An important measuring device
When evaluating a set of potential money-making buildings while locating investment property, one factor seriously tied to the building’s ultimate cash flow will be its “Walk Score.” This is a relative measure, compiled by the web site WalkScore.com. The score is a ranking between 1 to 100. It takes into account the proximity of shopping, transportation, schools and recreational facilities in relation to the actual walking distance from any particular rental property. So you can use it when evaluating potential rental properties to see which ones offer the greater possibility for rental profits.
Comparing Walk Scores
Thus, for a rental unit in a large, central city location that has a close walking distance to all local shops, buses, trains, parks, playgrounds, etc., a Walk Score could be in the high 90’s, for example. A good suburban setting, while still close to shops and transportation and other recreational amenities, would usually garner a Walk Score in the 70’s. And on the other end of the spectrum, a rural rental property, which requires a car to get to any local shopping, public transportation, downtown area, parks and schools, would probably yield a score close to zero.
There have been studies that have shown a high correlation between greater Walk Scores and a higher valuation on a similar property (same size, square footage, bedrooms, baths and amenities) than those rental units with much lower Walk Scores.
In monetary terms…
It has been estimated that for every point increase in a Walk Score, there could be a possible increase in overall property market value for a like property by as much as $3,000. The reason for this is simple: the rental housing arena places a much higher value on units that are located within an easy walking distance to public transportation, schools, recreation and other services, like shopping.
If renters don’t have to use their car for everyday chores and/or commuting to work, then they attach a much higher value to the rental unit. And this translates into greater overall demand for the unit based on its better locale. And ultimately, that demand pushes rental prices (and cash flows for investors) up.
The bottom line
To sum up, any rental property with a higher Walk Score will produce greater overall rents. They’ll produce a higher rate of cash flow, as well as have greater demand. And this will ultimately yield fewer overall vacancies, and down the road, when it comes time to sell the asset, will yield a greater overall sales price in a faster selling time than a comparably-sized property in a lesser Walk Score locale. So it’s always a good bet to check any location’s cash flow potential by utilizing their Walk Score as part of your overall evaluation process.
photos courtesy of bs757.com,livesimplyenough.com, usatoday.com, davegi.com, nakedphilly.com