Category Archives: City Comparisons

August 1, 2010 · 1:14 pm

Kansas City Named a Great City for Young Adults

A few days back I read on Yahoo! that Kansas City had been named one of the 10 Great Cities for Young Adults. I read it, smiled and then moved on. Others were impressed, as well. No fewer than a handful of you have emailed me the link to make sure I saw it. Civic pride, I guess.

I love my home town. And I’ve been to most of these cities. I think Austin is the greatest college town in America. The people down there are great and the emphasis on outdoors activities always makes me happy. Plus, I like a cold beer over on 6th Street or in the Warehouse District. And it’s always good fun to watch my Jayhawks whip up on their basketball team in their own city. 🙂 The BBQ leaves something to be improved upon.

My dad live in Charlotte. So we get down there quite a bit. A clean and growing city. Reminds me of Kansas City in so many ways. Don’t get me started on BBQ that has cole slaw on. I’m sure that’s something Jesus wouldn’t do.

Chicago. Enough said. Love that town. Maybe even more than New York. Love the blues. Love lakefront.

I haven’t spent much time in Houston. Though I don’t really dig the site of refineries and hate mosquitoes that are as large as most mammals.

I’ve never been to Lansing. But any place where Tom Izzo is the head coach is alright with me. He’s one of the best college basketball coaches of all time in my book.

New York? God, how I hate the Yankees and everything they stand for. But God also knows I just love the entire experience of each and every visit there. The sensory overload feeling. I thrive on it.

Never been to Portland. My friend goes there a lot for business. Says it’s really pretty but a ton of traffic and the entire city is overrun with hippies. And yes, that is just the employee base that works for him. Not just the homeless people that are everywhere…at least according to him.

Salt Lake City is just not on my list of places to hang. Sorry. Just never really considered it.

Washington, DC is my home away from home. Regular readers here know I lived there 15 years. Well, in the Maryland suburbs, actually. The town has so much going on all the time. The power. The money. The activities. The history. The importance. The self-importance. Some real idiots there, to be sure. Some really great people, too.

I love my birth home of Kansas City. Glad I live here. And glad I’ve got to experience these other cities, well most of them anyway, too.

CC licensed image of Kansas City skyline as Night Descends courtesy of calebdzahnd via flickr.

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Can Kansas City & St. Louis Really Get Along?

In a rare act of cooperation a St. Louis based real estate agent and I (a Kansas City based real estate agent) are working together. Matt has referred to me a gentleman looking to buy a house in the Kansas City area because his son will be going to dental school up at the University of Missouri Kansas City for the next three years. Regular readers here of BBQ Capital: Kansas City Real Estate & Investing know that this is one of my favorite ways to own an investment property.

Anyhow, the gentleman is coming in tonight so that we can look at a couple two or three possible houses for sale for him to choose from. I’m hoping he’ll see the wisdom of the Red Bridge area for his particular needs. But back to the purpose of this post. Can Kansas City & St. Louis really get along? Let’s look back at some of the ways the two cities have had issues.

When money is needed for stadiums Jefferson City gives St. Louis partial funding (some of that Kansas City area taxpayer money) and Kansas City is rejected and has to raise all their funding from it’s citizens.
When money is needed to keep the bus systems running in both cities St. Louis gets several million while Kansas City is told there is no more money.
St. Louis gets a really cool arch built by the federal government. Kansas City, well, no arch.

SABERHAGEN WORLD SERIES So as you can see St. Louis usually gets the better of things and native Kansas City Missourians have what you might call deep seeded reservations about the city to the east. Of course, me being from Kansas, I think it’s all really pretty funny. So in the end, that’s probably why Matt and I can get along.

But oh, did I forget to mention the 1985 World Series? Kansas City got the better of that one, didn’t we. Even came back from 3 games to one. Ha!

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July 15, 2008 · 8:03 am

Olathe, Overland Park & Shawnee, Kansas Rank High In CNN/Money’s Best Places To Live 2008

I’ve written here in the past about how high Overland Park and Olathe, Kansas rank in CNN/Money’s Best Places To Live 2007 and before. Now the 2008 Best Places To Liveis out and Olathe, Overland Park and Shawnee, Kansas are all on the list along with Lee’s Summit, Missouri.

