A real estate appraisal is the process of developing an opinion of value for real property. Appraisals are performed by licensed real estate appraisers.

 

Appraisals differ from Broker Price Opinion (BPO) and Real Estate Valuation in that appraisals can only be performed by licensed real estate appraisers.

 

You can receive a [free real estate valuation estimate](https://www.offermarket.us/tools/free-real-estate-valuation), compliments of OfferMarket.

Real estate appraisal is the process of developing an opinion of value for real property. Appraisals are performed by licensed real estate appraisers.

Appraisal - Real Estate Glossary - OfferMarket

What is a real estate Appraisal?

by Daniela Gonzalez

 

<img load="lazy" src="https://porch.com/advice/wp-content/uploads/2021/11/iStock-1038186890.jpg" alt="Three miniature, toy suburban homes on top of a stacks of quarter coins">

Property value has many moving parts, especially for something that itself doesn’t, well, move. The factors involved in determining property and home value are sliding scales of perception, priority, and personality. What is important to some may be a deterrent to others, so coming to a consensus on the value of a property has numerous considerations.

 

## How Is Home Value Determined?

 

<img load="lazy" src="https://porch.com/advice/wp-content/uploads/2021/11/lesia-gant-olFlnjzapjk-unsplash.jpg" alt="Arial view of a suburban neighborhood">

 

#### Size

 

This one is pretty straightforward – larger homes are more expensive because building bigger homes is more expensive. Depending on where you live, there is a varying cost per square foot to build a home (this has huge variations across the country based on many factors like availability of building material, contractors, remoteness, terrain, etc.). 

 

#### Age

 

The age of your home can contribute both positively and negatively to your home value. We tend to place a high value on historical or character homes – classic homes from the early 1900s that have been well maintained and upgraded. Conversely, homes from the mid-1900s forward that have not been updated are not seen as having high value. If your house would not fall into the historical or character home category, [renovations and updating](https://www.reverealtors.com/blog/detail/1540/1/High-Value_Renovation_Projects_for_Your_Home) are necessary to maintain home value.

 

#### Location

 

Some location elements are primarily about personal priorities—some people prefer being closer to amenities, downtown cores, schools, nightlife, wilderness, hiking and biking areas, etc. 

 

Other locational elements are less subjective. For example, we can confidently say that most of us would prefer not to live next to a dump or landfill—or a meat processing facility, power generation plant, or fire station. A property nearby could have a beautiful home and exterior landscaping, but we would likely still value it less than the same home in a more picturesque location.

 


#### Features

 

The features of your home and property contribute hugely to its market value. What the term ‘features’ encompasses is vast and also highly personal. Here are some features that contribute to the value of your home and property:

 

- [Home gym](https://porch.com/advice/set-ideal-home-gym-hassle-free-daily-fitness) (including flooring, mirrors, etc.)
- Home theatre room
- Feature fireplace
- Indoor or outdoor water features
- Oversize windows
- Smart home features
- Finished/heated garage

 

#### Safety

 

Neighborhood safety is a significant factor in the value of your property. Not only is it undesirable to consider living in an area with a higher crime rate, but it will likely cost a potential buyer more in the long run too. Home insurance companies factor in the crime rate in your area and the likelihood that you’ll make a claim due to a burglary or property damage and will give you a higher rate if you live in a high crime area.

 


#### Neighborhood

 

You know the ones, the good neighborhoods where everyone wants to live. It might not be because the houses are beautiful and gigantic; maybe it just has a good vibe or many great locally-owned restaurants. Whatever the reason, some neighborhoods are more desirable than others, and just having your home located there can positively impact your property value. 

 

#### Tree Value

 

[Tree value](https://porch.com/advice/much-trees-really-worth) can reference both the trees on your property specifically, as well as the trees on your street in general. Having old and well-cared for trees provides a beautiful natural element to your property that people are drawn to, enough so that it has a noticeable effect on your property values. 

 

#### School District

 

If you have children going to a public school, this is probably something that you’re already keenly aware of. It’s also an excellent example of how priorities are on a sliding scale regarding property value. If you don’t have children, or they attend or will attend a private school, then you’re much less likely to be willing to pay more to be in a desirable school district.

 

## What can decrease my home’s value?

 

#### Crime Rate

 

Many potential buyers are savvy about this these days, and they will check on the crime rates in neighborhoods they’re interested in purchasing in. So not only are those baddies sneaking around and damaging property or stealing bad for you, they’re bad for the overall value of your home now and into the future. 

