Investing in Kansas City’s Real Estate Market: A Smart Move
Buying investment property in Kansas City's real estate market presents a compelling opportunity for both new and seasoned investors. The city's unique blend of affordability, steady growth, and strong rental demand makes it an attractive destination for property investment.
Why Invest in Kansas City?
- Affordable Property Prices: Kansas City offers property prices below the national average making it a compelling place to buy when you want a property that is going to cash flow without a large down payment. The average home price in the Kansas City metro area is $286,747, 17% below the national average. This affordability allows investors to acquire properties without overextending financially.
- Strong Rental Market: The city's rental market is robust, with a significant portion of the population opting to rent. Approximately 31.52% of Kansas City residents rent their homes or live in apartments. This consistent demand ensures a steady stream of potential tenants for rental properties. We want to caution people to understand the tenants rights groups before they buy in Kansas City proper.
- Economic Growth and Job Opportunities: Kansas City's economy is diverse and growing, with key industries including transportation, tech, and manufacturing. The area added over 12,500 residents in the year ending July 1, 2023, making it the 31st largest U.S. metro. A thriving economy attracts more residents, increasing the demand for housing.
Purchase Price vs. Rent Income
The balance between property prices and rental income in Kansas City is favorable for investors. The average monthly rent in the Kansas City metro area is $1,405, 29% below the national average. This rent-to-value ratio indicates that investors can achieve a healthy return on investment, with rental income effectively covering mortgage payments and other expenses. In other markets outside Kansas City the rental income might not even cover the monthly mortgage payments causing landlords to have to put in a lot of money upfront or come out of their pocket each month, which is a losing proposition.
The Importance of Good Property Management
A good property management company can make a significant difference in the success of your real estate investment. Here’s why hiring a professional property manager is a smart move:
- Market Expertise: A knowledgeable property manager can advise you on rental rates before you purchase a property, ensuring that your expected rental income aligns with market trends. Kansas City has a wide spectrum of housing options and depending on where you buy knowing what the renal demand is in those different neighborhoods is helpful especially when you do not live here.
- Repair and Maintenance Insights: Property managers can identify potential repair costs before you buy, helping you avoid unexpected expenses and ensuring your investment remains profitable. At VP Property Management we have renovated over 40 single and multi-family properties so we have expertise in evaluating a properties condition.
- Tenant Screening: Having a good tenant is crucial to minimizing vacancies and maximizing rental income. VP property management can thoroughly vet tenants, reducing the risk of late payments, evictions, and property damage. On top of that we meet all tenants and have face to face conversations with them, which not all management companies do.
- Reduced Vacancy Periods: With effective marketing strategies, quick turnaround on repairs, and proper tenant retention plans, property managers can ensure minimal downtime between renters, keeping your cash flow stable. A big reason why investors switch property managers is because they have too many extended vacancies.
Demographics of Renters
Understanding the demographics of renters in Kansas City can help tailor investment strategies:
- Young Professionals/older retirees: Areas like Downtown Kansas City and River Market attract these demographics seeking proximity to work and entertainment. While younger professionals are looking for fun the older demographic is looking for a place they do not need to maintain.
- Families: Neighborhoods such as Brookside and Waldo are popular among families however the schools in those areas are not awesome unless they pay for private education or get their kids into a charter school. Houses in Johnson county, Platte County, Clay County are going to be much more desirable if you are looking for an investment property in good school districts.
- Students: The presence of universities like the University of Missouri-Kansas City means areas like South Plaza have a high student rental population. These might be looking for larger houses that multiple friends could live in to reduce the cost of rent. Renting to students comes with its own challenges, there may be more wear and tear on the property and maintenance cost could be higher because of that.
Buying investment property in Kansas City's real estate market offers a blend of affordability, steady appreciation, and strong rental demand, making it an attractive option. By conducting thorough research, leveraging good property management, and staying informed about market conditions, investors can capitalize on the opportunities this vibrant city presents.
If you are looking for investment properties in Kansas City VP Property Management would love to talk with you about how we can help be your trusted partner. Email eddie@kcvppm.com