Locate Alpha
Risk Indicators

Neighborhood Change

This tells you whether a location is over or under-performing relative to the city's trend. If an area is improving faster than the metro area as a whole, it gets a score of 1. If an area is falling behind relative to the metro area as a whole, it gets a 10. The team at LocateAlpha created this by combining a number things, including income levels, crime, and education levels and looking at how those changed in the last five years. A score of 1 is best, and 10 is worst. A score of 5 to 6 is stable and perfectly normal.
Why it's important: If you want to buy a property, you want to be in an area that is stable or improving in order to maximize your appreciation. Proceed with caution if an area is shown to be deteriorating.

Market volatility

Market volatility tells you how much prices in that location have gone up or down relative to the national average, in the last 20+ years. In other words, has the location experienced higher highs and lower lows than what is typical for the country overall. Places are affected unevenly by economic downturns, based on local factors, that mean some places may lose value more than others. This measure is the same thing as "beta" used in stocks. On a scale of 1-10, a score of 10 is the highest volatility.
Why it's important: If an area has been badly affected by previous downturns, it could happen again. Proceed with caution.


This is based on FBI data for violent crime in the immediate area. You may want to minimize this for the safety of you, your tenants, and your property. However, you may also find opportunity in high-crime areas if you are prepared to accept the risks.

Economic Stress

The Locate Alpha team created this as a proxy for reliability of rental payments. It is based on the idea that high economic stress can introduce more risk into getting paid rent on time. We look at expenses on vices such as alcohol and tobacco consumption, as a percentage of income. On a scale of 1-10, 10 is riskiest and and 1 is best.

Renter Unfriendliness

Some areas do not allow houses to be rented out to tenants. If you want to do that, you should avoid areas that won't let you rent to tenants. A good indication of whether and area allows it is whether a community has a homeowners association and how high the fees are. High HOA costs are associated with more restrictions and therefore you might not be allowed to rent out your property in this location. We combine this with the percentage of renters in a location to understand if an area is renter-friendly or not. 1 is best and 10 is least friendly.
This is a best guess and is not definitive. When you do your due diligence on a house, always remember to review the actual HOA covenants to know for sure if they place restrictions on renters.

Property Loss Risk

Various hazards can affect the chance of you losing your property in a location. We look at weather related factors such as hail and tornadoes, and also the chance of the property burning down based on access to fire hydrants and fire stations. 1 is best and 10 is worst.
Last modified 6mo ago