Hello from Austin! Two newbs excited to get into MTR strategy

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Hello from Austin! Two newbs excited to get into MTR strategy

Katie Kantzes
New to Real Estate · Austin, TX · Member since 2023 · 1 post · 4 votes

Hi everyone - my partner and I have been following BP for quite some time, and we are excited to be in a position to take action.  We just need help busting out of analysis paralysis.

Here are our stats:

*We have 200k cash along with a $200k HELOC to invest

*My partner owns a paid off condo (worth ~$250k) and a 3/2 house ($199k left on the mortgage, worth around $525k), both in Austin.  We reside in the latter home.

*We have our sights set on moving to Colorado within a year and hope to achieve financial independence through real estate investing.  We are focused on cash flow potential.

Here is our tentative strategy:

We are interested in MTRs and furnished rentals, but are avoiding STRs due to increasing restrictions.  We are researching markets but are overwhelmed by the number of options and ways to get in.   Austin is out, as cash flow is difficult here and we don't want to stay in this location (nor do we want to house hack here). We are considering locations such as Omaha, Kansas City, OKC, and Des Moines because of the number of hospitals in these locations, which should help to attract travel nurses.

Our questions for you:

First - Does anyone have experience in these locations, or have other suggestions for us to consider?

Second - Should we begin with single family homes, or try multi-family to start?  How much should we invest in the first property or, alternatively, how much should we keep in reserves for purchasing other properties?

Third - if y'all are, or know of any investor-friendly agents in these locations that are open to talking with us, we'd love to get a conversation going.

Thanks so much for reading.  Best wishes to all of you on your real estate investing journeys!

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Laura Williams
Kansas City MO · Member since 2014 · 357 posts · 349 votes
2y

@Timothy Howdeshell Kansas City  (since I've been investing here in 2014) has had very strong rental demand and appreciation. I think it's a good market in general as long as someone's numbers pencil out & the property makes sense. Long term -such as unfurnished yearly rentals have always been strong here & I haven't seen any issues in oversupply in that area of the market. In fact city leaders have said there is a shortage of affordable housing in KC.

When I mentioned to pause investing here it was more specifically targeted at the shorter term furnished properties (30 + day and under). To give history as to why we had an airbnb explosion (as many cities did) and at the height there were 2250 short term rentals in KCMO and only 7-8% of those were licensed and legal. Some neighborhoods were becoming overwhelmed with short term rentals and upset that operators were not following the law to get neighbor permission before opening up nextdoor to them. So the neighborhoods united together and pressured the city council/mayor to make it illegal to have a short term rental in any residential zoned property (unless you are an owner occupant) and for commercially zoned properties they have be at least 1K feet away from any other airbnb -which is like a unicorn to find.

Luckily they did grandfather in the already licensed properties and many of the illegal STR got licensed last minute so we have around 450 licensed STR in KCMO now. But there are still around 1500 ilegal airbnbs on the chopping block that the city is going after and pressuring Airbnb/VRBO to delist and have already turned them in for tax fraud and can now fine them 1K/a day for illegally airbnb. They do not have a path forward at all to become legal/registered unless they can prove they are an owner occupant and even so they can only Airbnb a maximum of 95 days a year (as a whole house rental without them being there same time) according to the new ordinance.

Also neighboring areas outside of KCMO now are cracking down too. North Kansas City just completely banned airbnbs a couple months ago & didn't grandfather anyone in and now the Kansas State side is starting to discuss banning Airbnbs on that side such as Shawnee and Overland Park etc. https://www.kansascity.com/news/politics-government/article2...

So with this new ordinance just passing in May 2023 in my humble opinion there's going to be a big oversupply of furnished monthly rentals for the next short while as most of the illegal airbnbs will likely try renting for the 30 day + (or midterm market) which is legal as 30 day + isn't considered "Short term". I have a friend who specializes in monthly renting to travel nurses who tells me it's a blood bath for him due to all the illegal Airbnbs flooding the 30+ day market. So I would recommend anyone wanting to try the monthly furnished rentals like for travel nurses to wait a few months or a year before getting in until the inventory has thinned out a bit. Or maybe buy and rent it out unfurnished for a couple years and then turn it into a mid-term rental after things settle down.

