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In the Wake of 2020 Should I Buy Real Estate in the Kansas City Suburbs

November 13, 2020

Is now a good time to buy?

In the Wake of 2020 Should I Buy Real Estate in Kansas City Suburbs?

If you came seeking a quick answer you’re in luck, I've prepared one below. If you want to make sure your bases are covered and a dose of why, how, and where, then please, read on.

Here’s your, quick, stripped down answer: Yes, but buy Smart.

2021 Housing Outlook Trends in suburbs like Overland Park, Lee’s Summit, Raymore, Blue Springs, Independence and other similar areas.

The Great Housing Squeeze is Under Way – How did we get here?

In short, the size of two generations the Baby Boomers and the Millennials combined with the financial crisis of the last decade have created the greatest housing shortages in American History. During the financial crisis, many builders and contractors either went under or were hurt badly. As the economy began to pick up, the housing labor force had been decimated across the country. Many had moved on to find other lines of work and those that still remained were reluctant to take on large scale speculative building. This exacerbated the housing supply. Millennials were beginning to gain footing as the market conditions improved and started moving out of their parent homes, or other shared homes to start homes of their own. The cost of smaller homes being the first to rise in price contributed to the problem. Baby Boomers looking to down size were not moving due to the price proposition of their larger house, and perhaps not being quite ready or healed enough from the crisis. Many simply have chosen to age in place. The pressures from this trend are expected to continue to be felt for the next 10-12 years.

The Big Migration from Cities to Suburbs Begins in 2020

Corona Virus, along with strict city restrictions and sky rocketing cost of living, are all reasons people have chosen to pull the lever for the suburbs. When the nationwide lockdowns went into place, people became very acquainted with their living situation. Those that felt they could use a little more elbow room or thought their elected officials had over stepped personal liberty started buying in areas where the conditions are more accommodating to their needs. Those areas are largely suburbs with low crime rates, good schools, and surrounding amenities. Distance to work, for many, has become less of an issue due to flexible work from home options brought on by the pandemic. This trend is expected to continue as employers reevaluate needs for commercial space, cost moving forward and modify work from home policies into more of the norm. We could see mini surges in the migration if we have repeat lockdowns or restrictions reenacted.

The evolution of the dollar and how that impacts Rental Home Values

Regardless of the administration that holds the office, we know, THEY ALL ARE LIKELY TO PRINT MONEY! You’ll remember from grade school what happens to REAL assets or REAL PROPERTY when the value of the dollar declines. That’s right, the PRICE GOES UP! What we will experience is fixed mortgage payments but rising cost of living or higher rents due the increase in the cost of Housing. Real Estate has always been a good long term safeguard and hedge against inflation. With the rate at which the spread is predicted to continue, we can capture the spread and leverage our fixed purchase cost to the rising cash flows. Take a look at the graph (Federal Reserve bank of St Louis)

https://fred.stlouisfed.org/series/FYGFD

Suburban Rental Markets that Will Continue to Perform

My Recommendation is to buy in solid, growing suburbs with good infrastructure, good schools, established social and religious organizations. Choose a Realtor that is familiar with investment property in the market you are interested in, to work with.

Here's a list of Suburbs in the Kansas City Rental Market that are showing strong growth potential.

Lee's Summit, MO

Overland Park, KS

Blue Springs, MO

Raymore, MO

Independence, MO

Greenwood, MO

Not every home in these market makes it a good or great investment choice for you. Make sure the numbers work, and your projections are realistic.

There’s a lot going on in the wake of 2020. We want to protect our assets against inflation and leverage the pressures on housing to grow our portfolios. It’s a fantastic time to start or grow your wealth with Real Estate.

I’d like to know what you think! If you have comments about this article or questions about investing in the KC Suburb Area, I’d love to hear from you.

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Owning and managing rental properties can be a lucrative business, but it comes with its own set of challenges. From screening tenants to handling maintenance requests, property management requires a lot of time and effort. Here are some tips to help you effectively manage your rental properties and maximize your returns. Set clear expectations Before a tenant moves in, make sure to set clear expectations about the rental agreement. This includes the rent amount, due date, late fees, maintenance responsibilities, and any other rules or regulations. Having a clear agreement in place can prevent misunderstandings and disputes down the line. Screen tenants thoroughly A thorough screening process can help you find reliable tenants who will take care of your property and pay rent on time. Ask for references, run background and credit checks, and verify income and employment. It's also a good idea to have a conversation with potential tenants to get a sense of their personality and communication style. Maintain the property regularly Regular maintenance can prevent small issues from turning into big ones and keep your property in good condition. Schedule regular inspections and make sure to address any repairs or maintenance requests promptly. You can also consider hiring a professional property management company to handle maintenance tasks for you. Communicate effectively Good communication is key to a successful landlord-tenant relationship. Be responsive to tenant requests and keep them informed of any changes or updates related to the property. Establish clear communication channels and respond promptly to calls, emails, or messages. Keep accurate records Maintaining accurate records can help you stay organized and ensure that you are in compliance with local laws and regulations. Keep records of rent payments, maintenance requests, inspections, and any other relevant documents. Consider using property management software to streamline your record-keeping process. Know your legal obligations As a landlord, you have legal obligations to your tenants, including providing safe and habitable living conditions, respecting their privacy, and following eviction procedures if necessary. Make sure you are familiar with local laws and regulations related to rental properties and comply with them at all times. Of course, if you have a property in Lee's Summit, Raymore, Blue Springs or other surrounding areas, we'd love to assist you with all of your property management needs.

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