Investing in Lee's Summit

33 Replies

Good Morning!

So I'm a total newbie here. I'm looking to get started in investing and would like to start close to home here in Lee's Summit, MO. I'm having trouble finding anything with above a 10% ROI, unless I move more to Raytown or Independence. Is this accurate or am I maybe missing something? I'd love some input!


@Micah Hensley , I'm just shooting in the dark here but it sounds like you're prioritizing drive time and convenience over the investment perhaps?  I own 20+ houses in the KC area and none are in Lee's Summit because I can't make the returns my model demands.  However, it's a great area for long term appreciation potential.  Everything depends on what you're trying to accomplish - you'll have to provide a lot more info on what your goals are, when you want to achieve them, how you're buying, how you're exiting, why, etc. if you want actionable advice.  

That said, there is plenty of opportunity to use leverage and market intelligence to get near infinite returns using the BRRRR method. Please fill us in a bit...

@Don Nelson, 

What I want to accomplish. I would like to start generating some cash flow, but I believe we will be buying and holding so I do want some appreciation long term as well. My goal is to build a portfolio that eventually supports my family. I started looking in LS because it's close to home so I know the area well and because at least for the first few we will likely self manage. 

I am also very interested in the BRRRR method as well. But right now I think something that has immediate cash flow b/c of renters already present may be a good idea just to get me started.

But hey, like I said I'm a newbie and open to advice!

Hey @Micah Hensley,

I have the same issue in Overland Park (where we live). I actually just told my agent to change my MLS prompts to focus on properties under 100k and in areas like Grandview and certain zip codes up the stateline. I'm hoping to get my first property in 2020 using brrrr.

Great ideas on both counts.  It's just too much to give my opinion on how to accomplish what you want in this thread.  Keep digesting info and seeking education until you feel comfortable.  As for me, I focus on C class properties in south KC and along the Troost corridor also (redevelopment happening and a lot of investor money going in between the highway and Troost, north of 80th St).  My buying criteria is a value add model, seeking at least 1.4% rent ratios (monthly rents are 1.4% of my all in number).  I'm accomplishing this by purchasing homes from $30-$70K, doing rehab and renting to stable tenants.  My expenses are:

1 month vacancy divided by 12 months

10% repair and maintenance per month

Taxes/Insurance

I don't pay utilities and never buy something that's not separately metered. I do my Capex work up front so don't do reserves on that. I buy, rehab, and in most cases refi within 4 months and leave an average of about $5k in the property, earning $200/door minimum net cash flow. So, on $5k investment, I'm getting ~50% ROI. In some cases, when I refi I actually get money back and get infinite ROI.

This is definitely not the only way to do it and many will have different ideas out there.  but so far it's working for us and we are clever in lease structure so our actual repair/maint is more like 4%.

Hope that helps.

@Micah Hensley If you're really wanting to delve into the analytics of the property I can provide you with CMAs. Which will be more accurate from non MLS data i.e. (Zillow,Redfin, Trulia). Also with the market still being so hot offers being put in with site unseen, my client portal adds new listings atleast 1 day prior to hitting the public domains such as Zillow. Let me know if want to get setup!

@Micah Hensley - I grew up in Lee's Summit - but for the last 5 years have found myself living and investing up here in Maryville, MO. While I have been investing in my own back yard, I've heard it said before, "Live where you want and invest where it makes sense." 

Like mentioned in a post above, there really isn't a black and while answer on what is best for you. It really depends on your situation and your goals. Almost anything will cashflow if you have enough equity in it (i.e. no mortgage). Are you in a situation where you have ample amounts of cash (high income earner) and are looking to stash it in houses? OR did you spend the last 5 years saving up a 20% down payment for a $100K investment property and it will take you another 5 years to save up for the next? How much cashflow are you looking to generate? By what date?

@Micah Hensley - Great to hear of you being a teacher - Much needed! My observation is that KC has national (if not international) attention as a good place to invest... Which could make getting started a bit harder. The nice thing is if you ever decided to move out of town / state, all the necessary infrastructure (property managers, contractors, etc.) is at your fingertips.

A couple questions

- What is wrong with Raytown / Independence in your opinion? Even though they might be "rougher" areas, not all of it is bad.

- Have you ever considered investing outside of the direct KC Metro area? It might be easier than you think. I've personally never done it, but a good buddy of mine has been successful in doing so and he isn't a rocket scientist OR a trust fund baby.

- You want to replace your income. Do you want to quit your job? If so, what is the amount of passive income that will allow you to quit? How soon do you want to be there?

    Hey I am from Blue Springs so I am familiar with LS.Lee's Summit is rising in cost you used to be able to find properties under 120K on the MLS now it is 160K+. I would either turn to off market or look into Raytown, Grandview, Independence, KCMO(not war zones). My investors rarely find cheaper homes in LS unless we go straight through seller. Hope this helps.

    @Matt Crawford

    We've actually looked at property in Oklahoma where my wife's parents live. Looks like there's potential for good ROI there.

    I’m not opposed to raytown or independence I just don’t know as much about them to know what areas are better for looking for homes in!


    @Don Nelson

    I like your model and your simple explanation. I had two questions.

    1. Are you getting the loans thru your personal name or LLC?

    2. It appears you are investing out of state. How are you managing your rehabs?


    @Joel S. - I use an LLC and a commercial lender for both purchase and refi. Purchase lender needs 10% of price down and will finance up to 100% of rehab. Refi lender is 70-75% LTV refi after 3 months of ownership. Regarding management, it took time but we built a team of people - GC and subs on the ground, leasing specialist that gets paid a commission ($300), a couple of different agents feeding us deals and we utilize Zillow a lot to find them too. Using Cozy for management software.

    @Don Nelson

    I have single family home rental in the Waldo area and am planning on my next investment move.  I recently moved away form Kansas City (where I did the renovation on my current rental property) to Rhode Island but plan to still invest in that area.  Do you have any recommendations for general contractors in the area?

    Originally posted by @Don Nelson :

    @Joel S. - I use an LLC and a commercial lender for both purchase and refi. Purchase lender needs 10% of price down and will finance up to 100% of rehab. Refi lender is 70-75% LTV refi after 3 months of ownership. Regarding management, it took time but we built a team of people - GC and subs on the ground, leasing specialist that gets paid a commission ($300), a couple of different agents feeding us deals and we utilize Zillow a lot to find them too. Using Cozy for management software.

    Who are your purchase and re-fi lenders? 

    Thanks.

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