When looking for a new home, buyers often look for a house or land in the best neighborhood – or, at least, the best environment they can afford. And that is certainly understandable. However, homeowners may lose some benefits by not considering a less prestigious or less desirable environment.
Here are six reasons to build or buy in a rising area.
1. Lower price points
It’s natural to want to be in an area close to popular dining, shopping and entertainment options. Even if you buy a house to turn it over, you want to own property in the desired area. “When you buy in the best part of town, you pay dearly for the property,” according to Oliver Somoza, CEO of Turnkey Property Pro, based in Philadelphia. But when you invest in a less popular environment, your purchasing power can go further.
“While $ 300,000 might get you a studio apartment in the center of the city, it can buy you not just one but two 3-bedroom houses in a thriving environment, not too far away,” he said.
When you build or buy a house in an area that is on the rise, you buy at a lower price point. That means you now have the funds to create your ideal place. And that is very important if you buy a fixer-top that needs major repairs.
“Now you can consider repairs and renovations that will help you build the house you want, instead of adjusting your needs based on existing space,” explains Mick Lynch, Senior Vice President of Installation at Power Home Remodeling. So you can install the hardwood in the kitchen or use the brick wall as a design element. And there is another bonus for being in an area that is on the rise. “You tend to have more freedom to carry out external renovations without worrying about spatial planning and other environmental restrictions,” he said.
3. Increased resale value
Because the environment is on the rise, you can enter before prices start to skyrocket. And as a result of your renovation, you can significantly increase the resale value of the house. “However, make sure you understand real estate trends in that environment. [Understand] what is happening in the market and in certain areas,” Lynch advises. He warned against relying on word of mouth, which could be misleading. “It’s important to do research, study people and companies who migrate to these areas and let the information determine what is most suitable for your neighborhood.”
When an environment begins to transition, Matt van Winkle, Founder and CEO of RE / MAX Northwest, says it often takes five to 10 years to truly change. But he agreed that buyers who entered early could see extraordinary profits. “The added value or sweat of home equity in the regions going up and down gives a lower entry point for buyers and the ability to be part of the transformation if they overhaul homes,” he explained. You not only benefit from a return to an overhaul. van Winkle said you could also benefit from environmental appreciation.
4. An existing sense of community
Lynch’s advice is actually based on personal experience. “I recently bought a house in a rising environment, and that was the best decision I could make,” he said. When he looks for the right area, Lynch looks for certain things. He wants to find an environment with a sense of community where he and his family can fit in and develop. “For my family, our new environment is very suitable because we enjoy the atmosphere of the neighbors, potential job opportunities based on companies that move to the area, and the ability to make the homes and communities where we move truly become our homes.”
5. Appeal to a larger pool of tenants and buyers
If you buy property to be turned over and then rented or sold, there are several advantages to choosing one in the area to come. “For one, you have lower initial costs, but you also increase your chances of raising to good tenants or making quick and profitable sales,” Somoza said.
“Everyone is looking for ways to reduce their cost of living, and many are being priced from popular areas in the rental market today. So they turn to – you guessed it – the rising environment,” he explained. And this means that you won’t have problems keeping your property rented. “You will also be able to increase rent because the environment is becoming more desirable. And you have the potential to see buyers competing for upgraded properties if you want to sell,” Somoza said.
6. Create higher-quality affordable housing
Investing in a rising sector often leads to gentrification, but it doesn’t have to be. “Actually, real estate investment in these areas can even combat gentrification by creating more affordable housing without displacing people and families,” Somoza explained. “If a developer buys an outdated apartment complex with a view to repairing it and renting it, there is an opportunity there to provide clean, updated and affordable housing for people who already live in the area.”