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  • Travis TimmonsPro Member
    Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
    2y

    If I were you, I'd look at Temple. There's a VA and 600+ bed Baylor Scott and White hospital there that is a level 1 trauma center. It is also within driving distance and has a lower price point. I like the combination of a lower price point, population growth trends, day 1 cash flow, and better long term appreciation potential compared to a lot of those Midwestern cities. Don't underestimate the hassle factor for set up. If you can drive there, it's going to make your life a lot better for 2-6 weeks of set up and possible renovation.

    If you're going straight day 1 cash flow as your top priority in the Midwest, I like college towns with a 400+ bed, level 1 trauma center hospital. You'll have a lower price point than the larger cities listed above and 2 solid tenant sources for furnished rentals. The kind of place where you can buy a 2 bed 1 bath SFH for $120-150k that will rent for $1800-2200 as a furnished rental. I'd try to find something with a fenced in back yard and allow pets. Don't expect much appreciation though. There a very good chance that in 10 years the property will be worth close to what you paid for it today, but it'll be good day 1 cash flow if that is your top priority.

    I am also a fellow Texan with STR and MTR investments that will be moving north next spring. I have nothing to sell, own 3 long distance properties, and would be happy to be a resource if you think that I can help. Shoot me a DM if you want to talk in more detail.

    2Reply
  • Sloane Kraftsow
    Lender · New York, NY · Member since 2023 · 749 posts · 510 votes
    2y

    Hi Katie, I have a lot of experience in investing in Austin, Texas. I would love to connect with you.

    0Reply
  • Darson GranthamBusiness Member
    Realtor · Des Moines · Member since 2018 · 304 posts · 253 votes
    2y

    Congrats on posting here to gather advice from all walks of life! Its how I started in 2018 and starting convos with other investors be it in person or online is KEY to learning IMO.  Below I'll answer your qestiosn, the best I can!  If you want to know the lay of the land in the Des Moines area let me know!  I help a lot of folks from BP get started in the Des Moines Metro.

    First - Does anyone have experience in these locations, or have other suggestions for us to consider?  - Yes I have experience in Des Moines, both as an investor and an investor-friendly agent.  (I host multiple meetups for investors throughout the city)

    Second - Should we begin with single family homes, or try multi-family to start? How much should we invest in the first property or, alternatively, how much should we keep in reserves for purchasing other properties? if you are set on MTR, I'd say evaluate both types an learn the returns and pros and cons of each.  MTR rents will be different at a SFH vs Duplex vs 10 plex.   You have the funds it sounds like to do any of them here in Des Moines, so then it just comes down to which attributes to you prefer about each type of property. 

    Third - if y'all are, or know of any investor-friendly agents in these locations that are open to talking with us, we'd love to get a conversation going. - As i said above, happy to talk! 

    [email protected]515-612-6013
    0Reply
  • Peter Dorinsky
    Real Estate Agent · Columbus, OH · Member since 2020 · 149 posts · 193 votes
    2y
    Quote from @Katie Kantzes:

    Hi everyone - my partner and I have been following BP for quite some time, and we are excited to be in a position to take action.  We just need help busting out of analysis paralysis.

    Here are our stats:

    *We have 200k cash along with a $200k HELOC to invest

    *My partner owns a paid off condo (worth ~$250k) and a 3/2 house ($199k left on the mortgage, worth around $525k), both in Austin.  We reside in the latter home.

    *We have our sights set on moving to Colorado within a year and hope to achieve financial independence through real estate investing.  We are focused on cash flow potential.

    Here is our tentative strategy:

    We are interested in MTRs and furnished rentals, but are avoiding STRs due to increasing restrictions.  We are researching markets but are overwhelmed by the number of options and ways to get in.   Austin is out, as cash flow is difficult here and we don't want to stay in this location (nor do we want to house hack here). We are considering locations such as Omaha, Kansas City, OKC, and Des Moines because of the number of hospitals in these locations, which should help to attract travel nurses.

    Our questions for you:

    First - Does anyone have experience in these locations, or have other suggestions for us to consider?

    Second - Should we begin with single family homes, or try multi-family to start?  How much should we invest in the first property or, alternatively, how much should we keep in reserves for purchasing other properties?

    Third - if y'all are, or know of any investor-friendly agents in these locations that are open to talking with us, we'd love to get a conversation going.

