues and houses that come expensively, not knowing what that sewer line is like and all of a sudden it’s collapsed on you and you weren’t planning for it on the budget and you’ve got a $4,000 or a $4,500 bill at the end of the day that comes through inspections and resolutions.

Eric Scheele:
Then you learn from those mistakes. I tell everybody this … And this is really common knowledge and investment world. It’s you lose or win on the day that you buy the property. Know what you’re buying, know what you’re getting into, have your exit planned out, know your general timing at which you can be out of that property so you could avoid real expensive issues over time.

Lucas Scheele:
Got you. And with experiencing all of these issues, going back to volume, how are you able to keep up with all of this volume and there being issues? Say there could be issues with multiple houses that you haven’t seen. How are you able to keep up this volume?

Eric Scheele:
I don’t know, how do we keep it up, we just … We wake up and we fight the good fight. When you put your best foot forward and you give it 100%, you try to give it your A game and hopefully all things go well. But I think what’s sparked that volume is the ability, like I mentioned earlier, just to work with people. Back in the day when we first started, I wanted every house and I want it at my cost, not their cost. And that’s just not the case anymore. We tend to listen to people, we tend to listen to life scenarios. We tend to try to work with them as best we can. We’ve created actually programs aside from cash buying that specifically bring more equity back to the table.

Real Estate Leaders Podcast – Economies of Scale

Eric Scheele:
We got the scalability of economies of scale working in our favor that I can actually pass on to the homeowners. We’re one of Home Depot’s largest rehabbers on the Kansas side-

Lucas Scheele:
Oh, really?

Eric Scheele:
That relationship alone and the way that they treat us and the discounts that we get and their ability to actually deliver materials to the house and actually houses with us. It’s really a group effort and that convenience actually saves us time and money and those types of savings I can pass on to customers. We got KC Pier on the foundation side, so 30% of our houses have some type of foundation issue. This is Kansas, it’s got clay soils and those soils just wreak havoc on Kansas homes. The average investor that has to outsource a foundation work is looking at a five, a 10, a 15 to 20 maybe a $30,000 bill on extreme situations.

Eric Scheele:
Obviously us owning a company allows us to use that cost savings and I can provide those cost savings over to homeowners. We’re KC PG Realty group, there’s six realtors and my wife, Cheryl’s the team lead. Having those realtors in house has the ability to allow us to run some efficiencies that ultimately we can use to our advantage to help homeowners. I think the ability to provide variety outside of just the cash option, we’re not just a one stop shooter and a shot. There’s actually multiple options there for homeowners. And I think that plays well to helping us grow and if you go to Google and you look up the reviews on KC Property Guys, we got some really great stories. We’ve worked with some great people in the past and all that stuff kind of works in our favor that allows us to kind of continue to do the volumes that we’re doing.

Lucas Scheele, Kansas City Real Estate Leaders Podcast:
Absolutely. Obviously you’ve grown to a massive extent over the years and made yourself one of the higher marketers in the area and investors. Who are some key players or are there any key players that have helped you along the way kind of building up to where you are? Or who helped you get started?

Eric Scheele:
Yeah, well probably Home Depot, like I mentioned before, those guys are good. It’s Steve Norris and the guys over at Merriam, Home Depot specifically take really good care of me and in turn adopt our crews that we’re working with. My crews can go directly to Steve, Steve can take care of them directly with his team and I don’t necessarily have to be involved. I can kind of keep my focus on some of the higher level items. Check in with with Steve and the home Depot guys from time to time and keep those things running.

Eric Scheele:
Platinum Title does a lot of our title work and Margaret Arnold and Tiffany Stark out of Platinum Title and the ladies out there help us a lot because they know our game, they know what we do, they help us quite a bit. Mike Deering, our real estate attorney does a fantastic job and there’s just a whole bunch of key players that know what we do and how we do it and know that we’re out to help people and know our creative ways of thinking, of working with different houses and different situations and have the ability to support us through that.

Lucas Scheele:
For sure. For other people that are kind of wanting to get into the house flipping business, is the market changing right now, whether it be through regulation or just how deals are being created?

Eric Scheele:
Yeah. Oh absolutely. I mean, anybody can call themselves an investor, I’ve said that many times, whether you do one house or two house, five house, 10 house, 50 houses, everybody’s an investor and there’s lots of ways to do cash investments so you can even invest without cash. There’s a lot of those programs out there that say, “Hey, buy houses with other people’s money,” wholesalers that are out there. And some of those are kind of … Unfortunately seller beware types of things as well. You really need to know as a seller who you’re dealing with and check their Google reviews and make sure that the person that you are dealing with is legitimately going to buy your house and close on the date that you’re going to close.

Eric Scheele:
You got to kind of watch out for some of the models, sales and buying models that are out there-

Lucas Scheele:
Yeah.

