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.