Denny Spring, Eudora, has 32 townhomes for sale.

The asking price for the 16 duplex buildings in Stone Creek subdivision is $4.576 million, said Mike Chumley, a Realtor in the Basehor Remax office.

Chumley said he realizes that if the units are sold as a package, that it’s likely the buyer would be an out-of-town investor.

“It’s not every buyer that has $4.5 million sitting around to invest,” Chumley said. “The buyer we’re looking for is someone that has sold a piece of investment property and has some 1031 exchange money that they’ve got to put into another piece of property.”

Section 1031 of the U.S. Internal Revenue Code allows investors to defer capital gains taxes on the exchange of like-kind properties.

The two- and three-bedroom apartments range in rent from $700 to $895, and about 90 percent of the units have tenants.

Spring, who owns Spring Properties with his wife, Janet, said he built the townhomes to last. The couple also own townhomes in Eudora.

Spring said he takes care of the mowing and replaces trees if they die. When a tenant moves out, he, his wife and even his 73-year-old mother who lives in Eudora repaint the apartment and have the carpets professionally cleaned.

He said he designed the apartments to be pleasing to renters, as well as durable. For instance, the kitchens, living rooms and master bedrooms have vaulted ceilings. The living room window is topped by a half-circle window. Walls throughout the units are textured. And each unit has a double garage.

This helps to attract good renters, said Spring, who screens applicants by doing background checks.

“The biggest things we ask our tenants is just respect your neighbors and we can get along great,” Spring said.

Spring said Tonganoxie’s rental market is tough, and he’s had to lower the rent and offer incentives. On a three-bedroom apartment, he offers the first month’s rent for free, and on a two-bedroom, the first two weeks rent is free.

“I’d say in the last two to three years I feel that we’ve kind of run past our tenant market,” Spring said of the Tonganoxie rental market. “I think we’ve got more buildings than we’ve got tenants.”

Spring estimated it’s going to take another two or three years for the Tonganoxie rental market to level out.

And, he said, with lower interest rates in recent years, people are moving out of rentals to buy homes of their own.

Spring said Tonganoxie’s housing is reasonably priced.

“For some reason there always seems to be a money difference between Tonganoxie and Basehor,” Spring said. “I’ve had different builders tell me you can go to Basehor with the same house and you can get about $10,000 to $15,000 more for the same house.”

Kathy Bard, assistant city administrator, said she has heard complaints about the number of duplexes and townhomes built here.

But she said, looks can be deceiving.

“I wish people would understand that just because it’s a multi-unit, there’s more than one home on one property, it does not necessarily mean it’s rented property,” Bard said.

Bard said it’s not uncommon for a family to buy a one side of a duplex and for another family to buy the other side. She said about half the duplexes in Tonganoxie are owner-occupied.

The single units, she said, often sell in the $80,000 to $100,000 range.

“The housing industry is changing,” Bard said.

Go ahead

Despite what he said was a glut of duplexes and townhomes, Spring expressed confidence in the area’s real estate market. Once he sells his Stone Creek townhomes, Spring plans to build a townhome community, one that might be complete with a neighborhood swimming pool and tennis courts. He said he’d be game for building that in the Tonganoxie area if the opportunity arose.

“Tonganoxie is probably one of the best places as far as raising a family,” said Spring, who has two grown children. “I see they’re doing improvement on their schools, they’re making them bigger to accommodate more students.”

And Spring said, the town’s still-rural atmosphere is a plus for young families who appreciate green space.

Looking to the future, Spring said if a turnpike entrance were constructed south of Tonganoxie, commuters will be much closer to their Kansas City, and Lawrence jobs.

“In 30 minutes you’ll be pretty well anywhere in Kansas City,” Spring said. “What can you do to beat that.”

Ahead of the market

Chumley, too, has faith in Tonganoxie’s real estate market.

“There is, in certain areas, a lot of inventory out there,” Chumley said. “There are subdivisions in Basehor that have homes that have been finished for a year that are sitting for sale.”

It could be the area’s a little ahead of the market.

“Once the building slows down and the people fill in and everything gets full, I think property values will equilibrate and things will become a little more stable,” Chumley said. “I think real estate is always a good investment, if you’re a smart buyer.”

Chumley said buyers should remember that they don’t make money on real estate when they sell it.

“Your money’s made when you buy it,” Chumley said, “It all depends on how you buy.”

In the Tonganoxie and Basehor area, he said, homes that are priced from $170,000 to $200,000 seem to sell the quickest.

“The Basehor and Tonganoxie communities have not traditionally been communities that support $250,000 homes,” Chumley said.