Kansas City has been trending with real estate investors. It could be one of the best destinations to invest in property this year. Here’s what you need to know to make the right moves and get the most out of your investments.
Kansas City Real Estate
Zillow ranks KC as one of the hottest property markets in the country. While some major coastal cities are going through a correction, Kansas City home values have still been going up. They are predicted to rise by at least another 2.3% in 2020.
The median home value here was just $149,500 as of the fourth quarter of 2019. The median asking price per square foot is around $134. With average rents only $1,025 per month. That is at least 30% less than the national average.
This has become one of the most popular cities with millennials seeking a great balance between affordability and lifestyle. New remote work trends mean that even though Kansas City has a strong job market, online workers can make Silicon Valley and New York City wages, but live here and pay a tiny fraction of the housing costs.
As other big cities have become overheated and too competitive, KC provides real estate investors with opportunities that can still cash flow and have room for growth. It can be a great place to buy to live, build a rental property portfolio or flip houses.
What Makes A Smart Property Investment?
No matter where you are looking to invest, there are three key principles that are core to your success.
- Make Your Money When You Buy
Speculating on appreciation is not much more than gambling. Look for discounts and properties that you can add value to with improvements.
- Know Your Numbers
Renovating properties can seem like a great way to flex your creative side and design skills. However, as Warren Buffett says, “The best investments are the most businesslike.” If you are doing this to make money, treat it like a business, not a hobby. Be objective and focus on the numbers.
- Have a Great Team Lined Up to Help
You can’t do it all yourself. Your ability to turn an opportunity into a profitable property is all about having the best team of contractors lined up to quickly work through your punch list.
Know What You Are Really Buying
New real estate investors struggle when they don’t really have a handle on what they are buying. Do your homework.
A title and lien search and survey will show you exactly what you are buying. It will define your ownership rights and the boundaries of the property, as well as any debts attached to it.
Property inspections and contractor quotes will help you assess exactly what you are getting with the property. It will help you assess a fair offer, create a rehab budget, and make accurate profit projections. Be sure to inspect for those less obvious and more expensive repairs, like foundation cracks, pest inspections, plumbing and electrical and roofs that need replacing.
Be sure you know the market too. What can this property really rent for? What can it really sell for? How long might you have to hold onto for a renter or buyer?
Financing Your Investment
One of the best benefits of investing in real estate is the ability to use financial leverage. This can come in many forms. The more capital and credit you can line up in advance, the more flexibility and breathing room you’ll have.
These options may include:
- Personal, business and home equity lines of credit
- Portfolio loans for financing multiple properties at once
- Vendor and contractor financing
- Hard money loans
- FHA 203k loans
- Rehab and construction loans
- Private lenders
- Equity partners
- Real estate crowdfunding portals
Kansas City, MO has become an increasingly attractive place to move to and invest in real estate. It is an affordable market with lots of room to grow. One which is expected to be a top performer. Stick to your investment principles, know your numbers, thoroughly inspect what you are buying and get great help to make this a truly profitable investment. One which you can keep replicating to grow your portfolio and finances.