Some houses are excellent long-term Investments. But don’t try to outguess the future. Don’t bet the ranch on your long term (10 years or more) predictions. It’s still just a guess. With long-term investments in top locations, you can expect to pay more to acquire them. Even if the property looks terrible the competition will keep the price higher because of location.
On the down-side, higher acquisition costs and bigger mortgage payments can cost you a lot more money and take longer before you realize any profits or cash flow. This is important because mom and pop investors need cash flow first and long term profits later on.
I like to think about locations as “A” “B” and “C”. “A” locations are the best. “B’: will be the local average and “C” is a stone’s throw from the county dump. With some study and driving around, you can easily determine these locations in your own investment area. Investing in “A” locations is fine, but it generally takes more cash. My choice is “B” locations, but I always look at a “C” to make sure I don’t miss anything exciting. I stay away from HUD projects, high crime areas and places where I don’t feel safe being there