Another Neighborhood Grade ?

[TJ P.]

Trying to be as  specific as possible about one of the most subjective topics in RE investing- Neighborhood Grading. Where most would agree that A is very desirable (and difficult to CF) and D/F are war-zones.

I am devising a spreadsheet (if anybody knows of one that exists; send it my way) that categorizes and weighs a variety of factors and assigns a grade.  For example- Crime, schools, house age, % renters, median price, etc. 

My reasoning for this isn't just for personal use but also as a negotiation tool. What I am finding in talking to vendors (I'm mostly looking to TK currently), is the improper classifications being assigned to their properties. Obviously, I'm referencing what has been discussed ad nauseum here and the importance of due diligence. I'm trying to avoid wasting time and eliminating some of the shadier less than reputable parties out there. Another example- One of the outfits I'm looking at lists "B+" properties. The actual homes seem nice, not centuries old and minimal crime. The schools however, are rated <4 . For what I'm looking at: B/ SFH/ < 80K/ rent 1000ish, schools are extremely important and I don't feel justify a "B+" grade...maybe not even a "B".

So what are your most important criteria to grading properties? Are there any absolutes or deal breakers? If you were constructing a spreadsheet with weighted averages, what would command the most weight?

[Larry Fried]

@TJ P. I think you are quite right about the challenge of classifications, and as you said something that is much discussed here on BP.  Something that is not discussed much is grading a property vs. grading a neighborhood, and I think is somthing important to understand.  In other words you can have a B class property in a C neighborhood, a B class property in an A neighborhood, etc.  To me things like schools, crime, amenities, appearance of neighborhood, general condition of the surrounding properties, price points of houses in comparison to median price of city, owner occupancy rates are all factors to determine neighborhood classification.  Then look at the condition, size, value of the property in question to determine if it fits the neighborhood classification, or really is considerably better (because of rehab, construction quality) or worse.  

I have too often seen vendors giving widely inflated classifications to properties, such as B+ to what is only a very average house - C or C+ at best.  In a trip to the midwest I made very recently, one turnkey provider I met with actually showed me homes they classified as A, B & C, which actually seemed an honest assessment (they avoid D).  This was a pleasant variance from the norm, and reflects well on the provider in my view.