Eric Scheele:
… As a seller, as a homeowner, but in terms of variety or regulation, there really is no real regulation out there. There is no housing authority that regulates how we do business in the cash market outside of … There’s no real estate commission per se, but there is old Google and Google speaks volumes. If you get a poor review, if you don’t live up to your reputation, if you don’t say what you do and do what you say, at the end of the day people know that.

Lucas Scheele:
Yeah, it’s out there.

Eric Scheele:
People recognize that. Absolutely. Regulation in the power of the people is a strong … Carries a strong message, right?

Lucas Scheele:
Absolutely.

Our Real Estate Business Is About Taking Care of People

Eric Scheele:
And we try to make sure that we take care of people as much as we can.

Lucas Scheele, Kansas City Real Estate Leaders Podcast:
Yeah, you got to take care of people because in the end the people take care of you in return. What’s the future hold for KC Pier and Kansas City Property Guys as a whole? What do you guys have up and coming?

Eric Scheele:
Yeah. I don’t know. Keep fighting the good fight. I said that earlier, just wake up and keep doing it. We always look for different ways to reach out to people, let them know the services that we have. We’re always … KC Pier is offered both on the public side as well as our private houses. KC Pier markets itself out to the general public as well. We just want to make everyone aware that this is what we do and we’re there as a resource.

Eric Scheele:
Selling for cash as a house away from the traditional real estate is trending. I mean it really is. It’s becoming more and more acceptable. And when we first started in 2015 I mean it was … You really kind of had to dig up your leads and you still kind of do. I’m amazed at how people find out about us and through channels and are just experimenting and exploring the options outside of the traditional real estate and put the sign in the yard and sell it through the MLS. I mean that definitely is trending and evolving kind of as we as we speak. As a company we recognize that and we’re trying to make sure that we take advantage of the opportunities that we have.

Lucas Scheele, Kansas City Real Estate Leaders Podcast:
Awesome. And then you were mentioning there’s always other ways than just straight cash buying a house. What are a few ways that you guys, as KC Property Guys are able to work with people that are in these situations?

Creative Real Estate Solutions

Eric Scheele:
Yeah. If you go to our website, it says Creative Real Estate Solutions, and so that’s been developed, that tagline did not start there.

Lucas Scheele:
Yeah. And what’s your website?

Eric Scheele:
It’s kcpropertyguys.com.

Lucas Scheele:
Awesome.

Eric Scheele:
Of course. Right? You go there and it’s Creative Real Estate Solutions. We didn’t start with that tagline but over time and again listening to people and working with situations and using the resources that we have. We just kind of create out of the box solutions that take advantage of the resources that we have. Different types of programs, I can’t necessarily name specific ones, but there’s always, almost always when we talk to people more than one option available and each option can be exercised to bring more equity back to the table. The biggest difference is how much time do you have and what’s the cost of cash? Because the time does come at a cost. I mean you can sell a house literally in 15 minutes after meeting me if you want, but it does come at a cost because there’s a cash involved. I’m paying the realtors and I’m ultimately fixing up the house, but if you’re looking for more equity, absolutely. That’s where the creative side comes in and we can create different solutions for you as long as you have the time to make it happen.

Lucas Scheele:
Absolutely. If you guys are actually looking for some creative real estate options or stuck in a house where it’s just kind of becoming a burden, go to kcpropertyguys.com and just get in contact with them. How can people contact you? What’s your guys’s info?

Eric Scheele:
Yeah, no, absolutely. You’re right, kcpropertyguys.com you can go on there, there’s an easy form that you can fill out. We always ask people to tell us your story, we want to get the background of what you’re doing and maybe why you’re doing it, what you’re thinking or what you’re trying to do or what you’re kind of experimenting with. And then we’ll just quickly be in touch with you and we’re going to set up a time to walk the house, kind of give the nickel tour is what I tell people. Let’s take the nickel tour and let’s just kind of talk it out and try to find that solution that’s going to fit you guys best.

Lucas Scheele:
Great. Well thank you so much for coming on the Kansas City Real Estate Leaders podcast today.

Eric Scheele:
Yeah, you bet.

Lucas Scheele:
If you guys are trying to get into contact with them for some creative real estate options, feel free to reach out to them on kcpropertyguys.com or just give them a call at (913) 730-0086 and we’ll see you guys on the next episode. Have a great day.

Thanks for joining us this week on the Kansas City Real Estate Leaders Podcast. Please support all things local to Kansas City and hey, be sure to subscribe and share our podcast on Facebook and LinkedIn. This has been a KC Property Guys production. kcpropertyguys.com.

Check out the rest of our Kansas City Real Estate Leaders Podcast episodes here. If you’d like to sell your house get in touch with us here!