Investing in Rental Properties South of the River in Kansas City
Kansas City, Missouri, is a city rich in diversity and opportunities for real estate investors. Whether you're looking for cash flow, appreciation, or a place to park your money, Kansas City offers a variety of neighborhoods that fit different investment strategies. In this post, we'll focus on the areas south of the river, where many potential investment opportunities exist.
1. Understanding the Investment Landscape
When deciding where to invest in Kansas City, you first need to define your investment strategy. Are you looking for cash flow, long-term appreciation, or maybe just a place to store capital? The right property for you depends on these goals. In terms of cash flow, if you're working with a modest budget or don’t want to put a large amount down, areas on the eastern side of Kansas City can be a good fit.
In recent years, the demographic makeup of these neighborhoods has shifted significantly. With more Hispanic owner-occupants, these areas have seen improvements and are not as rough as they once were. While crime can still be an issue, many parts of these neighborhoods are relatively safe and offer solid investment opportunities.
2. Neighborhoods to Consider East of 71 Highway
East of 71 Highway is a prime area for cash flow properties. Many people who can no longer afford rentals in more desirable neighborhoods like Hyde Park, Brookside, or Waldo are moving east in search of affordable housing. This trend presents an opportunity for investors to upgrade properties slightly—without going overboard on expensive finishes—and still command a higher rent.
For example, simple improvements like adding a washer/dryer, enhancing the interior, or improving the landscaping can increase the appeal of a property and attract higher-paying tenants. While you don’t need to install granite countertops, making the property "nicer" than other nearby rentals can make a significant difference.
3. Rental Rate Insights for Properties
Let’s take a closer look at a few examples. For instance, a 4-bedroom, 1-bathroom house in the 3714 Belfontaine Avenue area could rent for around $1,300 per month, depending on its condition. If you invest in minor updates—such as adding a second bathroom or ensuring the property has in-unit laundry—you might be able to push that rental rate higher.
While properties in neighborhoods east of 71 Highway are often priced between $75,000 and $150,000, it's essential to consider other factors like property taxes and tenant demographics when calculating your potential return on investment.
4. Property Taxes and Tax Abatement Considerations
One thing to be mindful of when buying property on the Missouri side of Kansas City is the higher property taxes, which have spiked in recent years. However, if you invest more than $5,000 in property improvements, you may qualify for a tax abatement, which can help reduce your overall tax burden.
Make sure to factor this into your investment analysis, as it can influence your bottom line. If you're unsure about how this affects your investment, local property management companies like VP Property Management can help guide you through the process.
5. Areas to Explore: Vineyard, Ruskin Heights, and More
Aside from the areas east of 71, there are other neighborhoods worth considering. Vineyard, for example, offers mid-century ranch-style homes that may work well for rental properties. These homes were built in the 1950s and are typically 3-bedroom, 1-bath units that can be rented for around $1,200 per month after some modest improvements.
Ruskin Heights and Hickman Mills are other neighborhoods with newer-built homes and offer a good mix of investment potential. Properties in these areas tend to be split-level or ranch homes, which can be attractive to tenants looking for more modern amenities in an affordable price range.
6. Higher-End Areas: Brookside, Waldo, and Armor Hills
If you have a larger budget to work with and are looking for properties with higher rental rates, areas like Brookside, Waldo, and Armor Hills might be worth exploring. While the upfront cost of these homes is higher, they tend to rent for significantly more. For example, a property in Brookside could easily rent for $3,300 a month. These areas also attract tenants who are likely to stay longer, providing stability for your investment.
While these neighborhoods come with a higher price tag, they offer long-term growth potential due to their location and the consistent demand for rental properties in more affluent areas of Kansas City.
7. The Importance of Property Condition and Tenant Experience
Regardless of where you invest in Kansas City, one rule stands true: making your rental property nicer than surrounding rentals will pay off. A well-maintained home attracts better tenants, rents faster, and tends to stay occupied for longer periods.
Additionally, ensuring the property has essential features like in-unit laundry can improve your tenant experience and help you command higher rent. These small improvements may cost a little upfront, but they will pay dividends over time in terms of higher rental income and fewer vacancy issues.
Conclusion
Kansas City offers diverse investment opportunities, particularly in neighborhoods south of the river. By carefully considering your goals—whether it's cash flow, appreciation, or securing a place to park your capital—you can find the right property to suit your needs. With a little effort to improve the condition of your rental, you can secure better tenants, faster leases, and ultimately, a more profitable investment.
If you're considering real estate investing in Kansas City and want to learn more, feel free to reach out. My team and I can help guide you through the process, from property selection to property management.
Check out the video I made to go along with the post here https://youtu.be/R3ppSMPW1kA
Contact Us: For more information or to discuss investment opportunities, give us a call at 816-378-0007 or email Eddie at Eddie@kcvppm.com. Let us help you make your next investment a success!