Recent events and certain variables have been indicating a shift back to inner city dwelling (see our article "Urban vs. Suburban Real Estate" from 07/15/08).  In this posting, we would like to present a classic case of when investing in bedroom communities can make sense.  The case study for this argument is the city of Kyle, TX, a city just south of Austin by 15 miles.

The population of the city of Kyle is growing rapidly, at a rate of about 25% a year.  It is considered Texas' fifth fastest growing city.  There are several reasons for this explosive growth:

1.  Seton Medical Center for Hays County will open in Kyle in late 2009.  This will be the largest medical center in the area, represents the largest infrastructure project ever launched in the city, and will bring 5,000 new jobs.

2.  Many would-be home buyers are priced out of the Austin market, which has appreciated approximately 20% in the last 36 months.

3.  There is a lot of overflow of students attending Texas State University San Marcos who were not able to find housing in San Marcos.  If you were able to attend our recent Student Housing Seminar, you'll remember that San Marco represents one of the most profitable student housing markets in the country, as housing in this town is hightly limited.  Kyle is about 9 miles north of San Marcos.

The ideal bedroom community (from the perspective of the real estate investor) should be close enough to major hubs of employment to make for an easy commute, and should also have it's own economy and infrastucture to accomodate the growing population.  The three specific factors highlighted above answer to this criteria, and also create a profitable investing opportunity.  Cash flow is projected to be strong, and investors should realize significant appreciation in the next three to five years.

Questions?  Comments?  Contact Us! 

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Ofer Goldenberg is the Owner and CEO of Capital Growth Investment.