Kansas City MO Investing Out of state - Feedback Needed

[Krish Das]

Hello,

I am an out of state investor trying to buy a portfolio of houses in Kansas City MO Zip code 64130 and 64128. All the houses are more than 100 years old and the rents are between 550 and 700 per month. I am looking for advice on potential issues that I should be aware of, and whether it will be a good deal or not. The house prices are between 35-40k, conditions are both good and bad (some need minor to moderate repairs). I would love to know about the rental market, the rental season, the pros and cons about those zip codes areas, things I should be aware of. Your feedback is valuable, since I would like to evaluate whether i will end up with some lemons or not (good deal or bad deal). The street names and the zip codes are as follows:

Monroe Ave, 64130

E 43rd St, 64130

Euclid Ave, 64130

Park Ave, 64130

S Benton Ave, 64130

Myrtle Ave, 64128

Bales Ave, 64128

Indiana Ave, 64128

Thanks,

KD

[Pinder Cheema]

Hi @Krish Das, I think you need to understand that you are not going to attract stable and long-term tenants. Most of the class D tenants stay for 9-12 months and usually leave behind a long list of problems thereafter. This means that you will spend a significant amount of CapEx funds maintaining your property, which will eat most of your net cash flow year after year. Another thing about class D properties is that you will almost always have to under-price the rent to drive normal occupancy. There is never a dearth of class D rental properties, but there is always a shortage of good class B and C properties in every MSA. As mentioned by the others, management is always going to be a struggle for both you and your prospective property manager. I would always go with a property manager that specializes in class D properties, however, even the best property managers feel burned out over the constant day to day struggles of managing a class D property. The best possible scenario for a class D property would be to rent to section 8 tenants, however, there are always caveats associated with section 8 as well. All in all, class D properties always look great on paper, but there are several caveats that almost always doom the NOI forever. I agree with @Lee Ripma that you should maybe check out the areas you are investing in as that will totally change your prospective of class D properties.