Rental property in Kansas City is changing…economics wise. Let me tell you what I’m seeing from three different prospectives.
On the Kansas side if you are a tenant you have choices but you also have to act quickly. In Johnson County we, as property managers, cannot rent houses fast enough. I would LOVE to have more 3-4 bedroom, 2 bath homes for rent. Rents are up and competition is up which means a lot of frustrated renters.
On the Missouri side we are seeing rental inventories rise. Therefore you have a little more time to make a decision on your next home and rents are beginning to hold steady. No more inflation on rental prices do I see in the near future.
Tenant selection for the last couple years has been easier than in previous years. You have multiple candidates and even though credit history may have been bad you had recovering income. Managing houses in the lower price range ($0-$700/mo) remains the biggest challenge because of the tenants that inhabit that space. The medium range rents ($700 – $1,000) have been performing very well and the quality of tenants has been way up. The high range rents ($1,000 and up) have also done remarkably well in this economy.
But watch your maintenance. Don’t create a deferred maintenance situation you will later regret.
BUYER OF RENTAL PROPERTY
Quit arguing with your realtor and keep a cool head. I am noticing two kinds of investment property buyers right now and they are both driving me a little crazy. :)
- Buyer that won’t listen to the current market realities. Investment property for rental purposes is hot right now. Returns are down as prices are up. You simply cannot offer 10-15% below market value and hope to buy the property. This started 6 months ago and I don’t see it slowing yet.
- Buyer that doesn’t watch the numbers. Usually a new real estate investor, this buyer wants to win the house to get started. They think they are shaving their margins just a little but little do they know they are probably shaving any chance of making money in the property…ever. Rental properties cost money on an ongoing basis. You need to make sure the property is paying for itself instead of you constantly having to feed the beast that was supposed to feed you.
Just a few of my thoughts for now.