 

#### Neighborhood

 

Gentrification is a tricky thing when it comes to property value. It relies on an overall increase in property values throughout a neighborhood to bolster the value of individual properties. 

 

Suppose you renovate a home in a less-desirable area with the idea that the neighborhood itself is becoming more gentrified, and that doesn’t happen as quickly as you were hoping (or at all). In that case, you have a property that’s valued is negatively impacted by the general area, not by the characteristics of the home or property itself.

 

#### Location 

 

There’s a good reason for the old “location, location, location” adage that you’ve likely heard many times before—it’s still relevant! So many factors go into what a desirable location is or isn’t, and they can be tricky to navigate. Here are a few of the important ones to consider:

- Cemeteries – generally speaking, very close proximity to a cemetery will work against your home value. 
- Highways – noise from roads is a detractor; while easy access is suitable for property value, it depends on your location.
- Hiking trails – if you’re a hiker, this could be a suitable property feature; however, many people do not prefer to have a reason for multiple strangers to be close to their home year-round. 
- Construction – Construction brings noise, people, dust, and traffic. None of these are suitable for your property value.
- Property history – This can be anything from being in a floodplain to having a violent crime committed on your property at some point. Some states have mandatory disclosure laws about certain things, while others do not, so the impact on your property value will depend on the history and where you live. 

 

## Tips For Avoiding a Low-Value Home 

 

<img load="lazy" src="https://porch.com/advice/wp-content/uploads/2021/11/lesia-gant-olFlnjzapjk-unsplash.jpg" alt="tiny home keychain">

 

Be informed – Know what’s happening in your neighborhood and city. It might not be the most scintillating activity, but keeping an eye on your city or town council’s activity and any proposed infrastructure changes or construction permits can be a great way to help you stay ahead of the game. 

 

Economic factors – The state of your local and national economy are one of the biggest drivers in real estate pricing. You could have an adorable home with perfect curb appeal, but your property will be valued less if you try to sell in a down economy. 

 

Building regulations – This is a significant factor if you’ve made any additions to your home. Most municipalities require permits for building additions, and if they are not correctly acquired, it is likely to be detrimental to your property value on resale. 

 

Hire a realtor – A realtor can focus their trained eye on areas that you can maintain or improve the home value that you might not have thought of. We get used to our homes and don’t see them with the critical eye that a potential buyer might, so having a realtor in your corner can help you keep ahead. 

 

## How To Increase Your Home Value

 

<img load="lazy" src="https://porch.com/advice/wp-content/uploads/2021/11/immo-renovation-UqNEbyRQ660-unsplash.jpg" alt="kitchen in middle of remodel">

 

Remodel – It’s a big undertaking, but if you want to maintain your home value and stay competitive in the resale market, remodeling is the best way to keep your home current. That’s not to say that you have to gut your home down to the studs every ten years, but making comparatively small upgrades like creating a more open concept floor plan or putting in more oversized windows (even just repainting) will help retain property value. 

 

Add features – Maybe you finish the basement or take that spare bedroom and create a home gym; anything you can add to your home that a future buyer would find attractive will work in your favor. This is also a great way to engage a real estate agent—they know what people are looking for in a home and can give you great advice on what would be an attractive feature to add to your home. 

 

Good maintenance – Little things add up, and they can quickly amount to enough things that, together, decrease your home value— if you need to have a portion of your fence replaced, no problem. Same with new gutters, some new [landscaping](https://porch.com/advice/xeriscaping-landscape), or exterior paint. Taken individually, these things are not likely to decrease your property value much. But all together, they definitely will. Keeping those pesky little tasks in check is one of the best ways to make sure that you don’t have a mountain of upkeep to do when you go to sell!

 

Now that you have a clear picture of the potential pitfalls that could decrease your property value and how to avoid them, you’re all set to make sure that you get the most out of your property when you choose to sell.

Comprehensive guide on preserving the value of your home. Detailing how to avoid common pitfalls of home buying and subsequent home maintenance.

Don’t Let Your Property’s Value Decrease - OfferMarket

Don’t Let Your Property’s Value Decrease

*Opinion by Daniel Sperling-Horowitz, CEO of OfferMarket. OfferMarket is a private lending platform and investment property marketplace.*

 

We started OfferMarket because we believe that sellers and buyers should be able to connect and transact commission free. OfferMarket is a commission free real estate marketplace for off market deals.