    Thanks so much for reading.  Best wishes to all of you on your real estate investing journeys!


     Hey Katie, if you guys are open to other markets I'd also recommend checking out Columbus, OH. Central Columbus is home to many major hospitals and the market is rapidly developing with many new and existing companies expanding their business here, the hospitals are continuing to expand as well! There are great opportunities if you're looking to MTR to travel nurses and others in the medical field. I'd be happy to connect if you're interested in learning more. 

    1Reply
  • Julio GonzalezPro Member
    Specialist · West Palm Beach, FL · Member since 2008 · 4k+ posts · 1k+ votes
    2y

    Welcome to BiggerPockets, Katie! It's great to see your enthusiasm and thoughtful approach to real estate investing.

    -Julio

    561-253-6640
    0Reply
  • Laura Williams
    Kansas City MO · Member since 2014 · 357 posts · 349 votes
    2y

    I have experience in Kansas City Missouri and wouldn’t recommend our market for the next few months/year. The city just passed a new ordinance in May regulating the short term rentals (80+% of the current 2200 airbnbs are illegal) and the city is cracking down on them. I suspect most of the illegal Airbnb operators will go to monthly renting and flood the market as they have no path forward to be a legal Airbnb in a residential zone anymore unless they are an owner occupant.  Probably in about a year the oversupply should be gone but it’s going to be a rough ride until then. Have a friend who does monthly renting to travel nurses and said rates are less now than if he was renting by the year unfurnished and not paying utilities. 

    https://www.kansascity.com/news/local/article279307904.html?...

    0Reply
  • Matthew Masoud
    Investor · Orange County, CA · Member since 2014 · 363 posts · 408 votes
    2y

    This is an unpopular opinion in the MTR space but I think you should stay away from single family homes.

    They typically only work as MTR or STR making it a risk.

    Only purchase real estate that works as a LTR as well.

    I'd start with a 3-4 unit and rent them all MTR.

    I personally believe all the markets you just mentioned have great MTR potential.

    0Reply
  • Zach Edelman
    Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes
    2y

    Fellow Austin resident, investor, and MTR/STR enthusiast here. Welcome to BP!

    0Reply
  • Timothy Howdeshell
    Investor · Fresno, CA · Member since 2016 · 222 posts · 237 votes
    2y
    Quote from @Laura Williams:

    I have experience in Kansas City Missouri and wouldn’t recommend our market for the next few months/year. The city just passed a new ordinance in May regulating the short term rentals (80+% of the current 2200 airbnbs are illegal) and the city is cracking down on them. I suspect most of the illegal Airbnb operators will go to monthly renting and flood the market as they have no path forward to be a legal Airbnb in a residential zone anymore unless they are an owner occupant.  Probably in about a year the oversupply should be gone but it’s going to be a rough ride until then. Have a friend who does monthly renting to travel nurses and said rates are less now than if he was renting by the year unfurnished and not paying utilities. 

    https://www.kansascity.com/news/local/article279307904.html?...


     Hi Laura, 

    Certainly an interesting development in the KC short term rental market. Are you saying to avoid all KC buy and hold? 2200 short term rentals seems fairly small in relation to the 2.4 million metro area residents. Also, in reading your linked article, it seems that the hosts simply need to register with the city in order to continue to operate. Not that all will be able to comply with density and zoning restrictions, but I'm not seeing how this will flood the long term rental market. 

    0Reply
  • Conner Olsen
    Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
    2y
    Quote from @Katie Kantzes:

    There's a huge demand for MTR in Austin and you can get some great cash flow on your properties! I'm getting 75% above LTR rates on my properties. I wouldn't ONLY focus on traveling nurses. I've only had one traveling medical professional across 5 properties.

    0Reply
  • Laura Williams
    Kansas City MO · Member since 2014 · 357 posts · 349 votes
    2y

    @Timothy Howdeshell Kansas City  (since I've been investing here in 2014) has had very strong rental demand and appreciation. I think it's a good market in general as long as someone's numbers pencil out & the property makes sense. Long term -such as unfurnished yearly rentals have always been strong here & I haven't seen any issues in oversupply in that area of the market. In fact city leaders have said there is a shortage of affordable housing in KC.

