Investor · Los Angeles, CA · Member since 2008 · 25 posts · 6 votes
I have yet to land my first 'buy and hold' all cash deal and I am looking at Kansas City, MO as an investment option. I am from Southern California and can't really buy here for obvious reasons.
Based on the research I had done so far, Kansas City is looking like a good market to invest in. Growing population, low unemployment rates, good school districts, low crime rates, etc.
My questions are:
1. What are your thoughts on the housing market in Kansas City and its viability for a buy and hold investment strategy?
2. What zip codes would you advise that I avoid in Kansas City?
Investor · Olathe, KS · Member since 2014 · 88 posts · 58 votes
10y
@Ejy Mirjan, your decision to invest in KC is very solid. I lived in San Diego for 10 years and found nothing that cash flowed... or the IRR was so thin it wasn't worth the heavy investment.
While I was in San Diego 8 years ago, I bought 2 properties in Huntsville, AL and still hold one of them. However, I "traded in" one of those properties, reinvested in KC, and tripled my cash flow.
@Account Closed's advice I agree with in terms of targeting, although I tend to migrate towards B-grade properties as long as I buy very low and do my own rehab. Otherwise, his strategy and advice are wise.
@Andrew Syrios is another very successful investor you may want to touch base with. His family started in Oregon and they have done literally hundreds of buy-and-hold deals here in KC which they refer to as "Ground Zero" for buy-and-hold residential real estate. Look up his blogs here on BP.
Investor · Kansas City, MO · Member since 2010 · 239 posts · 110 votes
10y
Hi
@Ejy Mirjan I am located in the Kansas City market and there are usually many out of state investors such as yourself looking to buy and hold. Personally I own rentals and think KC is great buy and hold location.
Area wise I tend to stay in what I refer to as a "C" area on a grading scale F - A. C areas tend to be more blue collar rental neighborhoods not a lot of heavy crime. Cash flows are usually very good. You can generally be "all-in" for around $50K and that house should be a 3 bed / 1.5 bath / 1-2 car garage with a basement that would rent around $750. Some investors choose B or A areas, other choose D-F areas (where you can buy a house for $5K) but I certainly wouldn't recommend an out of state investor doing a D-F area in my own personal opinion anyway.
KC metro is a huge area. Missouri, Kansas, and all of the suburbs so there are a lot of locations around. Best to educate yourself on areas and you might search back through threads here on BP to do so too.
Real Estate Broker / General Contractor / Property Manager · Kansas City, MO · Member since 2010 · 395 posts · 425 votes
10y
@Ejy Mirjan, as JJ said, the KC market is a big area with lots of possibilities. You need formulate your investment strategy and goals before you do anything else as this will help you determine what areas in KC you want to look for properties.
You have already established that you want rental property, so here are a few more questions to ask yourself:
1 Do you want SFR (single family residential), multi family, or commercial (commercial tenants)?
2 How much money do you have to invest and how much money can you borrow (if you want more money)?
3 Are you more interested in cash flow or long term equity?
4 How much risk do you want to take? This is probably the hardest question for most investors to answer. We all want the best returns, but with high returns usually comes higher risks. You need to determine if you are a big risk taker or a little risk taker. Think about your financial situation when you answer this question. Do you have the financial means to recover if your investment is a bust? Do you need income from your rental properties to pay your bills? Are you simply looking for a way to reduce your taxes?
If you can answer these questions, I can better tell you what areas of Kansas City you need to be looking at.
Investor · Olathe, KS · Member since 2014 · 88 posts · 58 votes
10y
@Ejy Mirjan, your decision to invest in KC is very solid. I lived in San Diego for 10 years and found nothing that cash flowed... or the IRR was so thin it wasn't worth the heavy investment.
While I was in San Diego 8 years ago, I bought 2 properties in Huntsville, AL and still hold one of them. However, I "traded in" one of those properties, reinvested in KC, and tripled my cash flow.
@Account Closed's advice I agree with in terms of targeting, although I tend to migrate towards B-grade properties as long as I buy very low and do my own rehab. Otherwise, his strategy and advice are wise.
@Andrew Syrios is another very successful investor you may want to touch base with. His family started in Oregon and they have done literally hundreds of buy-and-hold deals here in KC which they refer to as "Ground Zero" for buy-and-hold residential real estate. Look up his blogs here on BP.
