How To Spot An Up-and-Coming Neighborhood To Invest In
The surest way to make money investing in real estate is to buy low and sell high. One of the ways to do that is to find properties with good bones in areas ripe for revitalization. This means accepting some risk and possibly investing in areas that still have problems with crime and neglect.
How do you spot the signs certain neighborhoods are up-and-coming? It can be a challenge, but here are five clues that “good” things are about to happen in “bad” neighborhoods.
1. Major renovations are happening or about to happen.
When communities start spending taxpayer money in underdeveloped or neglected areas, it’s a sign they believe these areas are worth the investment. Attending city council meetings will give you a good idea of what’s happening in certain parts of the city.
Public park renovations and construction permit requests are clues that positive activity is taking place. If you have a Realtor you trust, listen to that person’s opinion on which neighborhoods are about to be “hot” and why they think so.
2. Retail sales activity is strong.
Talk to shop owners about how sales are trending in areas where you’re considering investing. Find out if the cost of a cup of coffee is going up. When retail business is healthy, or getting stronger, it’s a sign that people have disposable income and are spending it on more items than just the necessities.
3. Millennials are buying.
Young home buyers are often priced out of desirable and well established neighborhoods. They’re more inclined to take a chance on a great fixer-upper in a neglected area. This is especially true when the house is located in a neighborhood on the outskirts of a trendy area.
When young professionals move into a neighborhood, restaurateurs and bar owners take notice. It’s just a matter of time before property values begin to rise. Think Soho in Lower Manhattan or Cabbagetown in Atlanta.
4. Artists and musicians are moving in.
Cheap rent is usually the draw for struggling artists and musicians, but they lead the way when it comes to creating a hip vibe. Creative energy and the draw of “cool” will attract an audience.
The more attention and excitement artists create, with local jazz festivals and art exhibits in parks for instance, the more the area vibrates with life. This translates into revenue, property sales, and increased property values.
5. Trendy restaurants and art galleries are opening.
As noted, when young people and creatives put down roots, trendy retail establishments aren’t far behind. Keep an eye on reviews in local newspapers. When a reviewer has positive things to say about a new restaurant, coffee shop, or art gallery in a “bad” neighborhood, you can be pretty sure the area is ripe for revitalization.
Good reviews attract consumers and encourage other businesses to consider relocating. All of this translates into revenue for the neighborhood and opportunities for the savvy investor.