There are many things to consider in choosing the building you are going to invest in. The most important permits of not the slightest deviation. It will be fatal to compromise on the point of location. Let us see how we test for this requirement.
Let us say you have been offered a building located on Elm Street. You go to see it. The time of day when you see it is even important. Many a street presents quite a different picture at 10 a.m. than it does at 4 p.m.
Drive along the street, at 4 p.m. and look about as you approach the building. Remember not to decide this on the basis of whether YOU would like to live here. Just ask yourself this, "If you were going to pay $50 per month for a flat, would you consider this location satisfactory?" In the answer you will find the yes or no to location. But see to it that all the factors are considered. If there is a noisy or smelly factory nearby, or a dump or railroad, make sure you see the place, hear the place and even smell the place at its worst. Only thus can you get the full picture.
Hence we peremptorily pass up the buildings that do not pass the first test, that of location. Notice that we do not ask that the location be "beautiful" or "lovely" for all buildings. Not at all. We use the yardstick that is clearly indicated by the rental rate itself. That determines the attitude and measuring eye with which we judge location.
We try to see this location through the eyes of a prospective tenant who has come to the building to see a flat. We try to see it as he will see it, and judge it as he will judge it. This is NOT difficult. We certainly can quickly dismiss the locations that are obviously so bad that even the $50 tenant will certainly not find the location to his liking. These really give us no problem nor do those that are obviously good. It is the class of location that is "borderline" that may puzzle us.
I have taught hundreds of people this principle and many have expressed doubt about their future ability to determine the fitness of those locations which were not quite bad enough to reject at a glance, and not quite good enough to approve immediately. I have learned over the years that they were worrying without cause. It just does not work out that way. We have all seen that in some principles of practice, the theory is easy to understand but the practice is difficult or even impossible. Here it is reversed. The theory may be hazy, but the practice invariably turns out comparatively simple.
There are a few simple things that will give you your answer. I speak now only of those locations that are doubtful. The first step is to ask yourself whether in your opinion, the location would be satisfactory to a prospective tenant who was considering a flat in this building at $50 (if that is the rent rate).
The next step is to ask the tenants themselves, but this step must be approached with one reservation. In those cases where you are considering a building that has been "over-milked", that is, everything taken out by the landlord without putting anything back unless forced, you should approach the tenants with the mental reservation that they will probably be discontented with everything about their flats.
Thus any dissatisfaction on the part of such tenants must be weighed in the light of the general conditions which they have been forced to accept under greedy or neglectful ownership. If such a tenant were to indicate to you that he is unhappy with the LOCATION of the building, you should press him for the specific points that he finds undesirable.
He may come up with some very significant answers that will bear and guide investigation before buying. But if his complaint is very general, with no specification, you may discount it, as merely a baseless item in a general group comprising unhappiness.
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