# 9 Overland Park, Kansas
#11 Olathe, Kansas
#39 Shawnee, Kansas
#79 Lee’s Summit, Missouri

As a professional real estate agent in the Kansas Cityarea I have helped people buy homes and investment properties in each of these cities. I can tell you without a doubt that I can recommend each. I live in Olathe. I grew up in Overland Park. And Shawnee is just a stone’s throw away.

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Filed under City Comparisons, Kansas City Real Estate, Olathe

January 16, 2008 · 9:32 am

Kansas City v Los Angeles…Again

I had to laugh out loud yesterday after speaking with two different people from California. They were complaining about Kansas City’s weather. You know, snow, how cold it gets, etc.

“How can you live there? It’s 68° and sunny here!”

Then I open up this morning’s business section of the Kansas City Star and see an article showing that the most recent study of California real estate is that prices are down 15.2% from last spring/summer’s highs. My question to them is;

“How can you live there? Prices are stable here!”

And, we don’t get earthquakes, unimaginable crime, traffic at 10:00 pm, etc.

We all live where we live and have advantages over other parts of the country. Though you will ALWAYS hear me complain about the cold I have to say I like the change in seasons. Well, except for the whole raking leaves thing.

But from an investment property owner’s standpoint, there is no question that there is a stark difference between owning income property here in Kansas City or anywhere in the SoCal area.

Kansas City’s advantage: Stability and affordability. Slow and steady growth. It’s not sexy. But neither is KC.

SoCal’s advantage: At times, spiraling appreciation that can make you wealthy beyond your dreams. But if you don’t time it right…look out! And just try to make the numbers work.

Do what you are gonna do. If I can help great. But just know each area has it’s pluses. 🙂

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May 14, 2007 · 11:56 am

Los Angeles v. Kansas City: Which City Is Better For Your Investment Dollar? Part 2

Yesterday I wrote a post comparing Kansas City income property to Los Angeles income property. Feel free to go back and read the article as it will help you to get a basis as to this discussion.

Where we left off was with Kansas City at a very slight advantage on cash flow…very slight…and a huge advantage over LA in the cash needed to invest category. I believe to get the said rental homes in LA to cash flow/break-even we needed to put down $294,995 while in KC the cash needed was $38,800.

I’m going to assume there are more investors out there with $40,000 than $300,000 in liquid investment capital. But if you have the capital you might be thinking..

“Chris. That’s well and good. But you know darn good and well that the Los Angeles housing market is always going to be more desirable and appreciate more rapidly than Kansas City.”

Of course, more desirable is always going to be open for discussion. But appreciation can definitely be measured. Kansas City has a historical appreciation rate of 5% over any given 10 years. Some years KC can be as high as 11%. Some years 1% – 2%. Los Angeles, on the other hand, can be prone to big surges and big drop offs. Timing the market in LA can lead to riches you will probably never reach in Kansas City.

How has timing the market worked out for you so far?

And that is only if you have the $300,000 to invest in the first place.

For our next measurement in the Kansas City versus Los Angeles investment property challenge I’m going to use the KC 5% historical appreciation rate for the City of Fountains. For the City of Angels, I am going to use a steady appreciation rate of 8.5%. I realize that LA is nowhere near that at the moment. But over most periods of time in history I can assume that LA’s appreciation rate will be at least half again as good as Kansas City’s.

We’ll use 5 years as our holding period of time before looking to cash out or using the tax code to exchange into other investment property or properties.

LOS ANGELES

The Los Angeles area duplex we looked at yesterday appreciating at 8.5% a year should now have a fair market value of right about $902,000. That is an increase of $302,000 to your asset sheet. (Not including, of course, the other 3 of the 4 Benefits of real estate investing or the sales costs.)

