Kansas City, MO has risen as one of the top cities to invest in real estate in recent years. The city’s real estate market is praised for many great reasons. It does, after all, hold many features that are typical with the best place to invest in real estate. As a matter of fact, we here at Mashvisor have repeatedly explained how productive the Kansas City real estate market 2018 has been in many of our blogs.
Related: 8 Best Cities for Real Estate Investment 2018: Part 1
There are many reasons why a real estate investor should invest in Kansas City real estate. We’ll explain these reasons, but first, let’s take a look at the city’s data, obtained by Mashvisor’s investment property calculator, which you can learn more about by clicking here.
Kansas City Real Estate 2018: The Data
Median Property Price: $203,705
Traditional
Rental Income: $1,088
Cap Rate / Cash on Cash Return: 1.76%
Airbnb
Rental Income: $803
Cap Rate / Cash on Cash Return: 1.15%
Why You Should Invest in the Kansas City Real Estate Market in 2018
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Affordable and Profitable Investment Properties
The data shows two main features of the profitability of the Kansas City real estate market 2018. For starters, the median investment property price is very affordable. It is much more inexpensive than the national average of about $350,000. Secondly, the median rental income from Airbnb rental properties and traditional rental properties is relatively moderate but not very high. This is primarily due to the low property prices, but these investment properties are still profitable due to their good return on investment. The mix of affordable prices and good ROI is undoubtedly one of the main reasons a real estate investor should consider buying Kansas City investment properties.
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Rising Economy
The Kansas City real estate market is an excellent hub for traditional rental properties, and its healthy economy is one of the reasons why this is the case. The city’s workforce is a blend of blue-collar and white-collar jobs. KC’s economy had a tremendous growth rate of 3.95% in 2017, with more than three thousand jobs being created during that year. The growth rate is phenomenal on a national level since it is more than twice the national average. These economic trends are only expected to continue during 2018. Also, these indicators are why buying traditional Kansas City investment properties is a great long-term investment.
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Growing Population
With a growing economy comes a growing population. Kansas City was already home to the largest community in Missouri, but its population has continued to increase. The population has doubled since 2000, and the current population sits at over 2.1 million, with nearly half of them being tenants. Such statistics help the case that traditional rental properties are the dominant form of investing in the Kansas City real estate market. As a matter of fact, over 60% of residential properties in the city are single-family rentals.
Related: Investing in Single Family Homes: Why It’s a Must
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New Airbnb Regulations
For most of its recent history with Airbnb rental properties, Kansas City, MO was not a friendly city with the short term rental platform or short term rentals overall. The R Street Institute’s Roomscore 2016 Report, for instance, described short term rental operations as “practically impossible” in the city, giving it an “F” grade in a final evaluation. Luckily, however, legalization and regulation have begun as of late. In February 2018, The Kansas City Council passed an ordinance that officially legalized Airbnb rental properties. It also established many requirements, some of which include limiting the property to 8 guests, consent from and disclosure to nearby property owners, administrative fees, and permits. These regulations and requirements are a step in the right direction for the Kansas City real estate market, which has certainly benefited from the emergence of Airbnb rental properties.
Related: Buying a Short-term Rental Property? Invest in the Most Friendly Airbnb Cities
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Tight Inventory
As wonderful as the Kansas City real estate market is, it’s best for investors to start purchasing quickly. The city’s inventory is running low; for context, it dropped 17% in 2016. However, as the concept of supply and demand dictates, construction has begun to increase, with a 17% increase from 2016 to 2017. An estimated 500 new homes will be built during 2018. The Kansas City real estate market 2018 is a buyer’s market, which will give buyers an advantage in an otherwise limited market.
Now that you know why you should invest in Kansas City investment properties, you should know where to invest in KC. Here are the best neighborhoods in Kansas City for traditional rental properties and Airbnb rental properties.
Best Neighborhoods in Kansas City: Traditional
South Hyde Park
Median Property Price: $327,500
Rental Income: $1,320
Cap Rate / Cash on Cash Return: 1.29%
Central Hyde Park
Median Property Price: $242,000
Rental Income: $1,103
Cap Rate / Cash on Cash Return: 1.08%
Old Westport
Median Property Price: $121,617
Rental Income: $990
Cap Rate / Cash on Cash Return: 0.58%
Southmoreland
Median Property Price: $370,890
Rental Income: $1,275
Cap Rate / Cash on Cash Return: 0.09%
Best Neighborhoods in Kansas City: Airbnb
South Hyde Park
Median Property Price: $327,500
Rental Income: $4,142
Cap Rate / Cash on Cash Return: 8.22%
Occupancy Rate: 58%
Old Westport
Median Property Price: $121,617
Rental Income: $1,703
Cap Rate / Cash on Cash Return: 3.32%
Occupancy Rate: 57%
Hanover Place
Median Property Price: $104,950
Rental Income: $1,541
Cap Rate / Cash on Cash Return: 2.36%
Occupancy Rate: 59%
Central Hyde Park
Median Property Price: $242,000
Rental Income: $1,358
Cap Rate / Cash on Cash Return: 2.07%
Occupancy Rate: 56%
Overall, Kansas City, MO is among the best locations in the US housing market 2018. The city’s properties are affordable, lucrative, and versatile for both investment strategies. The market’s conditions, such as a healthy economy, growing population, and new short term rental laws, make investing in Kansas City investment properties worthwhile in the short and long term. Investors are advised to search and purchase properties soon, however, as the city’s inventory begins to run low. To get yourself started looking for a property in the Kansas City real estate market, click here! To learn how to make money in real estate, read the Mashvisor blog!