Investor · Sheidow Park, South Australia · Member since 2015 · 50 posts · 12 votes
Hi
I am Philip Charlton I am new to Bigger Pockets plus I am Aussie investor. My Plan is to get into the multi family units but need to start small have been show a few properties in Kansas City. What is Kansas like, is it a good area to look at investing? Is there bad areas to stay away from?
Any info, help, if there are investor looking to partner with an Aussie I am very keen to engage.
Los Angeles, CA · Member since 2016 · 22 posts · 4 votes
10y
@Mike D'Arrigo I'm teaming up with two other associates in California. We are looking to invest out of state. Initially we were leaning towards Texas because it appears to have a solid and steadily growing market. However property tax in Texas is astronomical, which has turned us off that area. We've recently been looking towards KC. With the low prices, we could possibly manage a duplex or triplex.
As first time investors, is there any advice or general info you would recommend to us for the KC area? Thanks.
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
10y
Hi Christopher,
It's not just property taxes but insurance that is astronomical in TX. They are real cash flow killers. The best advice I can give you is to invest in good areas within KC and stay our of the inner city. Especially if you're going to be investing in duplexes--it's even more important then. The area's that I like are outside the 435 loop in Independence, Raytown, Grandview and the area around the old Bannister Mall where the Cerner project is going in. Feel free to reach out if you'd like to talk.
KC is a great city for investors! Both the inner city and the suburbs. PM me for a list of great properties in Kansas City.
Kenzie Its not saying that you can not find great deals for folks. I just worry when I see some one inner city. What does inner city mean to you. I am reposting an article for ,you I just answered other folks on lower end deals. I am doing the webinars from a few different markets. As soon as I see 3bed bath, 4 bed 1 bath. You can tell the area you are dealing in. Promise not knocking you, I hope to educate folks. This is where I took major bath ( lost everything at one point) why I tell folks detailed information about lower end rentals.
Just thought I would send a recent post I did on BP for some one promoting lower end deals I always look forward to some feed back. Hope your learn some thing about Charlotte from it.
The problem with the lower end assets, they are such a more hands on investments , just more of a headache. Which I'm about to tell you why. Yes, on paper the entry price point looks great. So folks are only seeing one side of things. Lower end properties tend to be higher maintenance, higher expenses, and much higher turn over rate. Another factor is the rental prices aren't making sense, while still continuing to rise. We owned 37 of these exact type of homes (lower end in RH SC during the timeframe of 2004 -2009). So I'm speaking from experience, these type of assets tend to burn holes through investors pockets. Most folks start here, (1) Because they do not know any better and (2) The price point is much more attractive. These are what I like to call recycled product ( Quote by "Jay Hinrichs") , which usually has a 5 - 8 year shelf life. Or in better terms " the game of hot potatoes"- who or which investor is getting stuck holding the bag. Easy way to look at things are any institutional, or Hedge funds buying in this asset class. Now they are mostly buying A - B assets. Their is a reason Wall Street, and most private money are parking their funds into higher class assets. Most times this is why newer investors, jump in because its all that is left on the table for them ( lower end )or what the Gurus are selling.
The information above from Cindy is great. I've spoken with Cindy here on BG a few times. I told most folks here on BG and in many seminars that if I sit at computer long enough I can dig a lot of great information up to prove what a great city Charlotte is. We are Atlanta's little teenage brother growing up (fast) We are all lucky to be in a booming city basically still many years of growth left
I have to disagree on this being a good buy and hold market on most markets. From 2009-2013 this was one of the best buy ,and hold markets. Today we are facing an over priced market, rental returns are much less. I have some left over stock still holding from 2009. I was buying from $40k to $50k range. Same house now priced in $100k - $120k pre-rehab price range. I was also buying in 4 states; NC, SC, Georgia, & Florida. With that being said, "one man's junk is another man's treasure." So for out-of-state folks with (ex: California or NY) they tend to have much higher entry points. So buying a house here from $100k $150k with 1% rental rule. Still makes this a very attractive market for out-of-state or international folks. This does not mean we have a great buy and hold. For me personally, it says we are lucky that we still have a lower entry point then most folks markets.
If we jump in and really become bit more analytical. It is cheaper to build than buy today. We will be building new construction rentals for a few years. I am seeing this as similar to the 2000-2004 market. So the box Vinyl Village type homes is the current build (mixed in with townhomes, duplexes, quads). That mixed with real estate cycles , which very folks even discuss or understand.
Now back to the 10% Cap rate this is why most international folks are going to get burnt, and USA folks will as well. When investing in these lower end asset classes, Folks brought in cities like Detroit and Michigan. Promised a 20% return on the properties. I challenged folks to show me that over 5 years period (I am sure those returns are a lot less). Keep in mind this has nothing to do with the homes. It has everything to do with our economy, salaries for the lower income bracket, and a renters mentality. No security in those type of jobs with very little insurance benefits so job changing is common among lower end renters. It is very hard for someone paying 35 to 45% of their income to pay rent. I know here comes that chatter, well property management will handle that, right? We owned a management company from 2009 -2013. We lost our asses with that side of the company. I did it mostly for our turnkey clients. Good Rule of Thumb for any management folks who want to get in the business. Get 300 homes plus or get out of the business. Not profitable with out the inventory.
