Is it a good time to buy in Kansas City Mo?

Buying & Selling Real Estate
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Is it a good time to buy in Kansas City Mo?

Richard Young
Long Beach, CA · Member since 2012 · 19 posts · 4 votes

I am looking at buying SFR as long term rentals and stumbled across Kansas City. I see properties that range in the 25k to 50k range that can rent from 650-800 a month. Those are good cash flow starting points.

Are there any folks with local knowledge of Kansas City Metro areas that know if it is a good market to buy in NOW? If so, why?

Thanks!
Rich

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David Welsh
Involved In Real Estate · Grain Valley, MO · Member since 2012 · 7 posts · 3 votes
13y

Hey Rich I'm a Real Estate Agent in Eastern Kansas City, I do most of my sales in the suburban areas of the city like Blue Springs, Lee's Summit, Independence etc.. People here are very excited for Google Fiber. We have already seen a large increase in sales this year. My brokerage released this statement not to long ago:
http://blog.reeceandnichols.com/index.php/2012/10/average-home-prices-increase/
If you are focusing primarily downtown you have to be vary careful of the area you purchase in. It goes from war zone areas to Plaza Lights in a hurry if you know what I mean. You would have to specify exactly what part of the city you are finding your properties for me to verify those numbers, but those SFRs are definitely out there.

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  • Jeff Waters
    Investor · Member since 2011 · 3 posts · 2 votes
    13y

    I have noticed the same thing and am also wondering the same thing.....I would love to read the responses and more details..

    Jeff

    0Reply
  • Justin S.
    Residential Real Estate Agent · Chandler, AZ · Member since 2009 · 1k+ posts · 928 votes
    13y

    There was a story on CNN about Googles Fiber Wire going there and a lot of businesses following it. I don't know much about the area, but I thought it was an interesting story. If businesses move there, then housing growth should follow.

    http://www.cnn.com/2012/11/14/tech/web/google-fiber-kansas-city/index.html

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  • Marc Bodinger
    New York City, NY · Member since 2012 · 253 posts · 7 votes
    13y

    Here's a thought from left field. Does the potential of the Keystone pipeline proposition have any effect? Prospecting is definitely the best way to make gains and if/when it gets approval how close is KC to it?

    I might be totally wrong but I saw a map and one of the branches goes near KC and STL.

    0Reply
  • Aaron Mazzrillo
    Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
    13y

    You live in Long Beach. Have you looked across the street, before you decided to look across the country? While you won't find numbers so small in Long Beach, I know investors closing deals in that area and holding them as rentals. If the bigger numbers scare you, why not check out Palmdale/Apple Valley? You don't need a plane to get there.

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  • Richard Young
    OP
    Long Beach, CA · Member since 2012 · 19 posts · 4 votes
    13y

    Hey Aaron

    I am looking for 4 units in Long Beach/SoCal as well but the market in my opinion is getting tougher to find deals. I'm not getting interested in paying retail for property or getting into bidding wars. For buy and hold, I prefer local but ultimately, I invest where the numbers make sense so I look more at things like net job increases and population growth (i.e. - Dallas, Memphis, etc. while CA is losing jobs/anti-landlord/etc.) that will help with tenant and income stability. However, I'm always open to learning new perspectives. If you have models where the numbers work comparative to dallas or memphis, please share with me on or off thread.
    Thanks, Rich

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  • David Welsh
    Involved In Real Estate · Grain Valley, MO · Member since 2012 · 7 posts · 3 votes
    13y

    Hey Rich I'm a Real Estate Agent in Eastern Kansas City, I do most of my sales in the suburban areas of the city like Blue Springs, Lee's Summit, Independence etc.. People here are very excited for Google Fiber. We have already seen a large increase in sales this year. My brokerage released this statement not to long ago:
    http://blog.reeceandnichols.com/index.php/2012/10/average-home-prices-increase/
    If you are focusing primarily downtown you have to be vary careful of the area you purchase in. It goes from war zone areas to Plaza Lights in a hurry if you know what I mean. You would have to specify exactly what part of the city you are finding your properties for me to verify those numbers, but those SFRs are definitely out there.

    3Reply
  • Marc Bodinger
    New York City, NY · Member since 2012 · 253 posts · 7 votes
    13y

    Hey David Welsh how is the KC region performing as a whole? Do you have any stats on commercial properties performance?

    0Reply
  • David Welsh
    Involved In Real Estate · Grain Valley, MO · Member since 2012 · 7 posts · 3 votes
    13y

    Here are links of where google fiber plans on installing their services, you can keep an eye on it as its network grows.

    https://fiber.google.com/cities/kck/#header=check
    https://fiber.google.com/cities/kcmo/#header=check

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  • Kathy Batesel
    Basehor, KS · Member since 2012 · 16 posts · 3 votes
    13y

    I'm a lot more familiar with the KCK area (Wyandotte, Johnson, and Leavenworth counties) than I am with KCMO, but I can attest to what David Welsh said about the challenges of finding the good vs. bad areas.

