Here are my opinions on the current Kansas City investment market for real estate:
Buy & Holds – This market is in great shape. There are several values out there right now and many, many homes priced at a realistic market value based on their community. I’m high on duplexes and fourplexes and lukewarm on single family homes. Several apartments for sale right now have grabbed my attention, as well. I’m forecasting a 5-7 year hold period for maximum use of depreciation, appreciation and then an IRC 1031 exchange.
Rehab Properties/Flipping – This market scares me at this time. Sure, there are some good properties out there. I just haven’t seen them. Many foreclosures right now are aborted rehab situations. Not enough appreciation and housing demand to make this a lucrative enterprise at this time.
Buy, Rehab & Hold – I’m very high on this strategy. Very high. There are many a house for sale right now that are value priced but not lean enough to do buy, rehab, and sell. But if you can buy, rehab and have $12,000 of equity before you hire a property manager and put a renter in, why not?
Rental Market – In many parts of the city the rental market is extremely strong. Only a few pockets of weakness that I have seen. Most of the property managers I speak to have the same opinion. Gone are the days of long vacancies and rental incentives to get people in. Unless you are a pioneer on the outskirts of town. Then you are probably running high vacancy rates and banking on end-game appreciation. I’m not thrilled with that idea as housing growth (building) has greatly slowed.
Lease Option Market – I do very few of these. But three different real estate investors I know have successfully entered into lease option agreements with their “tenants” within the last 45 days. So there are people out there looking.
Personal Note: I read yesterday in USA Today that many real estate investors are leaving real estate and going back into stocks. Finally in the article, they distinguished between the Buy & Hold investor and the real estate speculator. They also based all of real estate’s benefits on appreciation only.
Don’t forget there are 4 Benefits to real estate investing:
- Cash Flow Before Taxes
- Principal Reduction
Of course, plan with your financial advisor. Diversity is the name of the game. Bawldguy did a great post about using insurance to gain the funds for real estate. Of course, out there you are paying $750,000 for the same duplexes we can get for $175,000.