KANSAS CITY

The Kansas City (Olathe) area duplex we looked at yesterday appreciating at 5.0% a year should now have a fair market value of right about $247,500. That is an increase of $53,500 to your asset sheet. (Same exclusions as above.)

SO LA WINS. RIGHT?

Wait a minute before we start crowning LA king. We simply cannot forget that in Kansas City you had a cash savings of $256,195 on the initial down payment. With those remaining funds we can buy a minimum of 6 additional properties. Properly leveraged, perhaps even many more. But we’ll just keep it at a cash invested to cash invested ratio and we’ll save $23,395 that will go towards additional closing costs and taxes over the years.

So we’ll add 6 more rental duplexes to the Kansas City real estate investor’s portfolio. Now you have 7 properties appreciating $53,500 per property over the same 5 years for a total appreciation in Kansas City of $374,500.

Kansas City asset growth = $374,500
Los Angeles asset growth = $302,000

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Filed under City Comparisons, Kansas City, Real Estate Investing

May 13, 2007 · 3:32 pm

Los Angeles v. Kansas City: Which City Is Better For Your Real Estate Investment Dollar?

A good deal of my clients come from the California, Washington and New York areas. And most of those come from the Los Angeles area. So I thought, for a little fun, I would point out to the folks here in Kansas City why the Los Angeles real estate investor likes this area for their dollar.

First, a few disclaimers. Finding LA comps to KC rental properties was not easy. After all, we in Kansas City have different style of architecture in our duplexes and let’s face it, our area is much, much smaller than the Los Angeles area. So when you are reading below just know that for the Los Angeles numbers I did the best I could in diligent research trying to find a two bedroom duplex that had a garage and was in a “nicer” part of the Los Angeles suburbs. After I found one on craigslist (why don’t more real estate agents in LA have user-friendly websites?) I then went to rentometer to find accurate rents.

So the long and the short of it is that I did the best I could on the Los Angeles numbers. If you feel I’m a little off here and there, feel free to adjust my findings accordingly. But I don’t think I’ll be too far off…

The goal is to get the rental homes in each city to “pay for themselves” when considering principal, interest, taxes, insurance and a 7.5% property management fee. No vacancies, reserves or other miscellaneous items have been figured in. So you know it’s not real world but it will get the point made.

LOS ANGELES

I found a duplex located on Vanowen Street in Lake Balboa, California. It appears to be in pretty good shape from the photos, has two bedrooms on each side, one car garage for each side (shared) and I don’t know how many bedrooms. My research showed rents would be in the $1,300 per side range. It is being offered at $599,995. So let’s do some math.

$2,600/mo rent collected
– $ 195/mo property management
– $ 300/mo taxes
– $ 175/mo insurance
= $1,930/mo available for P&I

Making a cash investment (not including closing costs) of $294,995 would leave you with a $305,000 mortgage at 6.5% interest amortized over 30 years. That’s $1,928/mo. That’s $24 a year cash flow.

KANSAS CITY

On Friday I closed a duplex in Olathe, Kansas that was asking $199,950 that featured two bedrooms, one and one half baths and a private garage for each side. My Buyer payed $194,000 for the property. Both sides are rented with fresh one year leases totalling $1,475/mo.

$1,475/mo rent collected
– $ 110/mo property management
– $ 225/mo taxes
– $ 90/mo insurance
= $1,050/mo available for P&I

Making a cash investment (not including closing costs) of $38,800 (20%) would leave you with a $155,200 mortgage at 6.5% interest amortized over 30 years. That’s $981/mo. That’s $828 per year cash flow.

WHICH CITY WINS???

Early in the game it looks like Kansas City has taken the lead. By putting down only 13.2% of the money in Kansas City than you would in Los Angeles you have created break-even to very modest cash flow. In Kansas City you are committing much less money up front and committed to a bank for a much lower mortgage balance.

But we are only at half-time of this match. (Or the 7th inning stretch, whichever you prefer.) Tomorrow we’ll discuss appreciation. Who do you suppose will win that battle? You might be surprised.

Jump to Kansas City v Los Angeles Real Estate Investing Part II here.

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