I can 100% guarantee that you have heard this saying before, When it comes to real estate it’s all about three things. Location, Location, and location.

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1. A and F are the ones you usually want to avoid: to A’s are too expensive and don’t have a decent return and F’s are in high crime rate areas which will cause more evictions and trashed properties

So for example here:
– In an A location, you have a decent appreciation, but you also have a very high property cost
– Can you imagine buying a house for 700k-1M a year and trying to make cash on a cash return of 15%
– Rents have to be stable and at an insanely high price and if things go run you can end up getting burned.

Example of an F location:
– They don’t have that much appreciation at all and also in very risky locations
– Where you will have a lot of turns over, a lot of maintenance to deal with, and problems potentially collecting money
– And sometimes you’ll have to face evictions with some of these people
– Plus remember usually they are not looking for homeowner status so they tend to beat up the property a lot

2. B Location ( like malvin place )
– Now my friend recently bought a 3 family home in a B area
– Meaning the type of Tenants he gets is good quality and he doesn’t have a lot of turnovers
– And the property is a safe area that appreciates fairly

However:
– This area is amazing but is also a little expensive which means less cash flow although he does it get higher rents
– And although the tenant might be great a lot of them have their own plans, meaning in 1 year or 2 years those tenants leave to go become homeowners themselves
– However, the big benefit is higher rents, more appreciations, and less turn over ( plus they often take care of the property )

Tip: keep in mind in though just because you are in B location doesn’t mean you will always attract B tenants, so it’s important to look at background checks, and interview them to get to know them.

3. C Location ( this is where I currently live )
– And it’s the sweet spot you want when buying properties, a mixture between C’s and B’s but sometimes maybe D’s

Now here is the Information on C locations:
– They are high in demand because rents are lower
– You can also buy them for less money which means in some cases more cash flow
– You won’t have B appreciation with the property but you will have some fair appreciation
– The best thing is the Turnover, a lot of tenants don’t really have plans to be homeowners but they are quality people, so take care of the property and stay for along time

For example:
– Where we live currently we have been here for the last 5-6 years
– And my mom takes care of the property like its her own
– And if I’m being honest has never really had plans to buy a property in New York ( that’s called a cherry tenant )
– And because the landlord has had the property for more than 20 years, most of the cash flow is going straight into his pocket and the house is worth somewhere around 3-4x what he originally paid for.

4. D Location ( my friend lives here )
– These locations are not the best location but not the worst
– You won’t get a lot of appreciation for the property at all
– And you will have tenants that will beat the property up a little more than usual
But the benefit is :
– You buy these properties for cheap
– And rent them out under section 8 or other government programs
– This you avoid the problem with potentially collecting rents

Tip: with these houses usually you are doing the bare minimum

This information was taught me from a Dean Graziosi Course and the guy that broke it down did such an amazing job his name, Matt Larson

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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