HOW TO SELECT REAL ESTATE
THINK “MONOPOLY”
Yes that board game from Parker Brothers. No one wins with Baltic and Mediterranean Avenues, too cheap, not enough rent, basically trying to attract low paying tenants is never a good idea. Tenants who can’t or don’t want to pay to live in a nice neighborhood will often disappoint you when you offer low cost housing.
Holding out for Boardwalk and Park Place doesn’t often work either unless you get lucky because they are expensive to buy, pricey to repair, and often the prospective tenants (the ship, the dog, the iron, the thimble, etc) often bypass it by advancing to go, or a railroad. The game is skewed to miss them and so they are less in demand. They are less likely to be visited and so your investment lays dormant much of the time as other properties in upper-middle neighborhoods are in more demand because more people can and want to frequent them.
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In Monopoly we want properties that others land on a lot (high demand) and pay enough to matter. We want the TANS or better, in real life we want the same thing. We seek good rent that a lot of people can afford in nice neighborhoods in which respectful people want to live. We avoid the cheap hovels that will attract the losers, deadbeats and meth-heads because those people won’t respect it, will often trash your house and the cops will be visiting every other weekend.
Simply put, we want good neighborhoods that justify decent to high rents that people will want to live in for a while, and when they leave, someone else comes along just as eager to pay. Just like monopoly.