How important is location?

The three most important things when purchasing a piece of real estate.

Having said that, if the property you are looking at has a history of reliable renters, maybe you're OK. But personally I stay with location location and location.

Thats certainly what I have been told over and over again. But like you said if it has a history of steady cash flow, could the location be sacrificed somewhat? We are just nervous jumping right in with a more expensive property just because of the location when there is a cheaper one thats bringing in the same amount of cash monthly. But I guess you also have to consider the type of renters that you will be working with. Ah the decisions!!! Thank you very much for the reply!!!

I would tend to think as a "Buy and Hold" Strategy, the only thing that would matter in relation to location is BECAUSE of the location, that's what kind of tenant's you'd probably get... Know what I'm saying?

If you rent out in a downtrodden back alley, then that's probably what your going to attract as a tenant, someone who is used to that way of life and "settles" for that if you will... (Why slum lords exist lol)

Now if you KNOW the rent is strong, never late, and enough cash flow to cover your home equity payments with the tenants already in place (which I hope it isn't an ARM loan because then you won't know for sure if they will) then why not? Really... would location matter much when it comes to that?

If it's not then you might not want to pursue that specific home, now if you want to try with no tenants already involved or new tenants all together then you will have to seriously screen your new yenants...

Also to avoid late paid rent you could require automatic draft out of there bank account (which would mean they are REQUIRED to have a bank account... just screen your tenant, better vacant if not a good tenant) on the day they get paid if they have direct deposit (again screen, see how important it is to screen? Besides you should always budget in a few months of vacancy)

I think location, location, location is overrated IN THIS STRATEGY (BUY AND HOLD).. especially when your city has NO LOCATION at all lol, you can do this practically anywhere with the right strategy. You can always do it at another city or what not too so there is options... I think location, location, location is reserved if you KNOW you intend to resell the property immediately to turn a profit.

Just my 2 cents.

Knowledge is Power
- Pimpedoutgeese

Thats pretty much how I am looking at it. I realize what kind of people I might be dealing with when it comes to a less than stellar neighborhood but I think if I use some pretty thorough screening tactics, it will be just fine. I appreciate your two cents, feel free to give a whole dime if you want! oh and I love your quote!

Hello BBandKK

Location? Back in the 1980's the phrase Location location Location caught on to new investors. That was 30 years ago. In the 90's it was about Terms Terms Terms. That was 10 years ago. Today it is about Discount Discount Discount. For me personally it is about Cash-flow Cash-flow Cash-flow .

I would want to know, (if it was me) does the cash-flow make the deal worth while? Keep in mind everyone needs a place to stay and live. It does not matter if its the million dollar neighborhood or the bread and butter type of neighborhood, everyone needs a place to stay.

As far as tenants, getting the right tenant is only a matter of screening them CORRECTLY. I do not mean doing it yourself being uneducated or getting a incompetent management company to do it for you. It is also a matter of protecting yourself by getting the sufficient deposit to cover damages and re rental fees.

Also I would not be using Zillow to estimate home prices in my area. I would get to know a licensed Realtor that do not mind running CURRENT comps.

As Dean says look for the ugly houses in the best neighborhoods. Location is one of the most important things you look for when you buy a home. You would not want your houses being trashed would you? You would not want dead beat renters. And you'd have a hard time selling a home in a bad area.

Jeremy

You need to define location first. What all is included by the term location?
Is the property close to employers, schools, etc? Does it have good access? Especially for this specific situation is crime low or high in this neighborhood? How about at night?
The fact that it already has tenants and cash flow is great but you should not bank on that. If you look at it as if it was empty and you need to find tenants is the location then good? How does the property look with that in mind? If you own this property you need to be prepared to find tenants. If you never need to then your lucky.

Scott

If i were you, i would jump on one of these properties for just a simple reason. Cash-flow!!!!!! If you are looking for a location, with the amount of money you have, it will be tough for you to find "THE" property you are looking for. I know an investor who bought multi-family property in a nice neighborhood but most of his tenants lost their jobs and now some of them are having a problem paying their rent. On the other hand, he also owns a 4-plex in not a nice neighbourhood but the renters are paying their rent on time and making more money on the property. I'm new like you guys and i'm looking to invest on a property that can be rent and get me a cash flow. That is all i'm worried about. Location is just a B.S.

Baria

If you want to buy in a nice neighborhood, you're going to pay nice neighborhood prices

Always remember what goes down normally goes up.

I'm based in NYC and 10 years ago, you couldn't give away brownstones in harlem. Now, even a shell is worth about $600k.

If you can get a good deal and you're bringing in income go for it. If you're not living there, it shouldn't matter.

Make the deal happen.

Very good info from everyone! I guess it comes down to that old saying, "you get what you pay for."

I just need to decide whether or not I am ready to deal with what comes with owning a home in a "low income" type neighborhood. I would rather not but if I want to get into the real estate game, I might not have a choice for a while. I think as long as I efficiently screen tenants, I can stay on top of it.

I bought a 4plex in a Bad area i Never had any problems. You just have to screen you tenants carefully...And now the area has gotten a facelift and crime as decreased drastically... And has raise the equity of my property and now its a desirable area

This is a good topic glad I ran across it because for a while now I have been scared to invest in bad neighborhoods are locations where properties don't sell fast because of my Realtors. They normally scare me away from a good deals because they are more concerned with how fast the properties sells in the area. But of course if you are going to buy and hold it shouldn't matter.

you need to know your area. Be aware of 'changing neighborhoods' areas that have gone from ok to bad or bad to worse and turned into war zones.
Some investors prefer section 8 properties.