Is the inner city/urban core a viable investment area now?

[Timothy Howdeshell]

Hi all, 

I've been investing in Kansas City, MO for several years now. I've always stayed away from the inner city (South of the river between 71 and 435. I'm seeing that development has continued pushing east towards 71 from downtown. And with prices going up all around the metro, the inner city seems to have a lot more development in it as well. 

When I started out I was told not to invest east of the Paseo and to avoid inner city due to high crime, low values, etc. Is this changing now though? 

I'm not a fan of D class areas (or C- for that matter) so would like to avoid that type of investing, but I'm wondering if it is safe from a crime and ROI perspective (fix and flip).

Thank you! 

[Ernst S Coriolan]

That's such a broad outline, but there's a tremendous amount of opportunity in that area. Vineyard Estates is a great neighborhood with high home prices. The Swope Park area is another unique pocket that has high home prices and it also has lower crime rates the closer you are to the park. There are also a lot that invest in this areas and use a section 8 strategy to guarantee the rent. Development projects keep pushing that line at Paseo/71st further and further east as projects are completed. 

In my opinion there are a lot of areas that I would live in and feel comfortable in the neighborhood. I'd shrink that box down a little more, between south of 23rd and north of Blue River. A lot of investors tend to avoid the loop on the KCK side, but Strawberry Hills is another pocket that has given several investors a lot of success. Most of the neighborhoods tend to do fine for the fix and flip strategy, like most cities KC tends to have areas that are considered rough, but compared to other cities its reasonable. Most of these neighborhoods are walking the line between B/C. 

Crime maps can be deceptive because the business district has more crime, but thats where a large number of people go to do things like the night life in the Power and Light District, so crime would follow where a large number of people are. 

[Alex Olson]

I like that you are hearing better things in those areas. There a lot of C and B areas of what you are talking about. I have a deal for a client east of 71 and is an as-is 7% cap rate asking price. They have put a lot of money in to it. Area is doing well and getting better and better. 

[Caleb Brown]

Currently I like around the HWY 71 corridor. I would not go super East of that though, it still has a ways to go. There are so many pockets in KC so it is tricky. Be careful, inner city can still be a pain compared to the suburbs.