 

Many listings on our marketplace are posted by wholesalers. These are typically assignment of contract listings. If you are note sure what real estate wholesaling is, or you want to brush up on the topic, we encourage you to take a moment to read [Whole Real Estate 101](https://www.offermarket.us/guides/wholesale-real-estate-101).

Is it ethical to wholesale real estate? We'll look at both sides of this divisive topic.

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Is Wholesaling Ethical? | OfferMarket Blog

Is Wholesaling Ethical?

Grow your real estate investing business with the most competitive DSCR loan product. OfferMarket provides DSCR rental loans, bridge loans, hard money, fix and flip, slow flip, and ground up construction loans.

Private Lending | OfferMarket

Private Lending

Rental Market Stats

Rental Market Fundamentals

DSCR Loan Financing

Managing Risk with Landlord Insurance

Sourcing Off Market Properties

Conclusion: A Winner for Long-Term Investors

Build wealth through real estate with OfferMarket

**Last updated:** February 5, 2025

 

## **Rental Market Stats**

 

<div style="display: grid; grid-template-columns: repeat(1, minmax(0, 1fr)); overflow: auto; white-space: nowrap;">
<table><thead>
 <tr>
 <th>City comparison</th>
 <th>Kansas City, MO</th>
 <th>Philadelphia</th>
 </tr></thead>
<tbody>
 <tr>
 <td>Median home price</td>
 <td>$232,000</td>
 <td>$218,500</td>
 </tr>
 <tr>
 <td>Median home price growth (10-Yr)</td>
 <td>96.61%</td>
 <td>68.73%</td>
 </tr>
 <tr>
 <td>Single family market rent</td>
 <td>$1,550</td>
 <td>$1,850</td>
 </tr>
 <tr>
 <td>Single family market rent growth (10-Yr)</td>
 <td>29.17%</td>
 <td>28.47%</td>
 </tr>
 <tr>
 <td>Rent yield</td>
 <td>8.02%</td>
 <td>10.16%</td>
 </tr>
 <tr>
 <td>Population</td>
 <td>510,704</td>
 <td>1,550,542</td>
 </tr>
 <tr>
 <td>Population growth (10-Yr)</td>
 <td>7.43%</td>
 <td>-1.38%</td>
 </tr>
 <tr>
 <td>Unemployment rate</td>
 <td>3.3%</td>
 <td>4.4%</td>
 </tr>
 <tr>
 <td>Property tax rate</td>
 <td>1.52%</td>
 <td>1.3998%</td>
 </tr>
 <tr>
 <td>Public school rating (out of 10)</td>
 <td>3</td>
 <td>3</td>
 </tr>
 <tr>
 <td>Median household income</td>
 <td>$67,449</td>
 <td>$60,302</td>
 </tr>
 <tr>
 <td>Income to rent</td>
 <td>3.63</td>
 <td>2.72</td>
 </tr>
 <tr>
 <td>Median household income growth (10-Yr)</td>
 <td>48.64%</td>
 <td>46.33%</td>
 </tr>
 <tr>
 <td>Poverty rate (%)</td>
 <td>14.60%</td>
 <td>20.30%</td>
 </tr>
 <tr>
 <td>Civilian labor force</td>
 <td>68.70%</td>
 <td>63.40%</td>
 </tr>
 <tr>
 <td>High school grad or higher</td>
 <td>92.50%</td>
 <td>88.00%</td>
 </tr>
 <tr>
 <td>Bachelors degree or higher</td>
 <td>40.30%</td>
 <td>35.70%</td>
 </tr>
 <tr>
 <td>Median age</td>
 <td>36.5</td>
 <td>3560.00%</td>
 </tr>
 <tr>
 <td>Foreign born</td>
 <td>9.1%</td>
 <td>15.1%</td>
 </tr>
 <tr>
 <td>Housing units</td>
 <td>250,082</td>
 <td>760,242</td>
 </tr>
 <tr>
 <td>Housing units per capita</td>
 <td>0.49</td>
 <td>0.49</td>
 </tr>
 <tr>
 <td>Occupancy</td>
 <td>91%</td>
 <td>91%</td>
 </tr>
 <tr>
 <td>Renter occupancy</td>
 <td>44%</td>
 <td>48%</td>
 </tr>
 <tr>
 <td>Housing unit turnover</td>
 <td>13.2%</td>
 <td>14.4%</td>
 </tr>
 <tr>
 <td>Insurance Premium</td>
 <td>$1,740</td>
 <td>$1,639</td>
 </tr>
 <tr>
 <td>DSCR at 80% LTV (7.49% interest rate)</td>
 <td>0.89</td>
 <td>1.15</td>
 </tr>
</tbody></table>
</div>