    When I mentioned to pause investing here it was more specifically targeted at the shorter term furnished properties (30 + day and under). To give history as to why we had an airbnb explosion (as many cities did) and at the height there were 2250 short term rentals in KCMO and only 7-8% of those were licensed and legal. Some neighborhoods were becoming overwhelmed with short term rentals and upset that operators were not following the law to get neighbor permission before opening up nextdoor to them. So the neighborhoods united together and pressured the city council/mayor to make it illegal to have a short term rental in any residential zoned property (unless you are an owner occupant) and for commercially zoned properties they have be at least 1K feet away from any other airbnb -which is like a unicorn to find.

    Luckily they did grandfather in the already licensed properties and many of the illegal STR got licensed last minute so we have around 450 licensed STR in KCMO now. But there are still around 1500 ilegal airbnbs on the chopping block that the city is going after and pressuring Airbnb/VRBO to delist and have already turned them in for tax fraud and can now fine them 1K/a day for illegally airbnb. They do not have a path forward at all to become legal/registered unless they can prove they are an owner occupant and even so they can only Airbnb a maximum of 95 days a year (as a whole house rental without them being there same time) according to the new ordinance.

    Also neighboring areas outside of KCMO now are cracking down too. North Kansas City just completely banned airbnbs a couple months ago & didn't grandfather anyone in and now the Kansas State side is starting to discuss banning Airbnbs on that side such as Shawnee and Overland Park etc. https://www.kansascity.com/news/politics-government/article2...

    So with this new ordinance just passing in May 2023 in my humble opinion there's going to be a big oversupply of furnished monthly rentals for the next short while as most of the illegal airbnbs will likely try renting for the 30 day + (or midterm market) which is legal as 30 day + isn't considered "Short term". I have a friend who specializes in monthly renting to travel nurses who tells me it's a blood bath for him due to all the illegal Airbnbs flooding the 30+ day market. So I would recommend anyone wanting to try the monthly furnished rentals like for travel nurses to wait a few months or a year before getting in until the inventory has thinned out a bit. Or maybe buy and rent it out unfurnished for a couple years and then turn it into a mid-term rental after things settle down.

    2Reply
  • Timothy Howdeshell
    Investor · Fresno, CA · Member since 2016 · 222 posts · 237 votes
    2y

    @Laura Williams

    Very informative and thorough. I've been occasionally tempted to branch into MTR or STR for improved cashflows, but seems to be a bit more trouble at the moment to execute.

    1Reply
  • Konstantin GinzburgPro Member
    Member since 2021 · 376 posts · 242 votes
    2y

    @Katie Kantzes

    I like your idea of targeting markets with an abundance of hospitals in order to cater to traveling medical staff. I think this is good strategy in theory but might be a little harder to do in practice in the current environment. During the pandemic, there was a large demand for traveling medical staff and there were a lot of MTRs that popped up in order to meet this market demand. I think this caused a bit of a market saturation as the market for traveling nurses has appeared to soften a bit since the pandemic from my experience. I think this would still be a feasible strategy but I think it may be better to make sure you select properties right next to the major hospitals as opposed to in the general region of a city with hospitals nearby; this could help your listing stand out more and help drive more deals to you. Another strategy would be to attempt to contact a hospital directly to see if they would be interested in having you providing housing for their traveling staff. One market that we have had more luck serving is student housing, as opposed to traveling medical staff. Acquiring a property near a school can help with this strategy. 

    For SFH vs multifamily; I strongly prefer multifamily homes. You not only typically have higher cash flow with this asset class but there is a higher chance of minimizing vacancies since even if one unit is empty, you may still have other units continue to be occupied and paying rent. 4-plexes are one of my preferred asset classes since the acquisition process for getting a 4-plex is no different than a SFH but we have had substantially more cash flow from our 4-plexes than our SFHs.

    0Reply
  • Conner Olsen
    Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
    2y
    Quote from @Timothy Howdeshell:

    @Laura Williams

    Very informative and thorough. I've been occasionally tempted to branch into MTR or STR for improved cashflows, but seems to be a bit more trouble at the moment to execute.


    The hardest part of MTR is getting it furnished. I probably spend an hour a month per property keeping it running.

