The 7-Eleven Secret

A few weeks ago I was showing a rental property down in Tacoma to one of my investor clients. The property was inexpensive, produced very attractive cash flow, met the 1% rule (contact me if you would like to know what that is), and was in a good location, at least on paper.

Typical of me, I arrived 30 minutes before the scheduled appointment. This provided a chance to drive around the area and familiarize myself with the neighborhood. I came across your regular, standard, 7-Eleven/convenience store. From the outside, it was clear that this was not the best kept convenience store, but in an area where the average price for 1500 square foot home was $125,000, I wasn’t expecting a whole lot. I needed something to eat so I decided to enter.

Interestingly, the products this convenience store sold was very telling of its clientele and therefore very telling of the type of homeowners and renters living in the area. About half the convenience store was devoted to liquor and a good portion of the wall behind the cashier were cigarette products. More telling though, was the marijuana paraphernalia in the class encasement next to the cashier. I didn’t think a whole lot of this until I was early for another showing about 2 weeks later in a higher-priced neighborhood. It was clear that this convenience store had a very different clientele. This particular convenience store sold some basic electronics including disposable cameras, batteries, cell phone chargers, etc. Also, the cashier was much friendlier than the one in Tacoma. There was very little liquor or cigarettes and there was no marijuana paraphernalia.

These were two very different areas and very different types of homeowners and renters. But it got me thinking that if you are unfamiliar with an area it might be in your best interest to go to businesses that cater specifically to the local residents. Convenience stores make sense, as would a local watering hole, coffee shops, local eateries etc.

Sure, it’s obvious that a neighborhood isn’t the greatest when the local shops are bail bondsman, check cashing servicing and pawn shops. But since a lot of neighborhoods don’t offer a lot of commercial amenities, looking to the normally-present convenience store is your way to evaluate the clientele and typical buyer.