Real Estate investors from across the country are flocking towards properties in Missouri to build rental property portfolios. The Show Me State is a current favorite of real estate investors due to many factors. These include a strong economy, affordable prices and stable rents! Easy Street Capital is proud to be a leading provider of investment property loans for real estate investors looking to build rental portfolios in Missouri!
Investment Property Loan Types
When it comes to real estate investing in Missouri, there are many markets and types of investment property loans to choose from. For investors that like to get their hands dirty, rehabbing run down properties, hard money renovation loans are a perfect choice! These loans allow you to buy a property quickly and finance your rehab costs as well! Once you are done, you can either “flip” the property for a quick profit or pursue the BRRRR Strategy by renting it out and then refinancing into a long-term, low-rate DSCR loan!
Long-term DSCR Loans are also great for investing in turnkey rental properties. Turnkey refers to properties that are rent-ready and require no renovations. Move-in ready single family homes and fully furnished short term rentals are great for cash flow and price appreciation. Most DSCR Loans are fixed rate for thirty years, locking you into a fixed interest rate for the long-term. While, if historical patterns continue, rents and appreciation increase steadily each year. Bottom line, debt costs stay the same while cash flow increases!
One of the favorite metrics of real estate investors to spot profitable markets is the Rent-To-Income Ratio. The Rent-To-Income ratio measures a city’s average market rent against its median household income. The higher the Rent-To-Income ratio, the harder it is for renters to afford the prevailing rents in the city. Conversely, if the Rent-To-Income ratio of a market is lower than average, it means there is a large pool of potential renters for investment properties. Additionally, if the city is growing, it means that rents have room to increase significantly, meaning more cash flow and profits for landlords that lock in their debt payment costs for long-term periods by using DSCR Loans.
Where To Invest In Real Estate In Missouri
Missouri is a favorite market for real estate investment properties for many reasons. There are lots of varying markets that offer great potential for each type of real estate investor. Kansas City is the largest city in the state and one of the largest markets in the middle America. St. Louis is the second largest city and the largest metropolitan statistical area in the state. Springfield is the third largest city in the state and the fastest-growing my most metrics. Columbia has a significant population over 125,000 and is home to the state’s flagship university. Finally, Saint Charles, situated on the Missouri River, is famous for its riverfront and is a great market for vacation rental investors.
Kansas City
Kansas City is the largest city in Missouri, with a population of over 500,000 people. The city has a diversified economy with a strong focus on healthcare, finance, and manufacturing. It is home to several Fortune 500 companies, including Hallmark Cards, Inc., Sprint Corporation, and DST Systems, Inc., providing a solid employment base for renters.
Kansas City’s strong economy and growing population make it an attractive market for real estate investors. The city’s job growth and population growth create a steady demand for rental properties, with opportunities for long-term leases, medium-term rentals, and short-term rentals. The city’s rich cultural heritage and vibrant arts scene, including the Nelson-Atkins Museum of Art, Kansas City Zoo, and Kauffman Center for the Performing Arts, make it a popular destination for visitors. Kansas City’s central location, world-class barbecue, and sports teams such as the Kansas City Chiefs and Kansas City Royals make it a popular destination for sports enthusiasts. This provides a robust market for short-term rentals serving visitors for gamedays.
Overall, Kansas City’s strong economy and diverse attractions make it a great market for real estate investors looking to invest. It is particularly attractive for investors that like diversified strategies. Long-Term Rental and Short-Term Rental investors alike are likely to find opportunities in the Paris of the Plains.
St. Louis
St. Louis, Missouri is a major city located in the Midwestern United States. With a population of over 300,000 people, it is the second-largest city in the state. St. Louis has a diverse economy, with industries such as healthcare, education, and financial services playing key roles. The city is also home to several world-renowned attractions. These include the Gateway Arch and the St. Louis Zoo, making it a popular destination for tourists year-round.
Real estate investors can find lucrative investment opportunities in St. Louis, with a median home sales price of $206,000 as of February 2024, according to Redfin. In addition, the average rent in St. Louis for all property types was $1,250 per month, as of March 2024, according to Zillow. This makes it an attractive market for rental properties, with potentially high cash-on-cash returns. Investors can take advantage of low down payment options and utilize rental loans to generate strong cash flow and build long-term wealth in the real estate market.