    0Reply
  • Eric Mensah
    Rental Property Investor · Kansas City · Member since 2023 · 12 posts · 3 votes
    2y
    Quote from @Laura Williams:

    I have experience in Kansas City Missouri and wouldn’t recommend our market for the next few months/year. The city just passed a new ordinance in May regulating the short term rentals (80+% of the current 2200 airbnbs are illegal) and the city is cracking down on them. I suspect most of the illegal Airbnb operators will go to monthly renting and flood the market as they have no path forward to be a legal Airbnb in a residential zone anymore unless they are an owner occupant.  Probably in about a year the oversupply should be gone but it’s going to be a rough ride until then. Have a friend who does monthly renting to travel nurses and said rates are less now than if he was renting by the year unfurnished and not paying utilities. 

    https://www.kansascity.com/news/local/article279307904.html?...


     Laura,

    Does that mean if I am house hacking a duplex living on side and using the other side for Airbnb in Kansas City it would be legal per the ordinance ? 

    0Reply
  • Laura Williams
    Kansas City MO · Member since 2014 · 357 posts · 349 votes
    2y

    @Eric Mensah living in a duplex and renting out the other half as a short term rental (we were told) is completely legal and considered an owner occupant STR. You could rent the other half out 365 days a year as long as the other half was your primary residence. You'd still need to get registered with the city before listing your property and now we have these pain in the butt short term rental taxes we have to collect and pay every quarter. But you should be good to go and probably not a bad business plan. The city finally got airbnb and VRBO to delist several hundred (unlicensed) listings so the number of STRs in KCMO is way lower now than it was a year ago.

    I would contact the head of the STR program and ask him about your specific property and situation before putting money down just to double check there's not any quirks that might keep you from it but the city did tell us duplex with owner on one side and airbnb on the other is legal and considered owner occupied.

    1Reply
  • Eric Mensah
    Rental Property Investor · Kansas City · Member since 2023 · 12 posts · 3 votes
    2y
    Quote from @Laura Williams:

    @Eric Mensah living in a duplex and renting out the other half as a short term rental (we were told) is completely legal and considered an owner occupant STR. You could rent the other half out 365 days a year as long as the other half was your primary residence. You'd still need to get registered with the city before listing your property and now we have these pain in the butt short term rental taxes we have to collect and pay every quarter. But you should be good to go and probably not a bad business plan. The city finally got airbnb and VRBO to delist several hundred (unlicensed) listings so the number of STRs in KCMO is way lower now than it was a year ago.

    I would contact the head of the STR program and ask him about your specific property and situation before putting money down just to double check there's not any quirks that might keep you from it but the city did tell us duplex with owner on one side and airbnb on the other is legal and considered owner occupied.


     Thanks a lot Laura. 

    0Reply
  • Adam WindhamPro Member
    Lender · San Diego | Phoenix | Miami · Member since 2019 · 39 posts · 65 votes
    2y

    Welcome to BP! And congrats on starting your investing journey!

    [email protected]619-304-9507
    0Reply
  • Milton ChamberlainPro Member
    Real Estate Agent · Kansas City, MO · Member since 2019 · 235 posts · 107 votes
    2y

    Hi Katie!

    First - Does anyone have experience in these locations, or have other suggestions for us to consider?
    I am an experienced agent in both residential and small multifamily investments. I am happy to further discuss the entire KC metro market with you, as well as my more Specific market of the 'Northland.'

    Second - Should we begin with single family homes, or try multi-family to start? How much should we invest in the first property or, alternatively, how much should we keep in reserves for purchasing other properties?

    Unfortunately, my answer is more questions! :) my advice would henge on:
    -What are your 'metric' goals? Are you looking for something that will cashflow well, but may not appreciate in value as well? Or vice versa? Add-value properties? or something turnkey? The KC metro is a great playground for investors, bc there are so many effective strategies you can choose with success.

    multi or SFR?: Once again, depends on your goals and preferred strategies. Feds have made it tough for investors. I am seeing high 7's with 25% down minimum req for multis, with paying .75-1.5 points. 20% down SFR similar rates.

    Third - if y'all are, or know of any investor-friendly agents in these locations that are open to talking with us, we'd love to get a conversation going.
    Would love to chat with you to see if I am a good fit to assist you. Please message me if you would like to schedule a talk.

    [email protected]573-356-1607
    0Reply
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