Will Midwest towns become obsolete?

Question

Those of you guys who invest in small towns in Midwest...

Do you think those small towns will become obsolete?

There are  a lot of ghost towns here in Arizona, that are 1 hr away from Phoenix... And that is 1 hour away from megalopolis!

Small towns in Midwest are 2-3 hours away from Kansas Cit, Indianapolis, etc...

My worry is that they will become ghost towns in 20-30 years...

Do you worry about that? Or as long as it cashflows, who cares what happens in 10-30 years?

Josh Teunissen · Answer

even electric car parts need to be made somewhere, if the country stops eating meat, lettuce still needs to grow somewhere haha the pipe that pumps concrete to the top of highrise buildings Is made in my backyard. So as long as there is manufacturing in the Midwest and not all overseas...your best IRR also isn't over 20-30years. Just know your market, mine has come back from 08

Josh Teunissen · Answer

I would not bet too much on agriculture. I am a farmer, from my perspective farmers are squeezed about as tight as they can withstand before some farms fall and supply/demand equilizes. Margins are tight and milk doesn't pay to produce, I know a lot of farms maxing out their financing as well as investors dumping money into the larger dairys to keep them afloat. Also regulation in rural areas in my area at least are more and at a high cost with no return to comply. Producers in ag as a whole are on there knees however they don't represent the entire industry. There may be innovation that drives the Ag market but the traditional markets are tight.

Besides all that, In rural realestate markets I think we always need to keep an eye and an ear on the job markets/industry ect. I guess honestly that applies anywhere, metro rural or otherwise. In my area we have a lot of manufacturing, farming the way I know it is not a significant source of jobs (or income lol). We have large equipment today/robots thathe are more efficient and require a single opperator.

In order to answer the original question I would say that in my market I'm not terribly worried, it's on my mind but for now we have jobs and semi diversified indusries. Always need to reevaluate

Anthony Gayden · Answer

This is really an argument for rural vs. urban areas, not necessarily solely concerned with the midwest. There are plenty of smaller towns on the coasts where the exact same could be said. Merely being located on the west coast is not a hedge against rural decline.

There are a multitude of reasons why these smaller towns will continue to exist. The number one reason is agriculture, and farming. These industries will continue to exist and by their very nature will be located in these rural areas

Aside from that there are those businesses that are considered "unacceptable" and will locate in a rural area, far away from NIMBYs and city regulations. Think meat packing plants, mining operations, oil refining, dairy farms, etc.

Carl Pickens · Answer

well i've got a 80% unemployment rate among my renters and they are getting along just fine on government aid and sporadic under the table work. I also don't see them moving to the big city any time soon.

Michele B. · Answer

Ted Nugent was here and then it became popular and he then moved.

Mary Jay · Answer

Dont pay attention to that person! If you are happy there , who cares what others think!

Andrew Syrios · Answer

I doubt they will become ghost towns, but generally speaking, I would avoid investing in really small towns unless that's where you live. Even then I would try to invest in bigger nearby towns (not necessarily cities).

Michele B. · Answer

I think that there will always be people who want to live out away from a big city. I live on a dirt road and drive 45 minutes to work in a small town.  I think that you are underestimating the people who don't like city life to get up and move to a city.  I think small towns are hit pretty hard and most close up pretty easy until someone says hey I can use this old factory to start my business and the taxes will be super low in this area, and because the area is stressed the wages will be super low....and wham......Small town comes back......then some celebrity moves in cause its the it place and blam all property values skyrocket and the system starts over. I have seen it happen once in my lifetime already to a small town.  It will happen again.

Jay Hinrichs · Answer

Astute observation Anthony one only needs to look at rural CA OR WA logging and fishing towns.. to see areas that have been in steady decline for decades.. they have not dried up completely but not a lot going on and 20 to 40% unemployment..

Josh Teunissen · Answer

@Michele B "Screech" (Dustin diamond) from that show saved by the Bell moved to a smallish town around here too!  Interesting

Will Midwest towns become obsolete?

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