 

*Data compiled from the following sources:*

- U.S. Census Bureau
- U.S. Bureau of Labor Statistics
- Zillow
- Neighborhood Scout
- [PropStream](https://trial.propstreampro.com/offmarketus/)

 

## **Rental Market Fundamentals**

 

The analysis of the Kansas City and Philadelphia rental markets reveals distinct strengths and challenges for investors focused on 1-4 unit residential properties, particularly when considering financing strategies such as DSCR loans, the protection provided by landlord insurance, and the opportunity to source [off market properties](https://www.offermarket.us/blog/off-market-properties).

 

At a glance, Kansas City and Philadelphia present similar median home prices—Kansas City at approximately $232,000 and Philadelphia slightly lower at $218,500—but diverge significantly in other key metrics. Kansas City has experienced nearly 97% median home price growth over the past decade compared to Philadelphia’s roughly 69%, signaling a robust appreciation trend. However, Philadelphia’s rental market offers a higher rent yield of 10.16% versus Kansas City’s 8.02%, and although single-family rental growth rates are nearly identical (around 29%), the higher yield in Philadelphia may be attractive for investors seeking stronger income relative to property value.

 

## **DSCR Loan Financing**

 

One critical aspect of financing these investments is the [DSCR loan](https://www.offermarket.us/dscr-loan?ref=content-kansas-city-vs-philadelphia-rental-investing-stats). DSCR (Debt Service Coverage Ratio) loans require a DSCR of at least 1.0 to qualify, but a ratio of 1.1 or higher is preferred to ensure a monthly cash flow buffer. Here, the differences become pronounced:

 

In Kansas City, the DSCR stands at 0.89 under an 80% LTV scenario with a 7.49% interest rate, falling short of the minimum threshold. This means that, without improvements in operating income or a reduction in expenses, properties in this market may not support the debt load under DSCR financing without additional measures or concessions.

 

Philadelphia, by contrast, has a DSCR of 1.15, which exceeds the minimum and preferred thresholds of 1.0 and 1.1 respectively. This higher ratio suggests that Philadelphia properties are more likely to generate sufficient income to comfortably cover debt service, potentially allowing investors to secure the desired LTV on DSCR loans.

 

---

 

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---

 

## **Managing Risk with Landlord Insurance**

 

Regardless of whether your rental property is owned free and clear or financed, [landlord insurance](https://www.offermarket.us/blog/landlord-insurance?ref=content-kansas-city-vs-philadelphia-rental-investing-stats) is essential to your asset protection and risk management strategy. It safeguards against property damage, provides liability protection, and ensures that rental income is protected in case of unexpected events, all of which are vital for maintaining a strong financial position—especially when leveraging DSCR loans in your investment portfolio.

 

Landlord insurance is a specialized type of property insurance designed specifically for rental property owners. Unlike standard homeowners insurance—which is tailored for owner-occupied residences—landlord insurance provides coverage that addresses the unique risks associated with renting out a property. Here’s a breakdown of what it typically covers and why it’s important:

 

* **Property Coverage:** This component covers physical damage to the building caused by covered perils such as fire, storm damage, vandalism, or other unexpected events. Since the property is an investment asset, ensuring its structural integrity is paramount.
* **Liability Coverage:** Landlord insurance generally includes liability protection that covers legal expenses and medical costs if a tenant or visitor is injured on the property. This protection is crucial for safeguarding the investor’s personal assets in the event of lawsuits.
* **Loss of Rental Income:** Also known as “loss of rent” coverage, this feature helps compensate the landlord for lost rental income if the property becomes uninhabitable due to a covered loss (like a fire). This can be particularly important for maintaining cash flow, especially when using financing strategies such as DSCR loans.
* **Additional Coverages:** Some policies might also offer optional coverages, such as protection for furnishings (if the property is rented furnished), legal expenses, or even equipment breakdown coverage, depending on the insurer and the specific needs of the landlord.

