We're going to tell you something you already know: one of the best real estate investment strategies is to buy a home in a community that isn't popular now, yet will be in the next few years. But unless you possess psychic powers, there's no guarantee of which neighborhoods are next on the top lists. Luckily for you, we've been in the business for decades and know some tips to help you spot the next great community.
1. New major chains are opening. Companies like Starbucks take their franchising seriously, which means they thoroughly research an area before settling down routes. Piggy-back on their extensive market analysis by keeping an eye out for neighborhoods with new stores opening.
2. Large student, artist and young adult populations. Let's face it, young adults are usually looking for cheap rent in safe neighborhoods, and their friends have the insider intel on finding it. This means they're the grassroots in fringe communities that are about to become the next big thing. Students migrate first to areas they can afford, then fall in love with the neighborhood after it has been home sweet home for a few years. When you have hundreds of talented and educated people putting down roots, the neighborhood starts to improve and a vibrant community is born.
3. Ask your friends where they'd never live. Then find out why. Once you have a list of the least desirable neighborhoods, do some research. Evaluate crime stats, check out property values and figure out whether the reputation actually holds true to the neighborhood. Neighborhoods that used to be bad often have a rep that lingers for years after, for no real reason. People eventually realize their assumptions are unfounded and property values rocket.
4. Talk to your trusted real estate agent. We live and breathe this market, which means we see the trends first. We know what communities your neighbors are trying to move to and what houses can't stay on the market. If you're looking for the next hot area, talk to your local real estate agent. They might know just the place.
Now, this doesn't mean you can count on a community to be the next big thing just because you see an artsy-looking student drinking Starbucks. But it does give you a launching point for consideration and a good place, literally, to start doing research. Good luck out there!