Real Estate Broker / General Contractor / Property Manager · Kansas City, MO · Member since 2010 · 395 posts · 425 votes
10y
@Ejy Mirjan, I have seen some investors use a spreadsheet and actually calculate a numerical risk factor based on several categories such as, location, age, type, construction, and population stats, just to name a few. I personally feel that this is overkill and truly a waste of time since risk is a relative term that can't be quantified by one, absolute number.
I recommend a much more simple strategy that works very well for Kansas City's markets.
Basically, I look at 3 things:
1) Location
A) Inner city - Highest Risk
B) Midtown (areas surrounding the inner city) - Medium risk
C) Suburbs and surrounding cities - Lowest risk
2) Property Type
A) Single family homes - Highest risk
B) Multi Family - Medium risk
C) Commercial (office space/ retail space) - Lowest risk
3) Property Condition
A) Needs major work - Highest risk
B) Needs minor work - Medium risk
C) Needs no work - Lowest risk
So, based on this formula, you can see that if you were to choose a house in the inner city that needs a complete rehab, you would be taking the highest risk. If you were to choose a commercial property that is 95% occupied and located in the suburbs, you would be taking the least amount of risk.
Obviously I am generalizing about a lot of things here, but this is a good place to start.
Advertising · Queens, NY · Member since 2015 · 27 posts · 12 votes
10y
@Ayad Mirjan any update? I'm also an out of state investor looking for buy and hold properties in the KCMO area. I have a slight upper hand since I grew up in the area but it's been a good 12 years away so I have some catching up to do. I'd love to keep in touch and see how it goes for you. Ideally I'd like to own a place in the next few months but I'm stuck in window-shopping mode...
Investor · Los Angeles, CA · Member since 2008 · 25 posts · 6 votes
10y
@Elizabeth S. good developments so far. KC is where I will be making my move. I like the numbers the market appears to have at this point. I was able to connect with a few people over the phone in the past week as well and that was also very helpful. I will be visiting KC in January and meeting some of the investors who showed interest in partnering to work on a few deals together. At this point I have my work cutout for me.
Let's stay in touch and see how we can help each other out.
Investor · Chula Vista, CA · Member since 2015 · 44 posts · 12 votes
10y
@Ejy Mirjan Good luck with everything. I know when I started looking in kcmo in mid of last year it was almost overwhelming being from out of state (San Diego). Make sure to look at local taxes as they can very quite a bit from place to place thus affecting cashflow.
Los Angeles, CA · Member since 2016 · 18 posts · 0 votes
10y
Hi folks:
I'm from Los Angeles and also interested in investing in Kansas City; buy and hold, with an emphasis on cash flow. Are there any generalizations that could be made about the profitability/difficulty of SFH versus multi-family investing in Kansas City? Chris Dawson makes some great general points, but I was curious if anyone else had anything to add.
Investor · Los Angeles, CA · Member since 2008 · 25 posts · 6 votes
10y
@Prab C. I have since bought two single family homes north of the river in KCMO. One is already rented and cash flowing at a rate of 10% and the other is currently under renovation with a target of being on the market for rent by the end of the month. Shooting for a similar return on investment.
Investor · Los Angeles, CA · Member since 2008 · 25 posts · 6 votes
10y
@Prab C. I did not go with a turnkey company. Found all the contacts myself and vetted each of them before moving forward. Ive been very happy with all of the people I worked with.
Investor · Manitou Springs, CO · Member since 2016 · 57 posts · 25 votes
10y
@Prab C. just decided on the turnkey route. Check out my two blog posts about why I chose that and how I chose the company and let me know if I can help you out at all.
Investor · San Clemente, CA · Member since 2014 · 40 posts · 5 votes
10y
Ayed
I am from Southern California and I just flew back to KCMO a few weeks ago. I met with Nathan Brooks at bridge equity and couldn't have been happier with the experience. He was a straight shooter with great integrity. In fact a few days later I bought my first buy and hold from him!! I really look forward to working with Nathan and his company. I would highly recommend it.
Cleveland, TN · Member since 2016 · 26 posts · 4 votes
9y
Hi Ayed. I own two investment homes (SFR) in Kansas City MO that I'm looking to sell. Both vacant. Both have rent for between $600 to $700 One needs some TLC but the price will be reflected. I just want to invest in real estate that is closer to me. Let me know if you are interested!
