Out Of State Investor: Kansas City, Missouri

19 Replies

Hello everyone! My name is Tonye Jack, and I am from Long Island, New York. I don't have much real estate investment experience, but I have a solid construction background, as Residential Construction Project Manager. My goal for this year is to purchase my first investment property by August and I'm currently trying to figure out how to make that a reality.

 Over the past year, I've been learning as much as I can about real estate through podcasts and reading several books. I narrowed my search to Kansas City, MO as the location in the midwest I would have the best chance of getting the benefits of cash flow and appreciation in comparison to the NY market. I am looking to do a variation of the Turnkey process which I would work with a project/ property management company to manage a light cosmetic rehab to build some equity in the deal and purchase the property on a discount. I would like to connect with any Property Management and real estate agents who have experience with out of towners. The locations in the city I'm interested in are Grandview, Raytown, Independence or any other solid B and C+ areas 

Originally posted by @Tonye Jack :

Hello everyone! My name is Tonye Jack, and I am from Long Island, New York. I don't have much real estate investment experience, but I have a solid construction background, as Residential Construction Project Manager. My goal for this year is to purchase my first investment property by August and I'm currently trying to figure out how to make that a reality.

 Over the past year, I've been learning as much as I can about real estate through podcasts and reading several books. I narrowed my search to Kansas City, MO as the location in the midwest I would have the best chance of getting the benefits of cash flow and appreciation in comparison to the NY market. I am looking to do a variation of the Turnkey process which I would work with a project/ property management company to manage a light cosmetic rehab to build some equity in the deal and purchase the property on a discount. I would like to connect with any Property Management and real estate agents who have experience with out of towners. The locations in the city I'm interested in are Grandview, Raytown, Independence or any other solid B and C+ areas 

Welcome aboard. As KC was mentioned in this thread I figured I'd drop you a link to The Ultimate Guide to Grading Kansas City Missouri Neighborhoods. Also have similar guides for Cleveland, Ohio and Birmingham, Alabama.

In addition there are tons of other turnkey markets out there besides KC. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

  • Cincinnati, Ohio
  • Dayton, Ohio
  • Toledo, Ohio
  • Youngstown, Ohio
  • Cincinnati, Ohio
  • Memphis, Tennessee
  • Saint Louis, Missouri
  • Indianapolis, Indiana
  • Detroit, Michigan
  • Erie, Pennsylvania
  • Louisville, Kentucky
  • Milwaukee, Wisconsin
  • Jackson, Mississippi

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or lose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

  • Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
  • Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
  • Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
  • Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
  • Make sure your property manager is a licensed real estate brokerage.
  • Google Clayton Morris Scam and/or Morris Invest Scam for a cautionary tale of what not to do when buying turnkey real estate
  • Understand you can not eliminate all risk, only mitigate it. If you are risk averse, real estate, (especially out of state) is not for you.

@Tonye Jack   @James Wise Hello Tonye and Welcome ! May I recommend you find a local realtor or a knowledgeable experienced realtor in the desired area. Execute a POA allowing them to address any and all issues that can arise. Review and analyzed the purchase. It definitely has potential if you have the right property manager and or realtor. Good Luck !

Hi Jenny, thanks for the advise. I never heard of executing a Power Of Attorney to the realtor. Won't that give to much power to the realtor? I'm guessing a real estate lawyer would be familiar with this process?

Originally posted by @Jenny Roman :

@Tonye Jack  @James Wise Hello Tonye and Welcome ! May I recommend you find a local realtor or a knowledgeable experienced realtor in the desired area. Execute a POA allowing them to address any and all issues that can arise. Review and analyzed the purchase. It definitely has potential if you have the right property manager and or realtor. Good Luck !

 

Originally posted by @James Wise :
Originally posted by @Tonye Jack:

Hello everyone! My name is Tonye Jack, and I am from Long Island, New York. I don't have much real estate investment experience, but I have a solid construction background, as Residential Construction Project Manager. My goal for this year is to purchase my first investment property by August and I'm currently trying to figure out how to make that a reality.

 Over the past year, I've been learning as much as I can about real estate through podcasts and reading several books. I narrowed my search to Kansas City, MO as the location in the midwest I would have the best chance of getting the benefits of cash flow and appreciation in comparison to the NY market. I am looking to do a variation of the Turnkey process which I would work with a project/ property management company to manage a light cosmetic rehab to build some equity in the deal and purchase the property on a discount. I would like to connect with any Property Management and real estate agents who have experience with out of towners. The locations in the city I'm interested in are Grandview, Raytown, Independence or any other solid B and C+ areas 

Welcome aboard. As KC was mentioned in this thread I figured I'd drop you a link to The Ultimate Guide to Grading Kansas City Missouri Neighborhoods. Also have similar guides for Cleveland, Ohio and Birmingham, Alabama.

In addition there are tons of other turnkey markets out there besides KC. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

  • Cincinnati, Ohio
  • Dayton, Ohio
  • Toledo, Ohio
  • Youngstown, Ohio
  • Cincinnati, Ohio
  • Memphis, Tennessee
  • Saint Louis, Missouri
  • Indianapolis, Indiana
  • Detroit, Michigan
  • Erie, Pennsylvania
  • Louisville, Kentucky
  • Milwaukee, Wisconsin
  • Jackson, Mississippi

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or lose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

  • Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
  • Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
  • Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
  • Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
  • Make sure your property manager is a licensed real estate brokerage.
  • Google Clayton Morris Scam and/or Morris Invest Scam for a cautionary tale of what not to do when buying turnkey real estate
  • Understand you can not eliminate all risk, only mitigate it. If you are risk averse, real estate, (especially out of state) is not for you.