Springfield
Springfield is a rapidly growing city located in the southwestern region of the state with a population of over 167,000. The city’s economy is diversified, with significant contributions from healthcare, education, and manufacturing sectors. Cultural attractions, such as the Springfield Art Museum and the Gillioz Theatre, can be found throughout the city, especially in its vibrant downtown area, which has a wide selection of shops and restaurants that draw both residents and visitors alike.
Springfield is often referred to as the “Queen City of the Ozarks” due to its central location in the region. Real estate investors can benefit from both short-term and long-term rental demand in the city, thanks to popular events like the Ozark Empire Fair and the Birthplace of Route 66 Festival, which attract visitors from all over.
Investors interested in architecture as well as profit will find Springfield to be an excellent choice. The city is home to several notable structures, including the Pythian Castle and the Gillioz Theatre. With easy access to major metropolitan areas like St. Louis and Kansas City and a prime location in the Ozarks, Springfield is an excellent choice. Particularly for real estate investors looking to invest in a growing market with significant potential for future development.
Columbia
Columbia is a rapidly growing city located in the central part of the state, with a population of over 123,000. The city’s economy is diversified, with significant contributions from healthcare, education, and manufacturing sectors. Real estate investors can find affordable investment opportunities in Columbia, with the median sales price for a single-family home at $314,900 as of February 2024, according to Redfin. With relatively cheap housing and a population with strong incomes, Cedar Rapids is a strong market for long-term rental properties.
Columbia is also a great market for investors specializing in niche strategies, such as short-term rentals or student housing. The University of Missouri, home of the “Mizzou Tigers,” boasts an enrollment of over 30,000 students. This provides a steady stream of renters. Investment properties aimed at students can provide very lucrative returns if done correctly. Properties located near campus and rented to reliable students can earn returns well beyond normal long-term rentals.
The city is home to several cultural attractions, such as the Museum of Art and Archaeology and the Ragtag Cinema. In addition, Columbia is a great market for short-term rental investors looking to capitalize on a steady stream of visitors. The Mizzou Tigers are typically a strong team in football, basketball, and other sports. This attracts many visitors for games throughout their respective seasons. The city also hosts a variety of events such as the Roots N Blues N BBQ Festival, the True/False Film Festival, and the Heritage Festival and Craft Show. These provide year-round demand drivers outside of sports.
Overall, Columbia’s diverse attractions, growing population, and strong economy make it an attractive market for real estate investors. Especially for those looking to specialize in student housing or short-term rentals. With its location between major cities like Kansas City and St. Louis, Columbia offers excellent potential for future growth and development.
Saint Charles
Saint Charles, Missouri is a charming city located on the banks of the Missouri River. The city’s beautiful riverfront, historic architecture, and vibrant downtown area make it a popular destination for visitors. Outdoor enthusiasts will also appreciate the city’s numerous parks and trails, including the Katy Trail State Park.
In addition to its cultural attractions and natural beauty, Saint Charles also has a strong demand for short-term rental properties due to its casino gaming. The Ameristar Casino Resort Spa St. Charles is located in the city and offers a variety of gaming options, including slots, table games, and poker. This draws in tourists from across the region and provides a robust market for short-term rentals.
AirDNA, the leading data provider for investors in short-term rentals, gives Saint Charles a Market Grade of A-, including a 75/100 on “rental demand.” This reflects the robust renter demand for short stays in the city. According to AirDNA, investors can expect monthly revenue of over $3,000. But perhaps the biggest draw for STR investors is the high seasonality score. This indicates there is not much seasonality, so investors generally avoid slow high-vacancy months. AirDNA projects that even in the slowest month of the year for Saint Charles, average revenue should be over $2,100.
Overall, Saint Charles’ diverse demand drivers, including its riverfront, casino gaming, and cultural events, make it an attractive market for short-term rental investors. Investors that use DSCR loans from a forward-thinking lender like Easy Street Capital that qualifies the income of the property using AirDNA projections can likely generate substantial cash flow.
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Ready to invest in real estate in Missouri? Easy Street Capital is Missouri’s best provider of investment property loans for both hard money rehabs and long-term rental properties.
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