    I've found some great rental potential in the KCK area and own two rentals there. I purchased one for $15k, spent $5k or so getting it livable (doing HVAC install ourselves) as former owner's daughter stripped it of copper etc. when mom died, and I keep it rented for $700. Its resale value now is about $40k. Other one I bought for $48k, lived there for a little over a year while fixing it up, and keep rented for $750 now (to family... its market rent should be more like $950.) Its market value is about $80-90k after upgrades.

    Area selection is super important to values here. The same exact property just a mile or two away can be worth far more or less.

    The other thing to know is that there's a LOT of competition for these houses.

    0Reply
  • Oliver Trojahn
    Kansas City, MO · Member since 2008 · 143 posts · 41 votes
    13y

    I live and invest in Kansas City, MO. There is ample opportunity for great cash flow here. However, since I manage my own properties i stick to the well known suburbs of Lee's Summit and Blue Springs. I buy SFR currently in these areas for rentals. Stats are typically 60k purchase price with 1,000 rents. I get appreciation and great tenants.

    There are plenty of war zones in Kansas City, however, there are also some decent areas with the deals you are talking about. I have been toying with the idea of starting to purchase Multi-Family units in these C and D areas as they are so cheap and handing them off to a management company simply not to deal with that class of tenants. in fact, I just made my decision, i am doing it!!

    Kansas City is an amazing place for rental properties.

    1Reply
  • Oliver Trojahn
    Kansas City, MO · Member since 2008 · 143 posts · 41 votes
    13y

    With that said, I would never recommend investing from out of state.

    0Reply
  • Brandon Laughridge
    Real Estate Investor · Kansas City, MO · Member since 2011 · 43 posts · 9 votes
    13y

    I think it's a great time to be investing in the KC metro (and I do).

    I won't touch anything in these zip codes: 64130, 64132, 64128, and 64127.

    Part of that area is not-so-affectionately known as the "Murder Factory": http://activerain.com/blogsview/909133/-my-take-on-64130-aka-the-kansas-city-murder-factory

    That's not say there aren't deals in those areas but as an out of state investor I think it's smart to not get greedy and stick to the solid, blue collar and better 'burbs. My favorite areas are North of the River (as locals say, look at a KC map and it's everything on the MO side, North of the MO River) and Eastern suburbs like Andrew mentioned (I'd also agree with him that multifamily is a different story and those rough areas could work with that intention). The deals are still plenty good, especially compared to CA (I live in San Diego and have looked plenty out here, including the areas Aaron has mentioned).

    On the KS side of KC, there are some tough areas in Wyandotte County (but in general not even close to as bad as those zips I highlighted above) but Johnson County is very nice, across the board. The flip side is you'll be paying a premium for that niceness and, in my opinion, Johnson County isn't great for investors since you can go 5-10 mi away, be in as nice of an area, and pay 25% less (as a rough estimate).

    0Reply
  • Kathy Batesel
    Basehor, KS · Member since 2012 · 16 posts · 3 votes
    13y

    Agreed.... JoCo is good for flipping properties more than locating rentals, in my opinion.

    0Reply
  • Brian McArthur
    Escondido, CA · Member since 2010 · 13 posts · 0 votes
    13y

    I broke several of the rules laid out in this forum by buying a 6 unit building in zip code 64124 in Nov. 2011, and I live in CA. I will caution you as others do in this thread, against chasing yield/cap rate from out of state. I think I'll make this property work, but it requires way more effort and creates way more aggravation than my other SFHs in other states.. I'll reserve comments on KC as a whole because others on this thread seem to know the local market much better than I do, and they live there.

    I would welcome feedback from any of you on the rental market in the North East side of town, where my property is. My section 8 tenants have been great and they actually pay above market rent, but finding the right tenants who pay their OWN bills for the other 4 units has proven more difficult than I originally thought.

    0Reply
  • Marc Bodinger
    New York City, NY · Member since 2012 · 253 posts · 7 votes
    13y

    I am just wondering, has there been a presence of hedge fund/private equity money coming to KC? Based on what I have read and seen once a market is deemed remotely expensive institutional dollars will start funneling cash to smaller markets and down the line.

    0Reply
  • Account Closed
    Real Estate Investor · Kansas City, MO · Member since 2012 · 85 posts · 19 votes
    13y

    I'm making a killing off this market from the result of the GFC, I have a hand full of buyers that i work with from the San Jose area. They are making way more money than you can for the over priced real estate in California. Just have need a good team on the ground to make it work.

    The grass can be greener on the other side....

    I source and buy deals with at 30% cap (no BS) and sell them to over seas investors for 15%

    @ Brian McArthur

    I own multi-family in the northeast also, pm and i'll see if i can help.

    0Reply
  • Ray Orellano
    Real Estate Broker · Leawood, KS · Member since 2013 · 150 posts · 23 votes
    13y

    @Kyler I'm new to investing but live just souhtwest of the Plaza in Prairie Village. I am also a full time agent in the downtown market.

    You mentioned your making a killing... I was wondering if we can connect just to chat and maybe do some business.

