“I want to flip Kansas City area houses, what area is the best?”
As a Realtor, in the Kansas City area that works with investors and as someone who invests in the Kansas City area myself, I get asked this question a lot.
So let me answer this for you.
First, what does “flip” mean to you?
Are you going to buy and then resell “as is” with out doing anything to the property? Or are you going to buy and renovate and resell?
The next question is who do you want to target as a buyer? If your target is cash investor buyers your area may be different that if you are targeting first time home buyers. And if your target is the investor buyer, do you have a ready pool of cash investor buyers?
So let’s look at the two target buyers cash investor buyers vs first time home buyers.
The cash investor buyer, you need to market a lot and build up your buyer’s list for this. Here in Kansas City you will find some cash investor buyers, but more than likely you will be looking to build a pool of investor buyers from all over the country first. When you have that in place you can go to town here in Kansas City. There are 100’s of homes in the area in all price ranges from $5,000 houses in the very urban core of Kansas City Missouri in zip codes like 64109, ,64110, 64123, 64124, 64125, 64126, 64129, 64130, 64131 and 64134. You can go to south Kansas City in areas like Ruskin and do the same thing in almost the same price range in zip codes like 64134. And there are areas of Raytown and Independence. There are a few owner occupant buyers in these areas, and there are investor buyers.
Because of the current economy, the investor buyers are going to be short on loans, so targeting the cash buyers is where you will need to look. If this is your target, you need to put a team in place to manage all these properties properly in the urban core and this is where the problem arises for almost everyone in the urban core areas of Kansas City – finding a good property manager is a daunting task.
Your other option is to target first time home buyers. If this is your target you will be looking in areas where there are homes selling probably in a price range of between $100,000 to $150,000 all fixed up. You want to find an area where there are not a lot of foreclosures or houses for sale. If I check out a subdivision and there are currently 5 houses for sale that are all short sales or foreclosures and all the sold comparables in the area are also foreclosures, plus a lot of expired & canceled listings, I would tend to look for a different area.
My personal favorite is a area where houses were built in 1950 or newer. With one or two normal sales and listings (not short sale or bank owned). Not a huge amount of turn over. Good or decent schools and a clean neighborhood when I drive through it. Areas where I can see a track record of nice homes being sold. This tells me that if I buy and renovate a home that it will sell.
For my first time home buyer houses I will probably be looking at areas outside of the urban core, avoiding the zip codes listed above. Areas like Kansas City just east of State Line over to about Holmes. Some areas of South Kansas City like Red Bridge. Some areas of Grandview, Some Areas of Raytown, Lee’s Summit, and Blue Springs. Also Johnson County and then areas north of the River & in Wyandotte County (I am not qualified to speak of north of the river or in Wyandotte- not my market).
Then you have a third option. The small multi family 2 – 4 unit. These can be investor properties or owner occupied. And right now because investors cannot get financing, these properties are selling at 50% or more less than what they have sold for the past 10 years. There are deals out there, all over the city in all sizes and ages. My thought would be to purchase say a duplex, fix up one unit to be the owner occupied unit and then get the other unit(s) in nice rental shape and rented up. Then sell to an owner occupant FHA to live in the 1 unit and rent the rest. But I have not yet tried this option.
I have bought and sold in all of the areas of Jackson County Extensively and probably the best advise I can offer is to follow the money. As the saying goes, he who has the money makes the rules . . . and this is true in flipping houses. Your target buyer who has the money and can buy will dictate where you are going to flip your houses.
So do a little research on the Kansas City Market. If you visit our web site RealtyResourceKC.com you will find links to different areas in Kansas City and on MAREInet.com you may find some helpful info in the Member Resources. Attend some networking events with other investors and also with Realtors to see what they think is the hot place to be. See where the houses are selling, then find a house in that area that you can make prettier than the rest (or rent better than the rest) and sell it at the same average price or a little lower and you will have a formula for succees.
To learn more about flipping houses you might check out the show Flip this House and find your way to Kansas City on March 27th when their star Than Merrill will be speaking at our local Real Estate Investment Association – (more info at MAREInet.com)