First-Time Investment Strategy - Kansas City or Orlando?

[Nick Meservey]

Wishing everyone a happy Saturday! I'll start by thanking the BP community for the awesome content that is consistently provided on this website. I have only recently joined the discussion and it's been a valuable resource in getting my feet wet.

I'm working to make my first rental property purchase within the next 6-9 months and am targeting a SFR that I can buy-and-hold and provides good cash flow. I work as an engineer on short-term assignments, currently living in Orlando, FL but based out of Kansas City, MO. My remaining time in Orlando is ill-defined and could be 6 months, could be 3 years; however, my job pays for me to travel home to Kansas City on a regular basis. When my time in Orlando is up, I'll take another assignment somewhere else.

With this in mind, I'd love to hear input on how much my work situation should factor in on where I choose to invest. Is it more valuable to be present here in Orlando for my first purchase or does it make more sense to purchase in Kansas City from afar, knowing I'll be more connected to KC in the long term? Should I just focus on finding the best deal regardless of location? 

Orlando is often referenced as a great market for investors right now, but KC also shows a lot of promise from what I can see. People also talk about the broader market slowing down, but I like the idea of taking action now and using the experience to scale up if a buyer's market emerges.

Thanks,

Nick

[Chase Taylor]

I am newer to investing so I am looking forward to input from others but will share my feedback. I own a duplex in KC which I currently house hack. I also own a SFH in Orlando which is where I am originally from. What I have found (others may be seeing something different) is there is better cash flow at this time in KC; however, I see a better long term play for appreciation in Orlando. I flew to Orlando for the first time in a couple years last month and hardly recognized the city, the growth is incredible.

In either scenario you are going to need PM at some point so I would focus on clearly defining your short term and long term goals; are you trying to build a portfolio so you can live off the income, purchase a couple properties for supplemental income, scale a large RE business? Depending on your goals, I think this will better help you answer your own question. If your goal is a large portfolio, KC may be more appropriate because as you mentioned, you will always have ties there. Also, as you are from KC and presumably know the area, this may serve you well. 

One last major point I would focus on is financing. It sounds like even if you purchase in Orlando you will not be occupying the property? Based on this you will be paying 20%-25% down. If you purchased in Orlando, occupied the property however long that may be, you will have more flexibility for a lower down payment. Yes, you will pay PMI and have less equity in the deal which will hurt your cash flow but this may allow you to turn around and purchase another property much more quickly. Again, this goes back to your goals and risk tolerance. Hope this helps.