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Kansas City vs Buffalo: Rental Investing Stats
Last updated: January 22, 2025
| City comparison | Kansas City, MO | Buffalo, NY |
|---|---|---|
| Median home price | $232,000 | $224,000 |
| Median home price growth (10-Yr) | 96.61% | 72.6% |
| Single family market rent | $1,550 | $1,800 |
| Single family market rent growth (10-Yr) | 29.17% | 33.3% |
| Rent yield | 8.02% | 9.6% |
| Population | 510,704 | 274,678 |
| Population growth (10-Yr) | 7.43% | 6.4% |
| Unemployment rate | 3.3% | 3.6% |
| Property tax rate | 1.52% | 2.63% |
| Public school rating (out of 10) | 3 | 4 |
| Median household income | $67,449 | $46,458 |
| Income to rent | 3.63 | 2.15 |
| Median household income growth (10-Yr) | 48.64% | 45.2% |
| Poverty rate (%) | 14.60% | 27.6% |
| Civilian labor force | 68.70% | 59.9% |
| High school grad or higher | 92.50% | 86.6% |
| Bachelors degree or higher | 40.30% | 31.2% |
| Median age | 36.5 | 35.7 |
| Foreign born | 9.1% | 10.4% |
| Housing units | 250,082 | 140,554 |
| Housing units per capita | 0.49 | 0.51 |
| Occupancy | 91% | 88% |
| Renter occupancy | 44% | 57% |
| Housing unit turnover | 13.2% | 15.3% |
| Insurance Premium | $1,740 | $1,680 |
| DSCR at 80% LTV (7.625% interest rate) | 0.87 | 0.95 |
Data compiled from the following sources:
- U.S. Census Bureau
- U.S. Bureau of Labor Statistics
- Zillow
- Neighborhood Scout
- PropStream
Market Fundamentals
Kansas City and Buffalo exhibit close median home prices—$232,000 and $224,000, respectively. However, Kansas City shows a more robust 10-year median home price growth at 96.61%, compared to Buffalo’s 72.6%. This disparity suggests that Kansas City offers stronger long-term capital appreciation prospects, a critical factor for investors prioritizing equity growth.
Buffalo’s edge lies in its higher single-family market rent of $1,800 versus $1,550 in Kansas City. This translates to a superior rent yield in Buffalo at 9.6% compared to Kansas City’s 8.02%. For investors seeking cash flow, Buffalo appears more attractive. However, the slightly lower rent growth in Buffalo (33.3% over ten years compared to Kansas City's 29.17%) indicates that Kansas City is catching up in terms of rental market competitiveness.
Population Dynamics
Kansas City enjoys a larger population (510,704 vs. 274,678) and slightly higher population growth over the past decade (7.43% vs. 6.4%). A growing population tends to support housing demand, underpinning both rental and homeownership markets. Buffalo's smaller size may contribute to its higher renter occupancy rate (57% vs. 44%), reflecting a stronger reliance on rental housing. This factor could indicate more stable rental demand for investors in Buffalo, but the smaller market size may pose challenges for scalability.
Economic Indicators
Kansas City outperforms Buffalo on nearly all economic metrics:
- Median household income is significantly higher in Kansas City at $67,449 versus $46,458 in Buffalo. This income disparity is also reflected in the income-to-rent ratios of 3.63 in Kansas City versus 2.15 in Buffalo. The higher ratio in Kansas City suggests that residents have more disposable income relative to their rental expenses, potentially reducing risk for landlords.
- Kansas City boasts significantly lower poverty rates (14.6% vs. 27.6%) and higher labor force participation (68.7% vs. 59.9%). These indicators signal a more stable economic environment conducive to sustained rental demand.
- The unemployment rate in Kansas City is marginally better (3.3% vs. 3.6%), further highlighting its relative economic resilience.
Property Tax Implications
The property tax rate in Kansas City is 1.52%, markedly lower than Buffalo’s 2.63%. For rental property investors, property taxes are akin to an expense ratio in an index fund. A higher tax rate, like Buffalo's, erodes profitability, just as high fund fees eat into investment returns. In numerical terms, the property tax for a $224,000 home in Buffalo would be approximately $5,891 annually, while a similarly priced home in Kansas City would incur $3,405 in property taxes. This $2,486 difference annually can substantially affect cash flow, especially when scaled across multiple properties.
Additionally, higher property taxes exert downward pressure on asset values. Buyers often account for the increased expense when determining the price they are willing to pay, potentially limiting future appreciation. Kansas City’s lower tax burden makes it a more investor-friendly market for those seeking to maximize both income and equity returns.
Housing Market Indicators
Buffalo’s housing market shows higher turnover (15.3% vs. 13.2%) and renter occupancy (57% vs. 44%), indicating a more transient population and potentially higher tenant turnover for landlords. While this can lead to increased vacancy risk and operational costs, the higher renter base also suggests consistent demand for rental units.
Kansas City, with a 91% occupancy rate compared to Buffalo’s 88%, shows slightly stronger housing stability. This, combined with its higher proportion of homeowners, indicates a balanced market that might appeal to investors seeking lower vacancy rates and more consistent income streams.
DSCR: A Cash Flow Analysis
The Debt Service Coverage Ratio (DSCR) at 80% Loan-to-Value (LTV) highlights a critical challenge for both markets in the current elevated interest rate environment. Kansas City’s DSCR is 0.87, and Buffalo’s is slightly better at 0.95, but both fall below the ideal cash flow level of 1.25 and the typical minimum level of 1.0 to be eligible for this LTV. This signals that current rental income has not kept pace with home price appreciation in these markets. This is a cautionary note for leveraged investors who must carefully assess their risk tolerance and cash flow projections.
Insurance
Insurance premiums are relatively comparable, with Kansas City averaging $1,740 annually and Buffalo at $1,680. While not a primary differentiator, investors should monitor local trends in insurance costs, particularly in areas prone to adverse weather conditions or other risks.
Conclusion: Kansas City is the winner
Kansas City emerges as the stronger market for long-term growth, economic stability, and lower property tax burdens. It offers a balance between cash flow and appreciation potential, supported by robust economic indicators and favorable property tax rates that enhance overall profitability.
Buffalo, on the other hand, is better suited for investors prioritizing high cash flow. Its superior rent yield and higher renter occupancy rate make it attractive for income-focused strategies, albeit at the expense of higher property taxes and weaker economic fundamentals.
For property tax considerations, investors should treat tax rates as a crucial component of their expense ratio. Just as a high-fee index fund underperforms its low-cost counterpart over time, properties in high-tax areas like Buffalo may yield lower net returns and experience constrained appreciation. Kansas City's lower property tax rate provides a tangible advantage, reducing overhead and allowing investors to capture a greater share of both cash flow and equity growth.
Investors should align their market selection with their investment objectives, whether they seek long-term capital appreciation or immediate cash flow, while carefully weighing the impact of property taxes and local economic conditions.
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