Wow. I just realized I have now been working with investment properties in Kansas City for fifteen years now and before that two years in Tulsa. In addition, I have been working as a property manager in Kansas City since 2006. My how time flies.
There have been a lot of changes in my career and the investment property business since 2004 when I returned to Kansas City. I arrived in boom. Lived through bust. And now we are (at the end?) in another boom.
Rental property homes are at a premium right now. West coast (and East) are flooding in to KC driving prices higher and higher and returns lower and lower. I’ve seen this before;
- Red hot seller’s market
- Low/Reasonable interest rates
- 100% loans for anyone with a 620 credit score or above
- Investor loans with 90, 95 and even 100% LTV
- Investor loans that include rehab money
Yes, I call those times 2006-2008 in Kansas City. The bust started in KC when the banks stopped lending in September 2008. Of course, the coasts experienced the shift much sooner. Still, this is time is a little different;
- While both time had/have limited seller inventory, this time there is real limited inventory…we just don’t have enough housing units
- The new-builds happening are WAY ABOVE what most first time home buyers can afford
Does that mean we’ll not have a bust? Or even a slow down here in the Midwest? Does that mean the buy, rehab and hold is still a great strategy…that keeps getting better? (Note that link is from 2011…can’t get those returns or prices today.) Does any of that really matter and the economy will still shift here in the middle of the country?
Look, I still believe wholeheartedly in real estate investing. Owning income property is a great way to hedge inflation while earning from the 4 Benefits of Real Estate Investing. Yet, timing can matter. All I’m saying is proceed with caution. If you are planning on buying and renting property for the next three to four years I’d be super cautious. If you are planning on owning rental homes for the next seven years or more, I’d say green light. After all, time is your friend when you own real estate.