Which side of Kansas City do you prefer investing in?

13 Replies

Hey everyone,

I'm committing to investing in Kansas City and am trying to build a deep understanding of the market. I want to start by understanding the differences between investing in the KS and MO side.

So which side do you prefer to invest in a why?

@Austin Petrie Missouri-landlord friendly rental laws, lower prop taxes, worse schools, I know it and I only buy on the MO side. The good school dIstricts are in demand. More “urban“ rather than suburban areas. Kansas-I believe it’s pretty landlord friendly for rentals but not for flips due on foreclosures due to one year redemption, higher prop taxes, better schools. More suburban areas. People are successfully investing on both sides but once I know something I tend to stick with it. If you want to know how “good” an area is look at the school district. The better the schools the better and more in demand an areas is. This is a gross generalization of course, since there are plenty of people who rent and don’t have any kids.

@Lee Ripma this is a super helpful comparison, thank you! So it seems like it really comes down to weighing those trade-offs based on your business plans and goals.

Was there anything else you learned after starting to invest in KCMO that surprised you or that you found interesting (whether in a good or bad way)?

@Austin Petrie Well coming from CA a few things I’ve learned: 1. The importance of heating and cooling systems 2. Weather-you really have a lot of it and it can damage-like wind and hail and trees falling. 3. Prop insurance is more expensive 4. Tenants expect a lot of space-like I though any yard was good but they like big yards 5. Property taxes are variable not locked 6. Schools are very important 7. Vacancy is your greatest killer on returns 8. With higher vacancy tenants have many more choices. They will say things like, Let me know if 2 months if this is still available. That would never happen in CA. 9. most of the Housing stock Is SFH, MF is limIted and very hot! I’ve also detailed how I do BRRRR projects in KC if you look though my old posts.

@Lee Ripma I appreciate you sharing all of that, I definitely hadn't thought about some of those points. Haha yeah I've never heard of someone waiting months to decide on a place to rent here. Ok I'll go take a look at your previous posts that sounds very helpful!

@Austin Petrie I'd second @Lee Ripma 's notion of schools, especially for someone from out of town. I've got my limits set pretty tight right now, but have come across some deals that have fit the numbers. I've used Great Schools to help define where I want to purchase, but would love to know how others have defined their target markets.

@Aaron Winters Schools are very important. I won’t buy units that post rehab rent for less than 750/Mo. The numbers never seem to work when rent is less than that, since Reno and maintenance costs don‘t change.

Note - Kansas City Missouri is getting very landlord unfriendly

currently, you have to register as a landlord and its free but they also just passed a new ordinance that starts in January that requires you to register for a fee annually and be subject to tenant complaint and random interior inspections.

It is my understanding both with run side by side, which seems stupid and redundant.

They are also working on a new 5 year housing policy

One thing they are looking at there is that you will not be able to discriminate based on source of income.  So if you exclude Section 8 or other vouchered tenants, if the new ordinance goes through, you will have to allow vouchered tenants to apply and count their voucher as part of their income.

most cities on the MO side are creating licensing and interior inspections to become very similar to KS, although KS has a state law allowing a tenant to opt out of mandatory interior inspections, no such law yet in Missouri, we are trying to get it passed.  So many cities with new ordinances are saying that if the tenant will not allow the interior inspection to evict them.

Please if you invest in the KC metro, become a member of one of the many landlord groups and stay informed because the city councils and advocacy groups are trying very hard to change the way things work and have worked for years.

Of course cities across the country are doing the same, so join your local groups, where ever you invest to stay informed and to help protect your industry.

You know . . . those local groups that have guru speakers that BP think is so horrible, that sell training and make the local group money .. .. . a lot of that money is put to work toward advocacy efforts on behalf of the industry.

-----------------------

As one of those group leaders, every time there is an issue I get calls and emails that someone should do something about whatever it is.  Many of those calls from irate investors are from people who are NOT a part of the local group and who do nothing other than complain.  And as a group leader, there is only so much I can do as in individual.  It takes the entire group stepping up, making calls and voting if they can.

So join and support your local REIA group, where ever you invest in the country. Because if you don't, who will.

Sorry, I will get off my soapbox now.

@Mike D'Arrigo can you tell me more about what you mean by more rental opportunity? Like more supply of good rental properties, or more ability to rent out a property (so lower vacancy), or?

Originally posted by @Austin Petrie :

@Mike D'Arrigo can you tell me more about what you mean by more rental opportunity? Like more supply of good rental properties, or more ability to rent out a property (so lower vacancy), or?

 More rental properties available.