Many investors eventually decide that buying multi-family real estate in Kansas City such as apartment buildings and duplexes is a smart financial decision. The reason is that many of the investors that focus on Kansas City multi-family properties end up making money on their investments. However, buying multi-family properties isn’t everyone’s cup of tea and in the long run it might not be the best strategy for every investor. When deciding your investment strategy and considering if multi-family properties are the way to go, you should always weigh the pros and cons.
Pros of Buying Multi-Family Properties in Kansas City
What are some of the pros of buying multi-family real estate in Kansas City?
OPPORTUNITY FOR BETTER CASH FLOW
In the Kansas City market most investors look at buying multi-family for the cash flow potential. Kansas City is a bit different than other markets, in our market we typically buy for cash flow and not as much for the potential appreciation. Multi-family has the potential to provide more cash flow than you’ll see with other real estate investing strategies. One of the reasons, you have more tenants paying rent, so you have more money left over after making the mortgage payment and taking care of other expenses like insurance and maintenance.
MORTGAGE SIMPLICITY
Buying multi-family properties in Kansas City also streamlines the mortgage end of things. You have to deal with only one mortgage for multiple tenants instead of multiple mortgages for single-family dwellings to accommodate an equivalent number of tenants. So you save time, a ton of paperwork, and possibly money.
INSURANCE EASE
Similarly, dealing with insurance matters is much easier for the same reason. You will have only one insurance policy for a multi-family property instead of several policies for single-family properties.
LESS RISK
Multi-family properties offer lower risk, especially when it comes to vacancies. With multiple units, the chance of a total vacancy is minimal. Even if one tenant moves out, the remaining tenants help maintain cash flow. Plus, most tenants pay on time, offsetting any late payments from a few individuals.
LESS COMPETITION
The single-family rental market is highly competitive and finding great cash flowing properties is very difficult. There tends to be less competition in multi-family, but there are still serious buyers looking for great opprtunityes in the Kansas City multi-family market. This makes them a more accessible entry point into real estate investing and can make it easier to find tenants.
BETTER LONG-TERM VALUE
Multi-family properties are primarily valued based on their income potential rather than changing market trends or buyer preferences. This stability allows them to provide consistent long-term appreciation. The long term appreciation on top of the potential for having an investment that provides steady cash flow is what allows many investors to flourish.
What are the Cons of Buying Multi-Family Properties in Kansas City
Now, let’s examine a few of the cons:
Higher Upfront Costs
Purchasing multi-family properties in Kansas City requires a larger initial investment and a bigger mortgage. This can be a financial barrier for new investors entering the market.
MORE TIME-INTENSIVE
Multi-family properties will take up a lot more your time. More tenants mean more maintenance and more repairs to make, which all takes more of your landlord time.
MORE EXPERIENCED COMPETITION
While competition is lower than in the single-family market, the investors you’re up against are often seasoned professionals with extensive market knowledge, making it harder to secure good deals and tenants.
LESS AVAILABILITY
Owing to the lower demand, multi-family properties are fewer and with less availability than single-family properties. So you will have fewer options and will have to put in a lot more work to find potential properties.
MORE REGULATIONS
Landlords are already saddled with a host of regulations and that regulatory burden only increases with multi-family properties. So if you plan to get into buying multi-family properties in Kansas City, you need to do your homework on these laws and stricter regulations.
Is Kansas City multi-family real esatate right for you?
Multi-family properties can be a lucrative and stable investment with less risk and easier management. However, they require careful planning, a solid business strategy, and an understanding of long-term goals. If you’re considering investing in multi-family properties in Kansas City, working with an experienced real estate agent can help you navigate the market and make informed decisions.
Ready to explore multi-family investments? Contact our team today to find the best opportunities!