 

Given that DSCR lenders mandate landlord insurance as part of the loan underwriting process, ensuring that the investment property is properly insured is non-negotiable. Both markets show comparable insurance premiums—with Kansas City around $1,740 and Philadelphia at about $1,639—which play a critical role in mitigating risks related to property damage, liability, and rental income loss. Landlord insurance, therefore, is not just a regulatory requirement but also an essential risk management tool that helps maintain the investment’s stability and appeal to lenders.

 

---

 

[![Got landlord insurance, shop now, takes 1 minute, shops 40+ carriers.](https://cms.offermarket.us/uploads/Got_landlord_insurance_c09902fc1b.jpg)](https://www.offermarket.us/insurance?ref=content-kansas-city-vs-philadelphia-rental-investing-stats​​​)

 

---

 

## **Sourcing Off Market Properties**

 

Another key component to a successful investment strategy in either market is sourcing [off market properties](https://www.offermarket.us/blog/off-market-properties). Off market deals can provide significant advantages, such as less competition and the possibility of acquiring properties below market value. Investors have several avenues to locate these opportunities:

 

Investment property marketplaces focused on off market deal flow such as [OfferMarket](https://www.offermarket.us/listings) and data and marketing platforms such as [PropStream](https://trial.propstreampro.com/offmarketus/) can offer extensive property data and analysis, allowing investors to identify potential deals that are not publicly listed. Direct marketing to property owners can uncover incredibly profitable investment opportunities but they require a significant investment in marketing spend, networking, information systems, and ongoing, consistent outreach and follow-ups.

 

Networking with wholesalers, real estate agents, and title company representatives can also yield valuable leads on off market properties.

 

In Kansas City, where population growth is positive (7.43% over the past decade) and median household income is higher at approximately $67,449 compared to Philadelphia’s $60,302, off market sourcing could unearth hidden gems that, with some operational improvements, might be repositioned to meet or exceed the necessary DSCR threshold. In Philadelphia, despite a slight decline in population over the last ten years, the market benefits from higher rental yields and a DSCR that already satisfies lender requirements. Here, off market sourcing can provide the edge in a competitive market, allowing investors to capture properties with strong income potential and favorable financing conditions.

 

## **Conclusion: A Winner for Long-Term Investors**

 

Ultimately, both markets require a holistic approach to investment. In Kansas City, while the growth in home prices and favorable economic fundamentals (such as lower unemployment and higher educational attainment) are promising, investors need to be mindful of the current DSCR shortfall and may need to implement strategies to boost rental income or lower operating expenses. Philadelphia, with its robust DSCR and attractive rent yields, offers a potentially smoother path to leveraging DSCR loans for an 80% LTV financing structure, provided that investors can secure properties—ideally off market—to capitalize on these benefits.

 

By integrating smart financing through DSCR loans (ensuring a DSCR of at least 1.1 for a safe cash flow buffer), maintaining the required landlord insurance to protect the asset and satisfy lender conditions, and actively sourcing off market properties using modern digital platforms and strategic networking, investors can position themselves to build a resilient rental portfolio in either market. Each element—from financing to risk management to property acquisition—is interconnected, and excelling in these areas is key to navigating the dynamic landscape of residential property investing.

 

For long-term investors, Philadelphia emerges as the winner primarily because:

 

* Its rental income dynamics and higher DSCR ensure that properties are cash flow positive right from the start—a crucial factor when using DSCR loans.
* The higher rent yield not only supports the debt service but also creates a buffer for any unforeseen expenses or market downturns.
* Off market sourcing strategies in Philadelphia can uncover properties that further bolster these financing advantages, allowing investors to secure assets that meet both immediate and long-term performance goals.

 

While Kansas City’s strong historical price appreciation and solid economic fundamentals make it an attractive market for capital gains, the immediate financing and cash flow benefits—crucial for a long-term strategy reliant on DSCR loans and risk mitigation through landlord insurance—tip the scales in favor of Philadelphia for investors looking to build a resilient, income-generating rental portfolio.

 

---

 

## **Build wealth through real estate with OfferMarket**

 

If you've found this helpful and would like access to more rental property investing insights, sign up for OfferMarket. Membership is free and comes with the following benefits:

 

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---

 

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