Some films with a lot of money or very specific needs will build an entire set. This is how all the major soaps are made, as they need access to their sets practically 24/7. Low budget and shorter projects tend to look for a location which they can temporarily turn into a set.
'Set' is a term used for where the action takes place. 'Location' refers to the building, park, land or even vehicle which will hold the set.
Once you have identified your location it is almost inevitable that it will belong to someone else and you must seek permission to film there.
It is essential to be completely honest with yourself and the owner about how much time you will really need - even if it's just your friend's sitting room or garden or the local supermarket car park.
It is usually better to ask for a bit more time and exaggerate slightly the level of disruption, so in the end, the owner thinks you've actually finished early and been ever so quiet
Don't burn too many bridges with your first production, especially with the janitor, you never know when you might want to cross back
It goes without saying that you should leave your location in better shape than you found it, and, if you are using it for free, a bunch of flowers or even just a 'thank-you' card for the owner leaves a good impression. You never know when you may return to this location - and if there is a problem with your rushes - it may be sooner than you think!
A local church hall can be useful as a base - they usually don't charge too much. And have much of what you need
If your film is not based in one place, how are young people going to get from A to B? - do you need transport? - if so, does the driver have the relevant permissions to drive young people?
Location! Location! Location!
More details about choosing and dressing locations.