Location vs cash flow

[Steve Wilmers]

Hey all, I'm curious to see what everybody thinks about the location of a property vs the cash flow it produces. A property I'm currently looking at could be considered the nicest house on the block, especially with the interior finishes. The cash flow is there, considerably higher than higher quality neighborhoods nearby. However, it's in an investor heavy area where many of the cheap houses are being gutted and turned into higher end finish rentals. The number of low income properties still substantially outweighs the refinished properties in the area. What risks are there in buying in lower income areas where redevelopment is slow, but still apparent? Thanks, Steve

[Bill Gulley]

Ned, that is totally wrong, I rarely have seen you say anything I'd disagree with, but you've been guruized my friend. Location is the basis for the economic benefits people pay for, it is the basis of value and how values are determined.

Location is also to the growing areas, those areas that have the highest appreciation in an area will all be great locations. Buying a property right out of the MLS at full price is done every day, and people make money in time.

You can certainly say that cash flow can be higher in areas that are not premium locations, that is true, often if you pay a premium or even more for the location it may not equate to higher rents in residential areas, but the appreciation never failed to pay me back with a profit. You will ALWAYS come out better having a property in a better location than the similar property in a bad location.

Saying location doesn't matter is, if not the most incorrect statement on BP, it's in the top three.

I bought a house in a good area, kept it over 5 years, utilities on and never rented the place, not one dang tenant every touched the door! Sold it and cleared over 80K !!!

I can give a dozen benefits of holding RE without a dang dime from rents but those with the mindset that rental income is all there is in life wouldn't get it, nor do they put themselves in other positions to profit or benefit in other ways.

And, for those suckered into contrary thinking, location is an economic and financial factor, it shows up in your taxes, it's part of the appraisal process, from there it effects what lender's do, it effects demand and supply, it's a key aspect to the foundation of assessing real estate, if you think otherwise, you're not going to be around long starting off.......

     Please show me a property that pulls 100K a year in rents that is in a bad location! Even commercial properties. If it pulls a 100K in rents the location has to be good enough to someone to pull those rents.

Lots of folks have brain pharts on BP.