New to Real Estate · Kansas City Metro · Member since 2021 · 10 posts · 9 votes
Hello all! I'm starting to analyze real estate in the Kansas City market and I'm seeing alot of discussion in Kansas City proper, with some minor discussions in surrounding areas on the Missouri side of the state line. Is property Johnson County on the Kansas side of the state line just not as desireable for some reason? It seems like discussions are almost entirely ignoring this market. What am I missing? I know the property is more expensive, but it should also fall into more of an A class, or high B class property in my mind as a worse case scenario. I would definitely like to open up a more detail discussion about the pros and cons of investing in Johnson County areas vs Jackson County areas. Please let me know your thoughts. Thanks everyone!
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
5y
The Johnson county market is just expensive. Areas like Overland Park, Mission, Roeland Park, Prairie, and Leawood are very nice areas just don't make sense for many deals. Hard to do BRRR's and Buy & Holds. Perfect for flips. Jackson County is nice but still affordable. The hot beds in KC are in Jackson County where you can BRRR, Flip or Buy and Hold.
New to Real Estate · Kansas City, MO · Member since 2021 · 8 posts · 13 votes
5y
@Joe Doran I'm interested in this as well. I grew up in Johnson County (Olathe) and currently live in Northern Kansas City, MO. I am fairly new to the real estate market and don't have a ton of experience, but I'd at least like to share my thoughts!
The housing market in Johnson County is extremely aggressive right now (like it is everywhere I suppose!). One thing that I would be concerned about is the ROI and cash flow on properties in places like Overland Park, Olathe, Mission, etc. Cash flowing $200/month on a property in Jackson/Clay County that cost $150K, vs Cash flowing $200/month on a property in Johnson County that cost $350K seems like a much better ROI, especially if you are having to put 20%+ down. I also wonder what the rental/owner percentage is in the high dollar subdivisions in OP and Olathe. Seems like the majority of the people that live in those houses own them. I would think in the older neighborhoods and subdivisions there would be great potential, and like you said, the A-class and upper B-class neighborhoods are more plentiful than in most of Jackson County. Another thing that I'm assuming would be more standard in the area that would hurt your cash flow are all the HOA's and their fees.
Clearly Johnson County has a massive rental market because there are as many apartment complexes as there are banks (and in Johnson County that's saying something!). As far as Single Family Homes and Multi-Family homes go, I haven't really been interested in looking there. I'm sure there are investors that are making a killing there, hopefully they chime in!
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
5y
The Johnson county market is just expensive. Areas like Overland Park, Mission, Roeland Park, Prairie, and Leawood are very nice areas just don't make sense for many deals. Hard to do BRRR's and Buy & Holds. Perfect for flips. Jackson County is nice but still affordable. The hot beds in KC are in Jackson County where you can BRRR, Flip or Buy and Hold.
New to Real Estate · Kansas City Metro · Member since 2021 · 10 posts · 9 votes
5y
How is appreciation in Johnson County vs Jackson County? I feel like Johnson County tries to develop in a manner to push property prices upward. Would this hold true for multi-family as well? And is that even an accurate assessment?
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
5y
Appreciation is higher in Johnson BUT they are close. The nice areas in Jackson County like Blue Springs/Lee's Summit are appreciating similar to Johnson County. The overall price is higher compared to Johnson County since Jackson County has homes in Kansas City included in that so brings down the average price. Multi family is stupid expensive in Johnson County too. Duplexes are 300-350
New to Real Estate · Kansas City Metro · Member since 2021 · 10 posts · 9 votes
5y
Perfect. I think that pretty much answers my question there. To make a deal in JoCo you would basically need to get a great price, distressed, off market, etc., and add some value to it on your own. Then re-run numbers after rehab to see if it makes sense to hold or not. Thanks everyone!
Rental Property Investor · NY · Member since 2015 · 49 posts · 20 votes
5y
Don't know anything about housing in any of these markets. We own a retail strip and office building in Jackson County. In 2019 the county raised the assessed value from about 2MM to 9MM. There was absolutely no justification for this. Took us time, eventually we settled for 3.5MM, had to pay hefty fees to get there and this chased away some of our tenants as they have to reimburse for taxes. This was a county wide issue with them going crazy on the taxes. It was all over the papers, so be careful.
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
5y
@Joe Doran - Johnson County is the California of Kansas City. High prices, huge demand, and low cash flow. If you want huge demand, low cap rates, and values that don't go down it works. I don't own any rental properties in Johnson County except one SFH I will lease to a local co-living startup. Most of my rentals are on the MO side in Jackson and Clay Counties. Own one in KCK, but it is in Wyandotte Co. This is all MF for the most part. MO is likely where you'll by your first rental. You just decide if you want B or C class and dive in!
Real Estate Investor · Los Angeles, CA · Member since 2016 · 31 posts · 7 votes
5y
@Joe Doran
Sounds like you got your answers above but one other point to mention - landlord laws are more favorable in MO compared to KS and I believe the tax rates are different too. Another reason why some investors prefer MO
Investor · Platte City, MO · Member since 2021 · 24 posts · 12 votes
5y
I'm under contract on my first property in Smithville, north of KC. I'm an investor newbie for sure, but lived in several corners of the metro my whole life. I really see the Northland (MO side) as having the most long-term potential for the sort of B class buy-and-holds that I would love to invest in long-term.
Sounds like the JoCo/Jackson County analysis makes sense--
@LeeRipma I love that "Johnson County is the California of KC." ...which does mean flip-town, or CA long term appreciation strategies make sense. There are some older pockets of Shawnee (where I grew up) and Merriam that could have some off-market potential for those willing to do the work of finding them, or gut-job BRRRs or something (some of the oldest parts of JoCo still have 1920s/30s bungalows, and there's plenty of distressed post-war homes throughout the country--though less outside the untouchable Prairie Village-Leawood-OP gold coast that are retail tear-downs). But I'm focusing on the MO side, particularly north of the river in Platte and Clay counties.
@Neel P. I'm interested in knowing more about what makes MO more favorable (I can see that maybe the unified govt. of KCK/Wyandotte County is not landlord friendly, but not sure about whole KS side. Does anyone have any insight on whether the new KCMO Department of Housing should be an increasing consideration for properties in KCMO itself? They've been increasingly pro-tenant, for years (I interned at City Hall years ago when they mapped out what has morphed into tenant-landlord university). This spring, they created a whole new department (pretty big deal) for housing--esp. affordable housing and tenant advocacy. Not sure if they will focus energies on fighting slum-lords (good thing), or casting wider nets, but I'm sure there will be some more red tape within the municipality itself.
@Joe Doran Even if you were to look beyond KCMO itself to avoid red tape on the first few deals, there is such a wide patchwork of municipalities (just north of the river, say), and in eastern Jackson Co, south toward Belton, Raymore, Peculiar, and on and on... Not sure what part of town you're based in, but I feel like you could find pockets of potential and models that work in many directions.