Investor/Hard money lender · Scottsdale, AZ · Member since 2014 · 60 posts · 13 votes
I am strongly considering purchasing in Kansas city. I live in Phoenix, Arizona. Does anyone have any feedback or experience that they can share with regard to Kansas city rentals?
@Austin Muck your question is very broad as a "more desirable area to renters" is a relative term with lots of variables. For example, if you are wanting section 8 renters, then you will be looking in a different area then if you want single professionals, or say, elderly tenants.
I think what you are asking, is where should you be looking to get the best cash flow without being in the worst parts of the city. If this is what you are asking, then your assessment is correct. The $50k-$100k range is the sweet spot in Kansas City for the best cash flow outside of the inner city. A good, general rule, is to avoid any house in the KC, MO school district. Another general rule is to stay outside of the I435 loop when you are looking south of the river. Raytown, Independence, Grandview, Blue Springs, Raymore are all good areas to look into. Anything north of the river is also usually a good area.
Feel free to reach out to me if you need more help.
I own 10+ units in KC. It's a great market if you can avoid the allure of the high risk/high return properties. I do own a few of those properties and they have done well, but the best performers for me have been the units that you can buy between 50k and 65k and rent out for 800-900. I put a loan on them and have been realizing 20%+ cash on cash returns. I have been able to buy properties below market value in cash and am able to cash out most of my money with a local portfolio lender.
Best of luck to you and I don't think you can go wrong if you do your research first in KC.
Kansas city is great if you can get a good property manager. My first property manager is doing real estate and property management and the property management side suffers. I am now getting a new property manager. I like Tyler's approach also. My first house was in the lower income area. I will move up from there.
Wouldn't be buying in KC for appreciation. As with most of the mid-west if you buy right you can get "built in appreciation"." The areas I buy in are generally built in the 70's so they are typically not development areas although I know there are some re-development areas really close. I get most of my deals through a wholesaler and haven't done any through an agent up to this point.
My approach and the numbers I look for are exactly the same as Tyler's. About a 1.5% purchase to rent ratio. I have 4 properties and started just about a year ago. I'm buying foreclosures, rehabbing and have a property manager. It's going very well so far.
I am a local KC Wholesaler/ Investor. Let me know what you may be interested in as we have frequent opportunities for you to get engaged in the KC area.
I have managed properties in Kansas City for several years. I have had clients make lots of money in Kansas City and we really do have a strong and diverse rental market. It all depends on where you buy and how involved your property manager is. Please let me know if you have any specific questions about the area and market.
If you're goal is cash flow, then Kansas City is a great market. What a lot of people don't realize is that KC has a strong and diverse economy. Kansas City has had the 2nd highest growth in technology start ups in the last 10 years and the highest growth in information technology which is why it is now being referred to as "Silicon Prairie" The Cerner Corp has broken ground on a $4.5B multi use office complex on the site of the old Bannister Mall on the east side that is expected to create 16,000 new jobs in the next 10 years. They are already hiring 300 new employees a month in the area. Next will be the Oxford on the Blue bio science corridor that is in the blue print stages. Here's an article on the Cerner project.
I own 10+ units in KC. It's a great market if you can avoid the allure of the high risk/high return properties. I do own a few of those properties and they have done well, but the best performers for me have been the units that you can buy between 50k and 65k and rent out for 800-900. I put a loan on them and have been realizing 20%+ cash on cash returns. I have been able to buy properties below market value in cash and am able to cash out most of my money with a local portfolio lender.
Best of luck to you and I don't think you can go wrong if you do your research first in KC.
Thanks. I had a post I did on BP about 6 mos ago trying to find one long distance out of state landlord that has owned lower cost rentals in the Midwest for a long time, say at least 7-10 years. And I did not find one person to step up. I'm really curious how these rentals work out over the long haul for people who live in expensive coastal areas and buy the older lower cost midwest houses thousands of miles away. If they work about to be a good cash flow investment providing good income over the long term. You seem to hear abut a lot of people that have been doing it a few years, but rarely anyone 10 years or more.
I think that's because 10 years ago the resources weren't as readily available online. I think with technology out of state investing has become easier to do and more people feel comfortable with it. I know somebody who lives out here who has a couple of rentals in the Midwest and has had them over 10 years and has done really well with them. They lived there before moving out here to California though.
Somebody that bought 7 years ago would have bought right before the crash so I don't think you will have a whole lot of people singing praises about the equity they lost. So there are other factors involved on why you might not be getting a whole lot of people stepping up.
I think that's because 10 years ago the resources weren't as readily available online. I think with technology out of state investing has become easier to do and more people feel comfortable with it. I know somebody who lives out here who has a couple of rentals in the Midwest and has had them over 10 years and has done really well with them. They lived there before moving out here to California though.
Somebody that bought 7 years ago would have bought right before the crash so I don't think you will have a whole lot of people singing praises about the equity they lost. So there are other factors involved on why you might not be getting a whole lot of people stepping up.
Just my opinion.
There were definitely a ton of people from expensive coastal areas investing all over the country 10+ years ago and a lot of the same resources were available then. You still had a lot of the same Internet tools in 2005. I know Marshall Reddick and others have been promoting out of state buying for 20+ years in SoCal. The key is also someone who has not lived there before, I'm talking someone who just picks a city and starts investing there. I'm not saying it can't be done effectively, I just didn't have never personally met anyone who has owned the low cost Midwest houses from a distance over the long term. I would love to talk to some. Over the longer term you get more of a true idea of what the costs will be like, turnover, fixing up properties, evictions, vacancies, etc... And what it's like dealing with this all remotely. For the first few years you can kind of be in the "honeymoon stage".
I have to say this is an excellent discussion. I'm in the same boat, and have been wanting to get in real estate in the KC market for years. I missed the boat on an FHA, as i've already purchased a home for my current family. So right now i'm trying to find the right lawyer, realtor, and PM for the area.
Would any of you who own in KC mind sharing general parts of the city that seem more desirable to renters? Based on running some of my own numbers, I agree that the 60k-90k range SFRs seem to cash flow best, but I would like to avoid investing in less desirable locations.
@Austin Muck, if you search previous posts here on BP you'll find investor-friendly agents here in KC. I'd suggest you reach out to them, pick the best one, and they can help you think through your goals, risk tolerance, and preferences. That will allow you to narrow down your criteria and target neighborhoods.
There's nothing like a real conversation to build your success faster! A great agent is worth their weight in gold.
Rob Cee
My theory is that you never hear from the out of state investors is because they are passive they are off doing better things than lurking on the forums. They are drinking margaritas or kombucha on the beach of that sort.