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Why Invest in Kansas City, Missouri

There are many reasons to invest in Kansas City, MO – one of our client’s favorite markets.

Well known for its contributions to the musical styles of blues and jazz, the city is also well known for its Kansas City-style barbecue.  And with over 200 fountains the city has been dubbed the “City of Fountains”, allegedly having the second most in the world, right behind Rome.

They also have more boulevards than any other city except Paris – why some people call it “Paris of the Plains”.

The most common weather is clear with almost completely blue skies.  The majority of the rain falls in April and June, but even in these wettest months, rain is light compared to other cities in the region.  Winters vary from mild to cold, very pleasant spring and autumn weather, and hot and humid summers.

Kansas City is an affordable market, with consistent job growth and population growth.

The Kansas City metropolitan area (MSA) is a 14-county area that straddles the border between the states of Missouri and Kansas.  With a population over 470,000 (city) and 2,200,000 (MSA), it ranks as the second largest metropolitan area with its core in Missouri.

The suburbs are largely south of the central city, though the area north of the Missouri River (known locally as the Northland) is beginning to experience growth similar to the south.

The metro’s population added just over 16,000 new residents between 2014 and 2015 according to the latest Census estimates.  This is a 0.8% growth rate, which ranks in 32nd of the 53 metro areas with at least 1 million people.  Natural population growth (births minus deaths) made up the bulk of the change, but the region also saw net growth due to migration, both from within the U.S. and internationally.

Economic growth has been led by healthcare, finance, insurance, automotive, manufacturing and IT.  Kansas City is also one of a major distribution center because of its central location within the U.S.  It is the top city for rail freight volume and the 2nd largest rail center, only behind Chicago.

The Kansas City metro added a solid 22,577 jobs in the year ending September 2015.  Nearly 40% of the metro’s new jobs last year were created in Jackson County – the county we focus on and where our client’s invest.

Knowing what industries will generate the greatest number of new jobs over the next 10 years is helpful as an investor.  Health Care leads the way with 25,000 net new jobs, followed by Professional and Technical Services with about 11,000.  These two industries are expected to generate 56% of all new jobs in the region.  But there will still be job opportunities across a much wider spectrum of industries.

Appreciation rates over the last 5 years have ranged from 3.2% to 8.1%, keeping it on pace with inflation.  Property prices are expected to continue its upward trend at a modest pace for the foreseeable future.  Rents are also expected to keep pace with price growth, thereby maintaining a favorable one percent rent-to-value ratio.

With a median home price around $132,000 and a rent-to-value ratio of about one percent on turnkey (and rent-ready) properties, Kansas City boasts favorable returns and cash-flow.

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