Neighborhood Grade Criteria

[Cameron Peters]

Can anyone point me toward a good article, blog, resource explaining different property and neighborhood ratings. For example a B+ neighborhood versus a C neighborhood. What are the differences between the two? I have read different sources on this subject but it seems to be mainly speculative from the eyes of the beholder. Am I off base? Is there definitive criteria used to grade a property or neighborhood? TIA!

[Andrew Johnson]

Cameron Peters You can just Google around and find a few different ways to look at it. Every the large institutions have subtle differences in their grading criteria. So it’s a little bit subjective and in the eye of the beholder. With some I see “walkability” being a metric they like to use. That’s great for urban but if you’re suburban I have a hard time thinking that’s a requirement for an “A” area. And, by the way, it’s also not static.

The real danger I perceive is that newer investors find a deal and love to rationalize their purchase by trading to shade the grading. The $50K duplex is in a “C- Area but getting better” because they don’t want to admit it’s a “D”.

What matters the most is establishing your threshold. If I see cars on cinder-blocks, chainlink fences, a check-cashing place one block over, cars parked on the street with a garbage bag taped over a broken window, etc. then it’s not for me. I don’t care if someone else tells me it’s a B- or gentrifying or what a crime heatmap shows. But those are my quirks, it limits me, but it’s based on my experience. Other people will see opportunity in those areas that I don’t. They might make a killing and be able to gloat about my buffoonery in passing on that area. I’ll live with it.

All that matters for you is what your desire is in terms of B vs. C vs. D. When you figure out what you want you can map it back to those grading scales and then the shading (C vs. C+) won’t make quite as much difference to you.

At least it doesn’t for me 🤷🏻‍♂️