First-Time Investment Strategy - Kansas City or Orlando?

Question

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

Hunter Locke · Answer

I'm with @Mike D'Arrigo, let the numbers be your guide!

Nathan Brooks · Answer

@Nick Meservey I don't know much about the Orlando market but you definitely have to be comfortable with whatever your decision is. My team is based out of KC and there is a lot of good stuff going on here in the city. All If I can help in anyway on the KC side ... whatever might be helpful, happy to help!

Mike D'Arrigo · Answer

@Nick Meservey In my opinion, your work situation shouldn't be a factor at all. That has nothing to do with whether it's the right market. The only factor that should matter is which market fits your investment objective best and allows you to achieve those objectives. I don't know the Orlando market but I do know FL has very high insurance rates, much higher than Kansas City so be sure to factor that in to your analysis, I do know Kansas City very well and can tell you that it has a good combination of both good cash flow and strong economic and demographic trends. I'd be happy to share my insights and experience in KC with you if you'd like.

Chase Taylor · Answer

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.

Nick Meservey · Answer

Nick Meservey · Answer

Loni Louise Bernard · Answer

@Nick Meservey You are in the perfect market to invest in, it would be easier, especially on your first investment to stay here in KC. You can be more involved, great training ground with solid CAP rates. Our boutique Realty co serves several small investors. My son is also an Engineer here, at Garmin, he's investing in his first rental this spring. We have low PM fees if you don't want to manage it yourself. Good luck!