Thanks for this extensive list of information, I follow your work and podcast pretty frequently. Thanks for putting out useful content your list of zip codes is extremely helpful!

 

@Tonye Jack Correct. However based on my experience in REO for many years, certain counties required my personal appearance to turn on electric, handle unpaid taxes or any issue on my behalf this was need. Perhaps not a common practice but there were my eyes and ears and I trusted their judgement to handle and manage accordingly. ALWAYS ! check with your attorney.

@Jenny Roman ohhh! That would be annoying if I had to fly over to Kansas from NY because of that. I still don't have a preferred realtor yet but I will definitely keep that in mind. Will you recommend the PM to handle things like this as well? I'm wondering did your realtor charge additional for this service?

Originally posted by @Tonye Jack :
Originally posted by @James Wise:
Originally posted by @Tonye Jack:

Hello everyone! My name is Tonye Jack, and I am from Long Island, New York. I don't have much real estate investment experience, but I have a solid construction background, as Residential Construction Project Manager. My goal for this year is to purchase my first investment property by August and I'm currently trying to figure out how to make that a reality.

 Over the past year, I've been learning as much as I can about real estate through podcasts and reading several books. I narrowed my search to Kansas City, MO as the location in the midwest I would have the best chance of getting the benefits of cash flow and appreciation in comparison to the NY market. I am looking to do a variation of the Turnkey process which I would work with a project/ property management company to manage a light cosmetic rehab to build some equity in the deal and purchase the property on a discount. I would like to connect with any Property Management and real estate agents who have experience with out of towners. The locations in the city I'm interested in are Grandview, Raytown, Independence or any other solid B and C+ areas 

Welcome aboard. As KC was mentioned in this thread I figured I'd drop you a link to The Ultimate Guide to Grading Kansas City Missouri Neighborhoods. Also have similar guides for Cleveland, Ohio and Birmingham, Alabama.

In addition there are tons of other turnkey markets out there besides KC. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

  • Cincinnati, Ohio
  • Dayton, Ohio
  • Toledo, Ohio
  • Youngstown, Ohio
  • Cincinnati, Ohio
  • Memphis, Tennessee
  • Saint Louis, Missouri
  • Indianapolis, Indiana
  • Detroit, Michigan
  • Erie, Pennsylvania
  • Louisville, Kentucky
  • Milwaukee, Wisconsin
  • Jackson, Mississippi

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or lose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

  • Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
  • Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
  • Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
  • Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
  • Make sure your property manager is a licensed real estate brokerage.
  • Google Clayton Morris Scam and/or Morris Invest Scam for a cautionary tale of what not to do when buying turnkey real estate
  • Understand you can not eliminate all risk, only mitigate it. If you are risk averse, real estate, (especially out of state) is not for you.

Thanks for this extensive list of information, I follow your work and podcast pretty frequently. Thanks for putting out useful content your list of zip codes is extremely helpful!

 

Thanks so much, glad to know my shows have been helpful for you. Good luck down there in KC!

 

@Tonye Jack Not really since they are investing their time to help you build that investment portfolio and they will consistently get their sales % for each purchase. However this should be mutually agreed since there is time and money invested on their behalf as well. 

@Tonye Jack Hi Tonye, we were looking at KC, MO back in 2018 and did tons of reasearch for two months straight. My hubby and I flew there (i was 8 months preggo at the time, lol) and ended up buying something in Independence. We were new to the location and scheduled face to face interviews with property managers, turnkey investors and real estate agents. We decided to move forward with a house on the mls and bought from the agent because it was a great deal and the turnkey companies didn't have a home that was a good fit. We are looking to work with this agent again this year, she really cares aboyt your needs and grew up in the area. I can send you her info if you're interested. Out of the three turnkey companies we interviewed we were really considering two of them, i can send you their info as well.

Originally posted by @Jenny Roman :

@Tonye Jack  We don't figure realtor commissions or title commissions into the closing costs for bridge or fix and flip loans. That is a separate a\mount and typically I see 3% commission fee to a realtor

Ok. I'll have to check with the realtors I'm speaking with and see what their fee would be. Thanks!

 

Originally posted by @Jasmine Feeney:

@Tonye Jack Hi Tonye, we were looking at KC, MO back in 2018 and did tons of reasearch for two months straight. My hubby and I flew there (i was 8 months preggo at the time, lol) and ended up buying something in Independence. We were new to the location and scheduled face to face interviews with property managers, turnkey investors and real estate agents. We decided to move forward with a house on the mls and bought from the agent because it was a great deal and the turnkey companies didn't have a home that was a good fit. We are looking to work with this agent again this year, she really cares aboyt your needs and grew up in the area. I can send you her info if you're interested. Out of the three turnkey companies we interviewed we were really considering two of them, i can send you their info as well.

Hi Jasmine, that's great to hear I'll shoot you over a PM I'd love to connect more. Thanks