    Thanks!
    Ray

    0Reply
  • William Robison
    Real Estate Consultant · Kansas City, MO · Member since 2013 · 388 posts · 200 votes
    13y

    @Richard Young Yes, Kansas City still is a great market. Inventory is currently a bit sparce. Values can have a significant range within the same rent price. This is a relation of the quality of property and hence quality of tenant that you will receive. You can get a turn key D-Prop at $25k or a fairly decent C-prop at $50k that will both bring almost the same rent. You really must consider the quality of the tenant and the level of turnover costs that you will have between these two. Let me know if I can help you locate some good properties for your portfolio.

    @Justin S. Google Fiber is HERE. Going well. Growing strong. Lots of business is happening, especially in the start-up arena, which is also a good market area to attract tenants...they dont want to be tied down or tie up capital.

    @Brandon Laughridge Yes, youve mentioned some strong market areas that are wide open for investment. These are areas that I focus most of my investors towards. They provide the right type of tenant and the right value property for a good ROI. If you are in the market, there are few deals dropping in REO and at a good market time.

    @Marc Bodinger There has been a small amount of institutional buying in the market locally. It appears that this hedge fund buy-up may be more hype than actuality. I track sales, and have only seen a few.

    @Brian McArthur You are correct. The quality rating of the property is critical in determining an investment. If you need help with the property that you do have here, let me know. If you are ready to look for some B-properties, we have some good deals available.

    All the best to everyone in their Kansas City investments.

    0Reply
  • Connie Covert
    Real Estate Agent · Lawson, MO · Member since 2014 · 99 posts · 18 votes
    12y

    I'm a licensed Realtor in MO  Born & raised in KC. The market is still good, with many properties having positive cash flow! I'm experienced in working with all types of investors on the residential side. I will NOT mislead or misguide you. I'm honest & upfront.  I physically look at properties & send complete reports. However, because I've done this for four years, I have to see your proof of funds or pre approval. No tire kickers...been there & done that! 

    But, I'll help you build a portfolio, regardless of the amount of time you need.

    Connie J Covert

    United Real Estate

    *I also whole sale...so off market homes too!*

    ccovert22urekc.com

    0Reply
  • Connie Covert
    Real Estate Agent · Lawson, MO · Member since 2014 · 99 posts · 18 votes
    12y

    KC is also being considered a "Electronic Meka" for the future! Many businesses are considering moving/building here for that as well as our vast area's for building. Cerner, Honeywell, Stowers...to name a few!

    0Reply
  • Nathan BrooksBusiness Member
    Lender · Kansas City, MO · Member since 2012 · 403 posts · 188 votes
    12y

    I mainly buy properties in the Kansas City, KS area ... and I believe it is still strong as a rental market. Buying in the $20-40k with rents in the $700-$900 range. The KC, MO market is similar, although the KCK area is closer to my home. Make sure you drive each of the streets individually, the neighborhoods are hit and miss ( I owned three SFR off 71 and 60th or so) ... I know several guys who buy in the KC, MO area towards the south end like past the 80-85th blocks.

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  • Lance Johnson
    Real Estate Investor · San Francisco, CA · Member since 2013 · 56 posts · 27 votes
    12y

    I currently own rental property (SFR) in KCMO, Brookside area. It has been great for me so far, and I am looking at other properties, as well.

    KCMO has huge job growth. By some reports, KCMO had the 3rd largest tech job growth in 2013. I see a lot of potential there. Cash flow is very achievable and there is certainly some chance for appreciation, especially if the Silicon Prairie really takes off.

    0Reply
  • William Robison
    Real Estate Consultant · Kansas City, MO · Member since 2013 · 388 posts · 200 votes
    12y

    Buying certain property types in this market requires a level of understanding of risks and tolerances.   As @Nathan Brooks points out, there are some relatively decent spots in the urban core where you can achieve high returns for the dollar invested.  I rightly or wrongly believe that these properties are best suited for the local investors that can manage those properties and manage that risk on their own.  They need that level of attention.   My property management company will not accept properties from these areas of the urban core because of the management demand.

    Conversely, there are small, great pockets of the KCMO area that @Lance Johnson mentioned.  Brookside is one of several pockets that have great houses in the A prop category.  Classic charm neighborhoods with high end values (at least to KC terms)

    As for the Silicon Prairie, I follow this quite a bit and have pretty good confidence in the Fiber-hood taking hold (Google's first internet service provider city is KC) with ultra-fast internet.  Cerner's current expansion and many more.

    All the best to everyone with their KC investments and others.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @William Robison 

      thank you for a reality check on the reality of certain tenant demands and what you will and won't do form a professional that is in the trenchs daily. anyone considering buying rentals should have someone like William give them a second opinon other than just listening to who is selling the property to you.. a good PM is worth their weight.

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  • Lance Johnson
    Real Estate Investor · San Francisco, CA · Member since 2013 · 56 posts · 27 votes
    12y

    I agree with @William Robison - there are certain areas of the city that I wouldn't consider as an out-of-state investor. I was chatting with one of my investment partners today and said we would need to move to KC to invest of some of the things were were talking about. I could tolerate that, I think... Kansas City is a great place.

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