Real Estate Broker · Phoenix, AZ · Member since 2013 · 749 posts · 399 votes
9y
@Ejy Mirjan as fellow members have mentioned - what is your goal? If you want to buy and hold to sell off in ten years. Then KC is not your market. We have great rental rates and low vacancy rates. If you want a good property that cash flows month after month - you have come to the right market.
Zip code wise - it really depends on what you are looking for. Multi, SFR, how much cash flow, etc...
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
9y
Kansas City is a big market with a lot of different areas, but overall it's very good IMO. It's stable with decent population and job growth and while the crime rate isn't good, it's better than many other cities. The prices are also cheap.
Generally I would avoid investing east of Troost in KCMO until you get past 435. We like Raytown and the area by the old Bannister mall (north of 470, east of 435) a lot. In the west part of Independence (particularly west of Noland and north of 23rd) and in the east part of KCK (near the downtown). Indeed, other than the area right by the Med School in Kansas City, KS (just north of County Line and just west of State Line) I wouldn't invest on much unless it was around 77th. That is unless you want to invest in lower end cash flow properties, but you need to be very careful with that.
Of course, this leaves out a lot of detail and there are of course exceptions, but those are the broad strokes of where I would be cautious about. We usually focus on working class to middle class houses and apartments and our favorite markets are Grandview, Raytown, the Waldo area (70's, 80's and 90's west of Troost in KCMO), Lee's Summit (mostly 64063), Hyde Park, Olathe, eastern Independence and a little bit north of the river and in Belton.
Investor · Los Angeles, CA · Member since 2008 · 25 posts · 6 votes
9y
Thank you all for your thoughts on this. I invested in two properties in KC (north of the river) in the first quarter of 2016 and they have been rented since. I am glad to have made that decision.
Investor · Kansas City, MO · Member since 2015 · 19 posts · 7 votes
9y
If you have the chance, I would consider to start looking into east of Troost for deals. MAC Properties and other big developers are investing large amount of capital on infrastructure projects. There are at least 350+ multifamily units going up in the next few years around Armor and Troost. Part of the "Troost Revival". Still probably want to avoid anything east of 71. I think if things keep heading in that direction, people will wish they had gotten in around this time.
@Ejy Mirjan, as JJ said, the KC market is a big area with lots of possibilities. You need formulate your investment strategy and goals before you do anything else as this will help you determine what areas in KC you want to look for properties.
You have already established that you want rental property, so here are a few more questions to ask yourself:
1 Do you want SFR (single family residential), multi family, or commercial (commercial tenants)?
2 How much money do you have to invest and how much money can you borrow (if you want more money)?
3 Are you more interested in cash flow or long term equity?
4 How much risk do you want to take? This is probably the hardest question for most investors to answer. We all want the best returns, but with high returns usually comes higher risks. You need to determine if you are a big risk taker or a little risk taker. Think about your financial situation when you answer this question. Do you have the financial means to recover if your investment is a bust? Do you need income from your rental properties to pay your bills? Are you simply looking for a way to reduce your taxes?
If you can answer these questions, I can better tell you what areas of Kansas City you need to be looking at.
Hey Ayad... i do realize this post is 2 years old but I am currently located in NY and interested in potentially investing in the KC area. I am mostly interested in Cash Flow perferably through multi family properties... i have about 75k to invest and am willing to take moderate risk.... would love to hear back from you !
@Ejy Mirjan, as JJ said, the KC market is a big area with lots of possibilities. You need formulate your investment strategy and goals before you do anything else as this will help you determine what areas in KC you want to look for properties.
You have already established that you want rental property, so here are a few more questions to ask yourself:
1 Do you want SFR (single family residential), multi family, or commercial (commercial tenants)?
2 How much money do you have to invest and how much money can you borrow (if you want more money)?
3 Are you more interested in cash flow or long term equity?
4 How much risk do you want to take? This is probably the hardest question for most investors to answer. We all want the best returns, but with high returns usually comes higher risks. You need to determine if you are a big risk taker or a little risk taker. Think about your financial situation when you answer this question. Do you have the financial means to recover if your investment is a bust? Do you need income from your rental properties to pay your bills? Are you simply looking for a way to reduce your taxes?
If you can answer these questions, I can better tell you what areas of Kansas City you need to be looking at.
Hey Ayad... i do realize this post is 2 years old but I am currently located in NY and interested in potentially investing in the KC area. I am mostly interested in Cash Flow perferably through multi family properties... i have about 75k to invest and am willing to take moderate risk.... would love to hear back from you !