Now back to low end assets, very rare you are every going to sell, and get retail prices in these areas. How many USA folks move to rental areas? Once a area is over 50 % or more rentals, values will eventually drop as will the area. We have artificially inflated prices, in most of the areas with cash sales to out-of-state folks, or local cash buyers( who just don't know any better). Basically most people are showing up to the table, and all we have are scraps left! This is not just here; Kansas City, Indianapolis as most markets to just a name a few are going through same thing. I still jump on 3 to 5 webinars month with out-of-state folks seeing what they are selling. So limited sales potential down the road for every one.
I was working with as well as being one of these turnkey groups for a few years. We all setup table and booths in LA, San Fran, and other markets. Selling our cities, and our turnkey deals. Me and a few of the guys we got smart, and jumped into the international markets. I still play there my self and see a strong demand for the turnkey product (just not worth it for me). Folks if someone was to start a local solid turnkey business here in Charlotte NC (5/month ) there is a good demand out there for this product.
Now for the lack of inventory. We had a few smaller hedge funds here in 2011-12 buying before most folks realized. They were already here buying smaller up to 100 homes.. Then the big boys like invitation homes (Blackstone which is a large wall street fund for folks who don't know ) came in purchased 7000 plus homes in little under a year. Most of the vinyl villages, anything built 2000 above; 3bed 2 bath or larger was their focus. Banks are realizing they can go into the property now . Taking a lipstick approach to rehabbing. Sell it them selves as well. So that's a few reason for the lack of inventory.
Lender · Los Angeles, CA · Member since 2008 · 35 posts · 9 votes
9y
Wow! What a great thread I'm reading today. Thank you all for all the comments and info. I'll be in Kansas in a few days and will look at a few properties. I've been visiting Kansas few times a year for the last 15+ years. Great area for cash flow. I've done several loans for my clients but never purchased anything for myself. I should have.
Wholesaler · Lansing, KS · Member since 2015 · 92 posts · 13 votes
9y
Susan Chagalian let me know if you need any help I am an agent and investor in the area. I have a SFR that would be a great flip if you are interested.
Investor · Kansas City, MO · Member since 2016 · 56 posts · 9 votes
9y
Hi Phillip,
As a 37 year resident of Kansas City I know most areas pretty well. We manage and sell properties here with a great track record. I'd be glad to help you any way I can.
Real Estate Agent · Blue Springs, MO · Member since 2015 · 104 posts · 49 votes
9y
A very good thread love all the helpful information. I am dying to get into this and start with my first rental. I have just been waiting until I purchased a home for my family first. It just doesn't seem right to me to buy and invest if my family doesn't have a home of our own. With that been said we are pre approved and will be buying soon within the next 3 months. So then the game really starts for me I'm so ready. @Mike D'Arrigo I know we have spoke once or twice or so and as soon as I get this going I'm sure I will be contacting you with some questions. I'm looking for some lenders as well and been contacting agents. My question is do I really need an LLC before I start buying or can I wait till I have at lest 2 or 3 properties? I want one because of obvious reasons tax breaks and savings. Just not sure if I need it just yet and does anyone have a good real estate lawyer that I can contact so I can get them on my team and I want them to look over these contracts that I have so I can make sure their legal. Thanks again in advance for all the help and information.
Real Estate Agent · Blue Springs, MO · Member since 2015 · 104 posts · 49 votes
9y
Also I was thinking about buying a turnkey first. Reason being is I need more funding for marketing so I was thinking that a turnkey would be easy to get some extra cash flow so I can market more. I thought that it will be a little easier since someone will manage it for me so I can focus on other deals. Any and all info is requested on or about turnkey's and their success and operations. Do any of you all think that it would be wise to go this route first?
My question is do I really need an LLC before I start buying or can I wait till I have at lest 2 or 3 properties? I want one because of obvious reasons tax breaks and savings. Just not sure if I need it just yet and does anyone have a good real estate lawyer that I can contact so I can get them on my team and I want them to look over these contracts that I have so I can make sure their legal. Thanks again in advance for all the help and information.
It's unlikely that you'll be able to buy in an LLC so I wouldn't worry about that. Lenders require that the property be in your own name.
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
9y
When researching the KC metro area don't forget to look North into St. Joseph and the area around MCI. Lots of growth there and for that matter the entire NE quadrant of the state all the way west to Junction city is hopping. I've been involved in a new subdivision just West of Manhattan and that area has been crazy for some time.
And for those who missed it - Tim "the tool man" Allen has been interviewed about his decision to move to Junction City. Go figure!
Monica King and I manage properties across the Metro area in Kansas City. Our office is off 51st and Prospect in Kansas city. I'd be glad to help in anyway.
Contractor · Seattle, WA · Member since 2020 · 19 posts · 6 votes
6y
@Gordon Cuffe
Hi Gordon, I’m looking at investing in KC, MO, is it possible to connect in private messages? Because I seen you mentioned something about good zip codes to invest in.
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