Seeking information about MFH investment in Kansas City

[Rashmi Nigam]

We are looking to purchase a MFH in KC but do not have much local knowledge of the market. Seeking to speak to people who can give us some info.

[Mike D'Arrigo]

Originally posted by @Account Closed:

Originally posted by @Mike D'Arrigo:

Originally posted by @Account Closed:

Originally posted by @Mike D'Arrigo:

Originally posted by @Account Closed:

I think there's a KC forum.  Check under the local forums.  Also, be sure and check out the tax rates.  I'm not familiar with KC, but some of the midwest states have really cheap prices, but crazy high taxes.

Kansas City taxes are on the low side They're around 1% of assessed value. 

 I see that you profit from promoting KC investments to people out of state. So, let me ask you this, when you say KC taxes are only around 1% of assessed value, can KC reassess the value of the property every year?  As you know, as someone who lives in CA, that is the beauty of owning CA real estate - that our property cannot ever be reassessed to a higher value after the date of purchase, which is pretty much unheard of anywhere outside of CA, due to Prop 13 which we voted into existence back in the 1970's because homeowners here were being taxed out of our properties.

KC might be a good investment for a savvy investor, but, I guess I'd ask why you live in CA if KC is so great?  Why not go all in on KC property as a person who also lives there?  

I know why.  Because you get a better deal by owning a property in CA that can't be reassessed, and your property is far more likely to increase in value over time in CA.

And, obviously, you still come out ahead as far as your income as a CA resident, in spite of CA taxes. So, the smart person would ask - why would someone who lives in CA be promoting KC properties? 

Sue, I'm a bit puzzled by why you question my choice to live in CA and promote Kansas City. I am a CA native. Why would I move to Kansas City simply because it is a good cash flow market. I believe in investing in the best markets and living where you choose. There is no need to live in the market in which you invest. In answer to your question however, Kansas City properties can be reassessed every 2 years, not every year. I have been active in KC for around 8 years and I can assure you that taxes have increased very gradually during that time. A I don't know how long you have owned property in CA but you are very wrong about your claim that properties cannot ever be reassessed to a higher value after the date of purchase. That is just not true. Taxes are based on the transfer price of a property upon sale and under proposition 13, reassessments are capped at 2% annually. I'm surprised that you don't know that. A 2% cap on a $1M property in CA still results in a $20,000 increase in assessed value. That would be the equivalent of a 20% increase in Kansas City.  

 No, this is not accurate.  When someone buys a property in CA, their property taxes are based on that price.  As long as they, or their heirs, own it.  This is not a "re-assessment", it is an original assessment, based on the sales price.  The property is never re-assessed for tax purposes.  The taxes going forward can never be raised more than 2% per year max, and many counties raise the rates less than that.  But, this is not a re-assessment of the value of the property.  This 2% max is always based on the purchase price, even if the purchase price was way back in the 1970's, when Prop 13 was passed.  I actually remember this happening.  People were being taxed out of their homes in CA, and there was a huge exodus from the state by people who couldn't pay their taxes anymore.

This quote from your post is laughable:

A 2% cap on a $1M property in CA still results in a $20,000 increase in assessed value. That would be the equivalent of a 20% increase in Kansas City.

Just wow.  Soooo, there are no million dollar homes in KC.  Okay.

Or..... since $20,000 would be a 20% increase, then homes are worth $100K in KC?  Okay.

So..... none of the above answers the question that is begged here - how often are KC properties reassessed?  What is the property tax base?

The fact that you are not coming back with these types of answers tells me that the property tax situation in KC isn't ideal, and you're hiding this from your potential customers.

This is what I try to let investors know, when they are lured by cheap purchase prices out of state.  You can find cheap purchase prices in a lot of other states, but their tax base can be insane, and they can reassess whenever they want to and good luck fighting them on it.

Sue, I really don't understand your hostile attitude here but you really need to educate yourself on this topic. It most certainly is accurate. The 2% cap is on assessed value. Taxes are based on assessed value. If assessed values could never be increased then there would be no increase in taxes. The CA tax rate is 1% and then there are local taxes on top of that. In most counties, it averages about 1.25% of assessed value.  That being the case, taxes on a $1M property would be $12,500 per year. Based on the 2% cap, the assessed value could go up to a maximum of $1,020,000 putting the taxes at $12,750. This link will help you understand this. https://lao.ca.gov/reports/2012/tax/property-tax-primer-112912.aspx Please read this and learn the facts before continuing to make incorrect statements. 

You also need to read my response more carefully. I most certainly did answer your question. I told you that property taxes can be reassessed every 2 years and that in the 8 years that I have operated in the market, they have increased only moderately. You obviously do not have any experience in the Kansas City market so rather than make unsubstantiated claims, I would encourage you to educate yourself by picking any property and go to the county tax assessors site and look up the tax history. It will show the the last 4 years of history. You will clearly see very little increase over the 4 years. 

So as far as prices go, the medium home price in Kansas City is $176,000 so there are obviously very few million dollar homes there. There are currently 1,546 homes listed for sale in KC right now. 45 of those are a million dollars or more. And yes, the price of a typical rental home is around $100K. 

If you would like to take some time and educate yourself more and have a more civil dialog, I'd be happy to do that.