I have been blogging about real estate investing in Kansas City since 2006 and during that passage of time I have seen seller’s markets, buyer’s markets and have lived through the Great Recession. Sometimes these markets have lasted months to years and sometimes it seems that they have oscillated back and forth with the seasons.
But I believe it is safe to say that Kansas City, especially on the Kansas side, has been in a seller’s market for quite some time now (a solid year, at least) and so we need to think about the effect that has on the real estate investor.
- Adding inventory to your portfolio is more costly and therefore returns are lower.
- You current inventory is worth substantially more than when you purchased it as supply and demand has increased the base price of housing stock.
Should you wait, therefore, to add additional inventory to your rental property portfolio? Well, when will the economy change? We know that it will. History proves that. But when? And how drastic will the change be? How long can you stand to have your money in a stock market that is now solidly under-performing? What alternatives do you have to the stock market and real estate?
Should you sell the inventory you have while prices are still high? Could be. Especially on the Kansas side. But are you looking to 1031 exchange? If so, will you be able to find suitable replacement property that will give you equal or better returns be that here in Kansas City or elsewhere? Is it time to sell, pay the capital gains and depreciation recapture and move on?
There are no easy answers, as usual. Your choices must be carefully considered. I can tell you that as a owner of Ad Astra Realty’s KC Property Manager that vacancies on the Kansas side have not begun to rise and on the Missouri side of KC they are only up slightly, say 2-4%.
If you’d like to set up a time to discuss your income property portfolio to see what your options may be, feel free to contact myself or Jimmy Geisler. We’d love to help.