Hello from Austin! Two newbs excited to get into MTR strategy

[Katie Kantzes]

Hi everyone - my partner and I have been following BP for quite some time, and we are excited to be in a position to take action.  We just need help busting out of analysis paralysis.

Here are our stats:

*We have 200k cash along with a $200k HELOC to invest

*My partner owns a paid off condo (worth ~$250k) and a 3/2 house ($199k left on the mortgage, worth around $525k), both in Austin.  We reside in the latter home.

*We have our sights set on moving to Colorado within a year and hope to achieve financial independence through real estate investing.  We are focused on cash flow potential.

Here is our tentative strategy:

We are interested in MTRs and furnished rentals, but are avoiding STRs due to increasing restrictions.  We are researching markets but are overwhelmed by the number of options and ways to get in.   Austin is out, as cash flow is difficult here and we don't want to stay in this location (nor do we want to house hack here). We are considering locations such as Omaha, Kansas City, OKC, and Des Moines because of the number of hospitals in these locations, which should help to attract travel nurses.

Our questions for you:

First - Does anyone have experience in these locations, or have other suggestions for us to consider?

Second - Should we begin with single family homes, or try multi-family to start?  How much should we invest in the first property or, alternatively, how much should we keep in reserves for purchasing other properties?

Third - if y'all are, or know of any investor-friendly agents in these locations that are open to talking with us, we'd love to get a conversation going.

Thanks so much for reading.  Best wishes to all of you on your real estate investing journeys!

[Laura Williams]

@Timothy Howdeshell Kansas City  (since I've been investing here in 2014) has had very strong rental demand and appreciation. I think it's a good market in general as long as someone's numbers pencil out & the property makes sense. Long term -such as unfurnished yearly rentals have always been strong here & I haven't seen any issues in oversupply in that area of the market. In fact city leaders have said there is a shortage of affordable housing in KC.

When I mentioned to pause investing here it was more specifically targeted at the shorter term furnished properties (30 + day and under). To give history as to why we had an airbnb explosion (as many cities did) and at the height there were 2250 short term rentals in KCMO and only 7-8% of those were licensed and legal. Some neighborhoods were becoming overwhelmed with short term rentals and upset that operators were not following the law to get neighbor permission before opening up nextdoor to them. So the neighborhoods united together and pressured the city council/mayor to make it illegal to have a short term rental in any residential zoned property (unless you are an owner occupant) and for commercially zoned properties they have be at least 1K feet away from any other airbnb -which is like a unicorn to find.

Luckily they did grandfather in the already licensed properties and many of the illegal STR got licensed last minute so we have around 450 licensed STR in KCMO now. But there are still around 1500 ilegal airbnbs on the chopping block that the city is going after and pressuring Airbnb/VRBO to delist and have already turned them in for tax fraud and can now fine them 1K/a day for illegally airbnb. They do not have a path forward at all to become legal/registered unless they can prove they are an owner occupant and even so they can only Airbnb a maximum of 95 days a year (as a whole house rental without them being there same time) according to the new ordinance.

Also neighboring areas outside of KCMO now are cracking down too. North Kansas City just completely banned airbnbs a couple months ago & didn't grandfather anyone in and now the Kansas State side is starting to discuss banning Airbnbs on that side such as Shawnee and Overland Park etc. https://www.kansascity.com/news/politics-government/article2...

So with this new ordinance just passing in May 2023 in my humble opinion there's going to be a big oversupply of furnished monthly rentals for the next short while as most of the illegal airbnbs will likely try renting for the 30 day + (or midterm market) which is legal as 30 day + isn't considered "Short term". I have a friend who specializes in monthly renting to travel nurses who tells me it's a blood bath for him due to all the illegal Airbnbs flooding the 30+ day market. So I would recommend anyone wanting to try the monthly furnished rentals like for travel nurses to wait a few months or a year before getting in until the inventory has thinned out a bit. Or maybe buy and rent it out unfurnished for a couple years and then turn it into a mid-term rental after things settle down.