How Do You Assess What Would Work In A Small Town?

Question

I live in a small (8000 population) an hour and a half south of KC.  We are the county seat and the population of the county is about 25k.  In my opinion the town is not as health economically as what it was even 5 years ago.  I can drive around town and see many houses for rent that you didn't used to see at all.  My question is this:  How do you assess if there is any viable way to invest here in this town as opposed to driving an hour to an hour and a half to a much larger metropolitan area that we know little about?   We live an hour and a half from Springfield, MO an hour north of Joplin as well.  Any thoughts would sure be appreciated!

Tom Goans · Answer

@Gary Kurtz,

Research.

Without even being there or have ever been there, I would bet there are real estate investment opportunities. This is true in almost every market for the very wise and prepared.

I would recommend your first step is reading the book "Think and Grow Rich". One of the common elements of most successful entrepreneurs is finding a need and filling the need.

Secondly, learn everything there is to know about the community, the people who live there, the major employers, trends, attitudes, the thoughts, considerations and plans of government agencies ... EVERYTHING. Become the best informed and prepared person in the community.

While you are doing this research, you will uncover many opportunities that others do not see.

Chasing opportunities in areas where there are many competitors will not yield as good of a return on the investment potential.

The best investments and return on investment I ever made was buying land that was mostly ignored by other investors. For example, I have bought 5-acre tracts of vacant land in an existing development for $800 (eight hundred) each - total price for all 5 acres. Each 5-acre tracts of land were sold in less than a month for $8,000 to $12,000. I had NO holding costs. The only additional cost was my time to create individual websites for each property.

• One added note: my father repeatedly stated there are      more buyers for Chevys than Caddies. While you are researching, you may      want to keep this philosophy in mind.

Best of luck.

Gary Kurtz · Answer

@Seth Williams you hit the nail on the head.  We have one major employer in town and a small manufacturing plant (employs probably 50) (not counting the local hospital and the school system).  If 3M were to leave town, this place would dry up.  We have lost several smaller retail shops over the last 5 to 10 years as well...and those buildings, located on the main drag are still vacant today.  I do think @Tom Goans handed out sage advice though.  I've already done much of that due diligence having lived here for the last 25 years and it is that information that has caused me concern, especially with buy and hold.  THANKS both of you for your help!

Seth Williams · Answer

@Gary Kurtz - just to support one issue that @Tom Goans pointed out - I think in general, it helps to thoroughly understand the employer base of the town. Is this an area with plenty of diversity and healthy/growing small businesses, or is there ONE major employer that basically controls the destiny of the community? The more diverse the employer base is in any given town, there less volatile it will be to economic downturns and "strategic decisions" that are made by business leaders in the area.