Tags

, , , , , , , , , , , , , , , , , , , , ,

img_8005_copy2bwIt is no wonder that a city that boasts nearly 42% of its’ residents as renters is a hotbed for investors looking to cash in on the rental housing market. When you mix low vacancy rates, high rental rates and inexpensive prices you get an easy sales pitch.

On paper many of these investment opportunities are almost too good to be true (most are..we will get to that later). It is interesting to take phone calls from out-of-state investors who catch wind of the bustling mid-west market, specifally Kansas City and want to throw cash at the first property they see (not advisable- keep reading).

Nearly every major city has its areas that experiences beneficial gentrification (i.e. old vacant buildings turned into high-end lofts) and its unfortunate economically divided lines. The beauty of Kansas City is that there are no definite lines. Although it sounds universally & tie-dyed wonderful, it’s not. You can generalize and say one area is better than others to avoid really explaining it, but when you drive the streets of mid-town (the Missouri side of Kansas City) you get a glimpse of what I am talking about. Huge beautiful homes selling for $800k on the same city block as a home selling for $16k. Any Warren Buffet disciple would jump on that opportunity right? I wouldn’t recommend that purchase to any friend or adversary (referring to either property).

Here is why. The lack of zoning conformity, sporadic re-development in city pockets rather than a central core, inconsistent values and social obsolescense  has led to the great checker board of property values and what appears to be a history of poor urban planning in Kansas City. This huge metro of Kansas City has always been on the rag-tails of great cities, the proverbial city of left-overs. There have been concepts implemented throughout its long history in not so great ways. We have great new developments that typically become obsolete almost as soon as they cut the ribbon to open (within a year or two anyway). An example of the “left-overs” idea is the mixed use devlopment  that surged in the 90’s finally made its way to Kansas City just last year to complete their TIF posterchild Power & Light District to prove that one small pocket gets the trendy makeover while the others deteriorate with their uninspired facades & values. That is until the next speculative development makes its way into the city agenda of bad ideas…i.e. a soccer stadium with $30million in tax credits being built 10 miles in the wrong direction (see it here).

oldconvWhen you have a city that is nearly 200 years old you have historical periods of building and periods of deterioration to match. Landlocked communities found elsewhere with the “circa de” birthday of Kansas City build and bury their empires essentially improving on what lay beneath its own ruins. Land where sprawl is over-welcomed creates a pocket phenomenon that gives birth to the checker board of new, old, poor, big, little, cheap design, high end quality and any other adjectives you can fit in this sentence. Kansas City sprawls with no mountain ranges or oceans for as long as a crow can fly and the skyline of ruinous properties to prove it.

The good news about the eclectic reality of this geographical oddity is there are very interesting opportunities stitched into the different zip codes. There is something different for every investor and the creative types can bring the best aspect of investing to life very cost efficiently, that being the ability to add value and realize highest and best use. You have lots of investors looking in many different directions, that is good news for my clients since I serve as a travel guide to values, developer of quality properties that add to the greater good of metro development from the middle outwards (no slum conditions allowed here) & consultant to the novice & old-hand investor alike.

If you want to know the categories we give the different areas and opportunities that lay therein, simply ask:

tmarcus@chiefpropertieskc.com

Advertisements