What Location, Location, Location, actually means: Debunking the Old Real Estate Adage

Just Google Maps it!

Location, Location, Location:

• How do you find the best location?

You look at specific criteria, like

the Neighborhood Grade

which Areas have the Best Schools

Employment Growth and Unemployment Rates

Population Growth

Proximity to Local Businesses

Vacant Rates

Property Managers/Landlords

Tax/Insurance Rates.

Let’s unpack these different criteria individually.

Neighborhood Grades:

• A, B, C, or D
• Neighborhoods are judged like they were in the school system. A-grade neighborhoods are the best, D is the worst. You get the idea

A

• This is not only how we classify the condition of the property but also based on the location of the property
• Newest buildings, hottest, restaurants, best schools, wealthiest people, and highest-cost real estate
• Best location you can find, and highest-quality tenants as well
• Newer and with fewer maintenance issues
• Granite countertops, hardwire floors, and other in-demand features
• Might have less cash flow because there is so much demand on the property
• Demand -> drives purchase price up, which makes cash flow go down

B

• Perhaps middle-class areas that may attract blue-collar level workers who live paycheck to paycheck
• Anywhere from 15–30 years old and mostly upgraded but lacking in the shine that is an A grade property
• Maintenance costs might actually be higher believe it or not because of the age of the home

C

• Lower-income areas with homes that are older
• Government subsidies, working low-wage jobs, etc
• Pawnshops, check-cashing businesses
• Systems (like plumbing and…