How to judge neighborhood quailty

Buying & Selling Real Estate
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How to judge neighborhood quailty

Josh Coup
Member since 2017 · 31 posts · 7 votes

I'm a newbie out of the KC area. I'm looking to land my first deal within the next year. I originally had MLS set up to send me properties in closer proximity to my residence, which is Overland Park. Well, most of Johnson County, KS would probably be rated B areas at the worst. And the prices reflect this. I'm now changing my search to lesser rated areas of the KC metro. My question is: Is there an objective way to measure the quality of a neighborhood? I'm not looking to invest in "war zones" as they are put. Or is it pretty much subjective? Eventually I'd like to also invest out of state where I'd have no familiarity with different areas' nuances.

Thanks,

Josh

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Amanda Wirch
Member since 2018 · 22 posts · 12 votes
6y
You can generally look up crime maps in a town/neighborhood to get a feel for the "types" of crime (i.e. violent offenses verses petty theft).  I like to check those out, plus I look at what types of businesses the area supports or attracts, government work or money being invested into the area, check out neighborhood chat boards or facebook groups and find out what everyone's complaints/concerns are, and if possible, I walk the area myself.  An area with an outflow of older families/retirees and an inflow of young families always interests me, areas that the city is trying to revamp interest me, and areas bringing in more local or boutique style shops ALWAYS interests me...particularly in smaller markets.  

I would take yourself and your own expertise into consideration.  Do you know knowledge of a particular industry/large area company?  Do you have a niche market you would like to attract?  (ie. young families, young professionals, pet owners, millennials...ect.)  What areas of town do you foresee good things for in the next 10 years?  Have you done your research to back that hunch up?  Use your own "insider" information!
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  • Brian Glaves
    Investor · Shawnee Mission, KS · Member since 2015 · 1 post · 0 votes
    6y

    Hey Josh welcome to the real estate business!   On the similar thread about Lee’s Sunmitt earlier, it depends on what your goals are.  I have rentals in Overland Park that I picked up 8-9 years ago that had decent cash flow around $200 a month on a 15 year fixed rate with 25% down.  Now those rents are $300 a month higher and the properties have appreciated 30-100%.  Problem is when I look for new properties In Overland Park I’m jaded to what I make on my current ones.  I’ve stretched outside to Roeland Park, KCK off of 47th and Switzer and most recently picked up a couple of small 2bd/1ba in Waldo area, all in an effort to find that $200 a month cash flow, with an eye towards increasing rents and appreciation.   Zillow is your friend, check the houses for sale on there and look at rentals around the listings to get an idea of the area.  Their “rent zestimate” gives a decent idea of what you could rent it for and their mortgage calculator is good to use to compare.  I manage my rentals myself so the location is important to me to be between home and work and to feel comfortable showing the houses any day/night.   Again different strokes for different folks, just wanted to share my strategy.  

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  • Amanda Wirch
    Member since 2018 · 22 posts · 12 votes
    6y
    You can generally look up crime maps in a town/neighborhood to get a feel for the "types" of crime (i.e. violent offenses verses petty theft).  I like to check those out, plus I look at what types of businesses the area supports or attracts, government work or money being invested into the area, check out neighborhood chat boards or facebook groups and find out what everyone's complaints/concerns are, and if possible, I walk the area myself.  An area with an outflow of older families/retirees and an inflow of young families always interests me, areas that the city is trying to revamp interest me, and areas bringing in more local or boutique style shops ALWAYS interests me...particularly in smaller markets.  

    I would take yourself and your own expertise into consideration.  Do you know knowledge of a particular industry/large area company?  Do you have a niche market you would like to attract?  (ie. young families, young professionals, pet owners, millennials...ect.)  What areas of town do you foresee good things for in the next 10 years?  Have you done your research to back that hunch up?  Use your own "insider" information!
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  • Jan Kerr
    REI Mentor · Perry, UT · Member since 2019 · 101 posts · 123 votes
    6y

    @Josh Coup Hi Josh. There is a really cool website that tracks a ton of dempgraphic information, not just by city name or metro area, but literally by zip code. It helps you see the differences in information from one zip code to the next. There is a long list of categories that you can look up from the population count and age statistics, Housing stats including median home values, rental and vacancy rates, crime rates and lots more. The site is www.bestplaces.net Enjoy!

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  • Tom S.
    Real Estate Investor · Burlington, VT · Member since 2010 · 2k+ posts · 1k+ votes
    6y

    @Josh Coup  Walk the area at night, see what's going on / how noisy it is / who's hanging out on the streets.  If you're not comfortable walking that area at night, it says a lot right there.

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  • Art Perkitny
    Specialist · Cleveland, OH · Member since 2018 · 232 posts · 348 votes
    6y

    @Josh Coup as others have already stated, the best way to learn a market is to personally go there and speak with the locals. However, when this is not possible or if you are trying to quickly analyze a large number of potential locations, the best thing to do is to look at the data. 

    In order to gauge the "rating" of an area we first need to establish what we are scoring. I like to think of location grades as a kind of risk score similar to what a FICO score or bond rating is to a consumers creditworthiness or bond default risk. 

    Next we need to decide what are the risks a location may posses and how to measure those risks. Risks in REI can be things like vacancy risk, non-payment risk, property damage risk, and so forth.

    To gauge a locations propensity to exhibit these risks we can look at data such as poverty rates, household income trends, vacancy percentages, high school graduation rates, etc ... 

    Hope all that makes sense. I'm going to leave you with a resource that I believe will help you in your search for a new location to invest in KC. The map below shows the rent to price ratios for various cities within the KC metro area. If you are looking for more cash flow and are comfortable taking on more risk I suggest looking into the areas shaded darker. These will be locations that will produce more cash flow on average each month.

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