rating a neighborhood A,B,C...

[Account Closed]

BP! 

I hear the guests and hosts on the podcast talk about giving a letter ratings to neighborhoods. What the best metrics to define what makes an area A vs. F, etc?

Thank you!

[JD Martin]

I think there are F properties! Maybe not everywhere but I know of properties that you'd have to pay me to take them and they'd likely never be anything more than a money drain. I would label that a failure.

For me & my area: A = prime zone, wealthy housing, white collar and high upper middle class blue collar. Exclusive neighborhoods, highest priced homes. B = Solid middle class housing, blue & white collar. Most of your reasonably desirable residential real estate is here, so you compete with a lot of would-be homeowners. C = lower middle class housing, more multi-family mixed in but decent places, some crime but low-level stuff nothing dangerous or violent. Some Section 8 here, but "upper-class" Section 8, people with jobs moving their way out of it. Some of the housing is getting rough. D = lower class housing. Lots of multi-family. Much of the housing is rough, decent amount of crime. Lots of permanent renters, people on disability/welfare, Section 8. Area is often either gentrifying or becoming a total war zone. F = total war zone. Completely dilapidated housing, much of it abandoned. Lots of crime. Police avoid the neighborhoods, no reasonable person would want to live there. 

What I like: C housing in a B neighborhood. I think it has the best opportunity for appreciation & value add, attracts the most renters, has the easiest exit strategy.