How is the market in Kansas City, MO for BRRRR?

Question

I am a new Real-Estate Investor and I am looking for my first investment using BRRRR. I'm in the process of educating myself and analyzing deals and living in Colorado Springs I don't have the most favorable local market so I am looking out of state. I landed on Kansas City, MO and I am seeing a lot of very cheap investments and running numbers (as novice as they are) it is looking very promising for someone who is just starting out. Monthly Cash Flow on a lot of the properties I am looking at are at 200-300 (I realize I have more due diligence to do). So it's making me wonder, is Kansas City worth investing in? As anyone found some decent deals recently in this city?

Luther Wilson III · Answer

For sure, @Hunter Bentz.  We're here in the Kansas City market making moves as well.  We're investing and we work with quite a few other investors as well.

Location is important...  You mentioned seeing a lot of very cheap investments.  There's a reason why you're seeing more of them that are on the lower end of the spectrum.  That's not exactly a good thing.  Invest there at your own risk...

A few things we've had to get real about:

1.  It costs more to get better product in decent or better locations now.  1a.  It also cost more to get properties renovated as well.  Your expectations may need to be adjusted.

2.  The "all in" costs (purchase & renovation) for most "deals" now are higher.  Not all of them - definitely a majority of them though.  Most of our best deals now are leaving us or or clients "ALL IN" closer to 80% - 90% of the ARV.  We're doing mostly BRRRs - I do not and have not worked with fix & flippers over the last 5 or 6 years for a number of reasons...  Mostly because I found it to be a waste of time.  Buy & Hold is where it's at for us right now, bro.

3.  True real estate investing is a a long-term play.  If you're planning to get in a try one deal then you might consider just forgetting about it.  I'd encourage you - just like I do all of my investor clients now - to set your intention to buy & hold properties for the next 5-10 years, at least.

If you have access to capital and aren't afraid to rehab and utilize leverage along with following the above then your odds of succeeding will be higher.

Here's what we've been targeting the last 3+ years and it's working incredibly well:  B-class single-family homes - ARV's in the $150k - $250k range and sometimes higher - no renovation projects over $90k yet lol - and we do some creative financing as well, which has been an absolute game changer.

Steven May · Answer

I have done BRRRR's in Kansas City and have assisted other out of state investors in purchasing BRRR's here as well. I invest myself so very confident in my numbers when I run an analysis for my clients. Happy to chat!

Dustin Street · Answer

@Hunter Bentz

Despite what some people say, I feel Kansas City is one of the more safe bets, as far as holding property goes, right now. I am a KC native so perhaps I am biased. But with prices everywhere being what they are right now, Kansas City is extremely cheap comparatively. Not to mention we have had a huge increase in both tourism, as well as people moving here. Not only are we increasing the size of the airport to account for the tourism, but we have several buildings under construction that, together, will bring tens of thousands of jobs here over the next 1-2 years. Business doesn't stop, it only adjusts, so we are also seeing a massive increase in out of state investors looking to get in where prices are more affordable. Right now more properties are owned by big companies than ever before, which is quickly decreasing the opportunities that smaller investors can pick up. Even people looking for personal properties are starting to pick up would be investment opportunities so they can beat market prices when purchasing their personal property. So between EVERYONE buying up our properties, the need for properties going to skyrocket over the next 12-24 months, and the available opportunities slowly declining, now is the ONLY time to buy BRRRRs out here. Because soon it's going to be near impossible to get your foot in the door. Also some key info here is that KC just declared $1200 a month for a 1 bedroom apartment as affordable, which means rent rates are about to get crazy high, and Overland Park was rated #5 in best cities to live in all of the country! I hope this info helps. If you want to look at some off market properties around KC shoot me a message.

Nicholas L. · Answer

@Hunter Bentz

doing an out of state BRRRR as your very first deal is going to be really, really difficult.  it's tough everywhere right now - good deals are harder to find, contractors are booked up, materials are expensive, interest rates are going up.  unless you find a killer deal you could get stuck with a lower appraisal and a higher mortgage amount on the refi.  if you're seeing something "very cheap" that other investors have passed on... it's likely not a great deal.  it's very unlikely to pick a random property on the MLS and crush a BRRRR.

why not pick a market somewhere you can drive to?  go to REIAs, visit 100 properties in person, network, meet agents and property managers, etc.

and if you haven't yet listen to Spencer Cornelia's episodes of the BP podcast.  he was flipping in Ohio from Las Vegas.  same exact process as a BRRRR up until the end.  he did a lot of things right and still ran into issues.

Patrick Drury · Answer

@Hunter BentzIf you want to do a BRRRR your best bet is through off-market deals.

Caleb Brown · Answer

Happy to chat! KC is still great for BRRR's. Interest rates does effect so you might have to leave some money in the deals. The good part about this market is you can negotiate and sellers are more motivated

How is the market in Kansas City, MO for BRRRR?

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