Deciding between properties

[Lia Locarnini]

Hi!  My husband and I are new 1031 investors.  We have are nearing our 45-day deadline to name our replacement properties.  We made many offers and have two accepted offers that we need to choose between.  Both properties have pros and cons.  Here are some descriptions:The first property is a 2018 build in a nicer area, with very good schools (9.8.7 Great School rankings).  The purchase price is above the comps in the area by quite a bit.  It had very few rental comps (only two) and we will likely have to wait two months to find a renter for the property.  The lack of rental comps makes the property riskier.  The property is not typically a rental neighborhood.  Most people buy homes here, but the area is very popular because of the great schools.  The home is $82,000 more expensive than home #2 and we will require that we finance part of it.   The cap rate is 4.79% at our estimated rent of $2,850 per month and a tax rate of 3.17%. The second property is in an area with schools ranked 5.4.7 on Great Schools.  There is more crime.  There are good rental comps, and we estimated a montly rent amount of $2,150.  The tax rate is 2.93%.  The property was built in 2017.  The purchase price is close to comps.  The cap rate is 4.92%.  This seems like it will be an easier property to rent out, but could possibly be harder to manage?I guess the question is how much is the good schools and safer neighborhood worth so you can manage properties from afar on your own and save on property management costs?  Are Class A properties more oftern easier to manage, or can good vetting of tenants in Class B or C properties make them easy to manage.  I know there is no definite answer, but maybe some of you have recommendations from your own personal experience.       Thank you!

[Joe Hammel]

If cap rates are nearly the same; personally I'd definitely go with the higher class neighborhood and schools. More likely that everything would be easier. If property #2 was a 8 or 9 or even a 7 cap, it would seem a little more of a toss up. I'm sure there are other variables factoring into your decision, but yes Class A is more likely to be an easier, better, experience if returns are the same or close.