Real Estate Investing Hot Spots Around Kansas City

Real estate investing is part research, part financing, part math, part intuition and part guts.  You can argue about the size of the parts, but here in Kansas City we know it will take all five to make a successful real estate investment property.

Areas I’m high on right now include Olathe, Gardner, Lenexa and Shawnee (Western and southern Johnson County) because of the actual and potential for job growth over the next one to five years.  As mentioned in a post over the weekend about apartments in Kansas City Marcus & Millichap feel the same way.  But I also feel that way about Blue Springs, Lee’s Summit and the Belton/Raymore areas in Missouri.  The Kansas City International Airport area has a vibrancy to it that I’m beginning to believe out-shines all the rest of the areas in Missouri.  I’m watching it closely.

But let’s not forget the future.  Where might positive growth be most likely has the years go by.  Think implosion.

I lived in the Washington, DC area when the mass of the city became so great that the far-flung suburbs continued to grow but the inner core of the city exploded with growth and opportunity.  Why?  Because the point had come and been exceeded where people would drive to work.  No longer was another 5 minutes a way just the blink of an eye.  Thirty minute commutes became forty-five and then an hour.  At the forty-five mark (each way) people began to wonder if it wasn’t less expensive to pay the extra bills for the house close in.  If not in money, then lifestyle.

At the hour mark they quit wondering and those that could afford to left the suburbs and went back in.  They bought small houses, tore them down and built.  Or they rehabbed.  Or they made do.  But back into the center of the city or the very close suburbs did they go causing an upward pressure on housing and rents.

Could this happen in Kansas City?  Well, yes and no.  Kansas City has more highway miles per capita than any other city in America.  Our commute times here are nominal.  Basically for every mile you drive it will take one minute.  (Eat your heart out, Los Angeles.)  Oh, it can get crazy and take you upwards of forty-five minutes to go thirty miles.  But not too bad.

Where I think the pressure will come from is rising gasoline costs.  Sure, if you can afford a Range Rover and are living in the posh neighborhoods of south Leawood then you can adjust your spending and adjust to the rising gasoline prices without too much sacrifice to where you live.  But what about those that rent?  Those that are the rank’n’file of the work force?  First time home buyers who struggle to put every dime they have together to get that first house?

My prediction?  Prairie Village, already going through a renaissance will continue to be more and more attractive.  Brookside, Waldo and the Kansas City’s close-in northern suburbs will make people drool.  The Kansas City, Kansas neighborhoods around the KU Medical Center will continue to be rehabbed and converted to today’s buyer. 

When you are considering where to put your real estate investment dollars think job centers.  Where are the people?  Where are the  people headed?  What are their incomes and lifestyle habits?  What external factors go into these decisions?  Stop, take a minute and put on your thinking caps.  Then go with your gut. 

5 Comments

Filed under Kansas City, Kansas City neighborhoods, Real Estate Investing

5 responses to “Real Estate Investing Hot Spots Around Kansas City

  1. Another Investor

    This has already happened or is happening in a lot of high-demand California cities as well as in the cities along the East Coast. I see it in the Phoenix area now.

    For decades, buyers have been willing to drive so they could afford to buy. As Chris points out, commute times and gas prices are changing that. Renters have always figured their living situations are temporary and they will compromise on the property to get the location they want. Renters will select a property based on how close it is to their job, their family, or whatever else is important to them. They won’t drive to save a few dollars in rent or to get a nicer home.

    Investing in the newly hot (or just warming up) inner suburbs that are redeveloping can be very profitable for the reasons Chris describes. Not all inner suburbs will redevelop equally, however. Do your homework and pick the right places, and over time you should be successful.

  2. And besides…the closer to the city’s job centers the closer to the higher population densities. Thnx.

  3. Chris,

    I think you have hit the nail on the head. Gas cost are going to direct where people live in the next 20 years.

    Any thoughts north of the river on Liberty? We have some deals coming up in that area and would like some insight into this area.

    Kim in KC

  4. Kim – I was on your site earlier! Anyway, Liberty is good. I don’t see the job growth there that I would like. But it is very similar to Olathe. My fear for Liberty is that with higher job growth and just as easy access to KC the KCI corridor will out pace Liberty.

    That being said, Liberty is still far better than most areas around KC. Good schools, nice look and affordable pricing. It’s a city people can be proud of.

  5. Growing up every summer we would make the trip to the Washington DC area to visit my sister. She lived in the suburbs and her husband made the commute into the city 2 hours each way every day.

    The urban core schools were bad, no one wanted to live there. And at the time, no metro service (light rail).

    Then one summer they put in a starter metro service around the tourist areas (the washington monument, the museums, the white house). The next year they added more.

    Soon (about 3 years) my brother in law could drive in part of the way and ride the metro. Eventually he could make a very short drive and take the metro to work in the city with a 30 minute commute.

    But during this same time, like Chris said the people who didn’t want to commute started moving into the urban areas. Renovation of specific loft areas and apartments were the start, then the branched out from there with new houses, and restoration of the old houses.

    And I also noticed as my sister was a teacher in the suburbs and we met some of her students on the metro that many of her students lived in the urban core, but had fake addresses in the suburbs so they could go to school there. So I would say that while their urban schools may not be quite as bad as KCMO, they were still bad and the urban core still turned itself around.

    With any luck, the price of gas, we will see the expansion of renovation start spreading from the Plaza, the River Market, and the Hyde Park areas and go east.

    Just watch HGTV for a while and you will see someone with a house they have or are renovating in DC that about 20 years ago was subdivided into 3 rental units and now will be restored to a very expesive single family home.

    It has also happened in many of the other major cities. And with KC, we are just about 30 years behind everyone else, so it should be coming.

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