Does Location Matter?

Question

I am in Kansas City and I see a fair share of out of state investors buying properties in Kansas City. Yes it can be done but location needs to be understood. I see too many buying spots where they had expectations of it being a C or B when in reality it's closer to a D area.

This week I was heading to meet a new client for coffee in Waldo, off of Wornall Rd. I took 75th and headed West. During that stretch of going West it was 9 minutes but I saw the variance in those short minutes. Waldo is a trendy area with shops and plenty of things to do. As you go further East the amenities decline and there's less shops.

Here's the vast price difference and DOM I see in that stretch I drove.

First area is Brookside, Waldo, and the surrounding neighborhoods between Wornall Road, Brookside Boulevard, and Troost Avenue. This area is nicer and I would classify it as a B or better (depending where you are). Junes average sales price was $388,611, DOM 19 days and 60 properties closed in June.

Now go 3-7 min East and compare that to the corridor between Troost Avenue and Highway 71, south of Ward Parkway. This I would classify as C or below (depending on where you are). The average sales price drops to $195,938, DOM 41 days with 25 sales during June.

These 2 areas are both active but within a short drive they are different. If you are investing in an unfamiliar area I would HIGHLY encourage to understand what area you are actually buying in.

Jay Hinrichs · Answer

there is that old adage   Location location location was true when it was coined is true today.

in Virtually every market and city in America.

Why

in my mind Schools play a big part  Crime  is big part and just general social demographics

Mike Fisher · Answer

Great post Caleb. Same exact thing in Chicago. I've managed rentals here since 2003 and the south suburbs are the poster child for this. You can cross one street and go from tenants who stay five years to blocks where you're turning units every twelve months and eating the costs.

The zip code trap gets out of state buyers every time. Zip codes are big, blocks are small. The averages blend the good pocket and the rough pocket into one number that describes neither.

My advice to remote buyers is always the same. Before you write the offer, ask a property manager who already works that area. We know which blocks lease in a week and which ones sit, because we're the ones handling turnovers when owners guess wrong. Most of us will give you an honest read for free. Way cheaper than finding out after closing.

Aaron Spatz · Answer

Yeah location matters more than anything else. It's what drives price. Different factors for different people, for example foot traffic, vehicular traffic (either wanting it for a business or not wanting it for a quiet area), school districts, utility districts, lot size, proximity to businesses, etc.

Kerlous Tadres · Answer

I always tell out-of-state investors the same thing: zip codes lie, streets tell the truth. From my experience, the biggest mistake I see is people underwriting a deal based on comps from a B area when their actual property sits in a C or D, and that gap will destroy your projections fast. Before you wire anything, drive the street at different times of day or find a local agent who will be brutally honest with you about where you're actually buying.

Jules Aton · Answer

Great points and unless your Realtor is a local, active, long term investor I am not sure how to determine if their recommendations are solid. I did rehabs in inner city Baltimore for years and was amazed at the difference in even a few blocks. The areas that were delineated by water, creating a peninsula were often a solid bet for continued gentrification and those without this remained  hit or miss and an inner city miss is ugly. Specific examples include Federal Hill to Riverside Park to Locust Point all solid vs Federal Hill to Pigtown/UM area a no go even decades later and similar with Fells Point or Canton vs going a few blocks up to JH hospital area. There is definitely a home team advantage and when investing thousands of dollars I want that edge.

Amit Patel · Answer

Hey Caleb,

You’re spot on. Location isn’t just the city, it’s the specific block and what’s actually around it. In Chicago and the suburbs we see the exact same thing. You can drive five minutes and go from solid rental demand and quick sales to areas where properties sit longer and tenants are harder to keep.

Out-of-state investors especially get burned when they look at a zip code or city name and assume it’s all the same. The difference between a B area and a C/D area shows up fast in vacancy, turnover costs, and how easy it is to raise rents over time.

What’s helped the remote owners I work with is having a local agent and property manager who will actually drive the streets with them (or send detailed videos and notes) before they make an offer. Pulling hyper-local comps and understanding things like foot traffic, nearby amenities, and even how the block feels at night makes a huge difference.

Appreciate you calling this out. Too many people learn it the hard way after they’re already under contract.

Ken M. · Answer

When I was flipping pre-foreclosures, the neighborhood and street the house was located on made more of an impact than anything else. It’s a different environment. The people who generally bought the houses where couples with no kids and not planning to have kids.

Since we offer creative financing terms, people who have income now but “dented” credit, were the buyers. We would offer pretty much the same terms banks were asking, but our qualification requirements were simpler and less demanding.

And those with 5 kids were happy to get out of a 2 bedroom apartment, into a 3 bedroom house. It’s a matter of priorities to them.

Chris Seveney · Answer

Yep. Schools and crime pay a huge role as well as jobs and inventory. It is also very interesting as I grew up in massachusetts where each town had its own schools (For the most part some regional), and their own police and local govt., Now I am in Virginia and it is by the county. When I was in Massachusetts people wanted to be in a specific town (usually a W town), because of the schools, and it did not matter what side of town you lived on.

In Virginia, people live in areas by the school district or public transit is where the homes ge the most money. So to tag on what Jay said, absolutely agree about schools, crime, public transit etc.

Arman Ahmed · Answer

You're spot on! One of the biggest mistakes out-of-state investors make is underwriting the city instead of the block. In Midwest markets especially, one street can be a solid long-term rental while the next can completely change your tenant base and exit strategy. That's why having a knowledgeable local team is just as important as finding a good deal, they'll help you avoid the pockets that don't show up in the data and keep you focused on neighborhoods that actually perform over the long run.

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