Location, Location, Location: Why It Matters in Real Estate Investment and How to Assess a Property's Potential - Article Banner

When it comes to real estate investments and rental properties in Kansas City, one of the most important things to consider is location. There is perhaps no saying that’s more famous than the adage “location, location, location.” This often-repeated phrase carries a lot of weight in the real estate and property management industries. You don’t have to be an expert to understand the power of location. 

Location matters because it can make or break the value of your investment and your ability to rent it out effectively. 

If you’re planning to acquire a new rental property and you’re analyzing what will work well for you and what might be a challenge, you need to consider location. Here’s how to assess a property’s potential in terms of location and whether it will help or hurt. 

You need to fully understand and anticipate the importance of a property’s location before you buy. Once you own that rental home, you cannot change its location. 

Good Location Leads to Higher Demand Among Tenants

One of the key reasons why location is so important when we’re talking about rental property investments is because of demand. The location of a property can impact the demand for it, which in turn affects its value. Properties in desirable locations will attract more tenants than those in high-needs neighborhoods or more remote areas. 

What makes up tenant demands when we’re talking about location? The qualities of a well-located home are often the same for renters as they are for buyers. Tenants are looking for homes that are close to schools, grocery stores, restaurants, and entertainment. They’re looking for recreation. They want to be close to parks. 

Rental properties that can provide that type of proximity to everything that matters will create more demand among your discerning tenant pool

Because of that demand, higher rental values are a given. 

Get to Know the Neighborhood 

Demand depends on the neighborhood. Tenants are going to gravitate towards rental homes that are in good neighborhoods. If they have kids or pets, they’ll want to be around other residents with kids and pets. They’ll want a neighborhood that provides safety and outdoor space. 

When analyzing a potential property, look around the neighborhood to assess its safety, cleanliness, and overall appeal. Is it well-lit? Is there adequate parking? Are there sidewalks for walking? Check out how things look at various parts of the day. Do things get busy during rush hour? These are the qualities that will be important to your future tenants. You don’t want to invest in a rental property that’s in an unpleasant neighborhood. Even if it’s the best and most attractive home. 

Are there other rental properties in the neighborhood? If so, do some research and find out how long they’re occupied. Do tenants tend to stay in place, or is there high turnover? How long did it take for those rental homes to attract tenants? 

Analyzing the surrounding properties can provide a bit of insight into the potential of a property. Properties that are surrounded by well-kept homes and businesses tend to have higher values and demand. On the other hand, properties surrounded by run-down or abandoned buildings can negatively impact the value of your investment. 

Look for Evidence of Location Growth

You’ll need to examine the market trends while assessing a property’s location and whether it’s a help or a hindrance. Market trends will tell you whether you’re making a good investment, and one of the most important trends to look at is whether the location you’re considering is seeing or expecting any growth and development. If coffee shops are moving into the area, walkable neighborhoods are sprouting up, and more people are moving in, you’ll see your property values increase. 

Beware of those neighborhoods that are in a state of decline because as you might expect, such factors will only drag down your property value and inhibit tenants from renting there. If a new highway is going to run through a neighborhood, for example, property values will likely tank and everyone will be trying to sell. If properties have been abandoned and are deteriorating, you’ll want to think twice before buying there. Keeping track of market trends and making strategic investments can help you choose the right location and maximize your return on investment (ROI).

Consider Accessibility When Assessing Potential Kansas City Investments

A property’s accessibility is another important factor to consider when assessing its potential as a lucrative investment property. Neighborhoods and locations that are easy to access, such as those located near major roads or public transportation, tend to have higher demand and values. Accessibility can also impact the ease of renting or selling the property, as well as potential rental rates.

No one wants to live adjacent to a major freeway. However, it’s important for tenants to feel like they can easily get places from their home. If they’re still commuting to work, they’ll want an easy way in and out. 

Remember to enlist the help of a Kansas City property management professional before you buy. Property managers can help you establish what kind of rent you’re likely to earn on a particular rental property. We know the neighborhoods and we know what tenants are looking for in their next rental home. 

As you continue your search for the next investment property for your portfolio, remember that there’s probably no factor that’s more important than location. You can always change a property’s aesthetics or condition. You cannot change its location. 

By analyzing a property’s location and considering factors such as demand, neighborhood, market trends, accessibility, and surrounding properties, you can make informed investment decisions that maximize your return on investment. Remember to always do your due diligence and thoroughly research potential properties before making an investment. With the right approach and the right property management partnerships, you can find properties with great potential and maximize what you earn on those investments. 

Contact Property Management CompanyIf you’d like to talk more about how to choose the right investment, please contact us at Key Partners Property Management. We’re your best Kansas City property management resource.