How to Invest During an Inventory Shortage

Question

Hey guys! I'm from Kansas City and am looking to invest sometime this summer. From my research, I've found that there is a big inventory shortage in the KC market, but seems nationwide to an extent. Properties are being overpaid for, are on the market for a few days sometimes, have even run into people overpaying for properties without doing an inspection.

How does this affect someone looking to invest soon? I'm looking to invest in a 2-4 unit property FYI. Does an inventory shortage just mean you need to be all that more creative to find good deals or do you simply wait for the market to shift?

I appreciate the feedback greatly.

Lee Ripma · Answer

Account Closed

Totally get it. Having just closed on a duplex and a fourplex in Kansas City I am looking at commercial for future purchases. I'm not an owner occupant so it's a little bit of a different situation, I just really like how straightforward it is to increase the value on commercial properties but it's easy to say the grass is greener. Once I do a value add on a commercial property I guess I can confidently say which works better for me!

Lee Ripma · Answer

Account Closed I'd consider going to a 5 unit, less competition, more straightforward valuations on properties.

Account Closed · Answer

I'd love to learn more about your KC investments! And yes, will be curious to hear which works better for you. Thanks for the insight.

Account Closed · Answer

This could be an option @Lee Ripma, thanks! I've just been lately honing in on multifamily residential for some of the benefits it offers for my circumstance. Once it gets commercial, can be a little trickier.

Account Closed · Answer

Thanks @Andrew Johnson! This makes a lot of sense, appreciate the feedback.

Marissa Carroll · Answer

I'm with you guys on this. I plan on owner occupying whatever I buy in KC, which throws another wrench in the equation.

I keep trying to figure out how close to the top we are, but I think we may still have a ways to go. Being an architect, our jobs are usually the first to dry up before a downturn (and unfortunately, the last to come back in a recovery), and most firms are still hiring like crazy. The last time it looked like this was two years prior to the last crash. I do know that commercial retail developers are starting to have longer vacancies due to over supply.

All that to say, keep going! I figure the first one I buy may not be the best deal, but it's probably worth cutting my teeth before the next downturn when there's a lot more inventory.

How to Invest During an Inventory Shortage

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