6 Reasons to Build or Buy in Up-and-Coming Areas

When searching for a new home, buyers often look for houses or land in the best neighborhoods — or, at least, the best neighborhoods that they can afford. And that’s certainly understandable. However, homeowners may be missing out on several advantages by not considering less prestigious or less desirable neighborhoods.

Below are six reasons to build or buy in up-and-coming areas.

Your money goes a lot further in up-and-coming areas.

Your money goes a lot further in up-and-coming areas. Image: TDK Visuals/Shutterstock

#1: Lower price points

It’s natural to want to be in an area in close proximity to popular dining, shopping and entertainment options. Even if you’re buying the home to flip it, you want to own property in a desirable area. “When you buy in the best part of town, you are paying top dollar for the property,” according to Oliver Somoza, Partner of Philadelphia-based S7 Real Estate and Turnkey Property Pro. But when you invest in a less popular neighborhood, your buying power can go much farther.

“Whereas $300,000 might get you a studio apartment in the city center, it could buy you not one but two 3-bedroom houses in a growing neighborhood not too much farther away,” he says.

You'll have more money left over for your renovation.

You’ll have more money left over for your renovation. Image: Andy Dean Photography/Shutterstock

#2: Personalization

When you build or buy a home in an up-and-coming area, you buy at a lower price point. That means you now have the funds to create your ideal place. And that’s especially important if you purchase a fixer-upper that needs major repairs.

“Now you can consider retrofits and renovations that will help you build the home that you want to be in, instead of adjusting your needs based on the space that already exists,” explains Mick Lynch, Senior Vice President of Installations at Power Home Remodeling. So you can install those hardwoods in the kitchen or use those brick walls as a design element. And there’s another bonus to being in an up-and-coming area. “You tend to have more freedom to make external renovations without worrying about zoning ordinances and other neighborhood restrictions,” he says.

Your home and neighborhood will increase in value.

Your home and neighborhood could increase in value. Image: Shelia Fitzgerald/Shutterstock

#3: Increased resale value

Since the neighborhood is up-and-coming, you can get in before prices start to skyrocket. And as a result of your renovations, you can significantly increase the home’s resale value. “However, just make sure you understand real estate trends in that neighborhood. [Understand] what’s happening in the market and in that specific county,” Lynch advises. He warns against relying solely on word-of-mouth, which can be misleading. “It’s important to do the research, study the people and companies migrating to those areas and let the information dictate what neighborhood is best for you.”

When a neighborhood starts to transition, Matt van Winkle, Founder and CEO of RE/MAX Northwest, says it often takes five to 10 years for it to really transform. But he agrees that buyers who get in early can see tremendous gains. “Value add or sweat equity homes in up-and-coming areas provide a lower entry point for buyers and the ability to be part of the transformation if they remodel a home,” he explains. You’re not only benefiting from the return on the remodel. van Winkle says you can also benefit from the appreciation of the neighborhood.

You might find a quirky, lively area.

You might find a quirky, lively area. Image: maLja/Shutterstock

#4: An existing sense of community

Lynch’s advice is actually based on his personal experience. “I recently bought a home in an up-and-coming neighborhood, and it was the best decision I could have made,” he says. As he was searching for the right area, Lynch looked for certain things. He wanted to find a neighborhood with an existing sense of community where he and his family could fit in and thrive. “For my family, our new neighborhood was such a great fit because we enjoyed the vibe of the neighbors, the potential job opportunities based on the companies moving into that area, and the ability to make the house and community we were moving into truly our home.”

Renting shouldn't be a problem after you fix up the home.

Renting shouldn’t be a problem after you fix up the home. Image: karamysh/Shutterstock

#5: Appeal to a larger pool of tenants and buyers

If you’re purchasing a property to flip and then rent or sell, there are several advantages to choosing one in up-and-coming areas. “For one, you have lower initial costs, but you also improve your chances of renting to good tenants or making a quick and profitable sale,” Somoza says.

“Everyone is looking to lower their costs of living, and many are being priced out of the popular areas in today’s rental market.  So they’re turning to — you guessed it — up-and-coming neighborhoods,” he explains And this means that you’re not likely to have any problems keeping your property rented. “You’ll also be able to increase rent as the neighborhood becomes more desirable. And you could potentially see buyers competing for an already upgraded property if you’re looking to sell,” Somoza says.

Gentrification isn't inevitable.

Gentrification isn’t inevitable. Image: Duncan Andison/Shutterstock

#6: Create higher-quality affordable housing

Investing in up-and-coming areas often leads to gentrification, but it doesn’t have to. “Actually, real estate investment in these areas can even combat gentrification by creating better affordable housing without displacing people and families,” Somoza explains. “If a developer purchases an outdated apartment complex with the intention of fixing it up and renting it out, there is an opportunity there to provide clean, updated, affordable housing to the people who already live in the area.”

Look for the signs of a promising area.

Look for the signs of a promising area. Image: Brian Goodman/Shutterstock

Finding the right up-and-coming areas

There’s no exact science to identifying a neighborhood poised for growth. That said, there are a few things to look for. “Increasingly, people are rejecting far-flung suburbs and are embracing walkable, urban neighborhoods,” says Gianpaolo Manzolillo, Licensed Real Estate Salesperson at Citi Habitats in Brooklyn.

“Look for areas that offer an easy commute to the downtown business district or that are located along transit lines,” he says. This is based on the theory that no one wants to spend hours sitting in traffic. “Districts that are adjacent to already-established desirable areas also offer a lot of potential for upside due to the ‘spill-over’ effect,” Manzolillo adds. When they can’t afford what they consider the prime neighborhood, people look to purchase in surrounding areas.

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Relocating? Watch for these Neighborhood Red Flags

In a perfect world, every neighborhood would resemble Mayberry. Everyone would know each other by name and your next-door neighbor’s yard would always look as manicured as your own. Unfortunately, there’s no such thing as a perfect neighborhood and every zip code has its own pros and cons. Still, there’s nothing worse than having home buyer’s remorse just because of your neighborhood. You might love a house, but if it’s in a problematic area, it could affect everything from resale value to the way you live your daily life. If you’re relocating, protect yourself by watching for the red flags that could warn you something’s not right.

Traditional neighborhood with craftsman homes

A mass exodus should be a red flag. Image: romakoma/Shutterstock

Red flag #1: Too much inventory

Having a lot of homes to choose from helps drive down prices. Great for a buyer, right? Actually, it depends. Having a lot of inventory might mean cheaper homes, but it could also mean there’s something causing homeowners to want to leave. It could be the area, but it could also be the homes. Consider some of these reasons a lot of homes might be on the market at once.

  • Homes are hard to maintain. A neighborhood that was developed by the same builder means that when one home starts to have issues, others might have the same. If you notice a bunch of homes by the same builder going up for sale at the same time, it could be a sign of poor quality.
  • Rising social issues. A sudden change in factors like crime rate or school ratings could have people looking for a way out. Gentrification could mean affordable housing is rare, or it could be the result of older residents downsizing in retirement. Consider some of the social issues that could change the way a group of homeowners views their area.
  • Low home values. Sometimes, when home values are poor, homeowners look to test their luck elsewhere before values dip even lower. While this could mean snagging a great deal, it could also mean gambling with future values.

Red flag #2: Shrinking schools

You can tell a lot about a neighborhood by asking a few questions about the nearest schools before relocating. Since schools are typically a reflection of a neighborhood and its attitude toward public services, a shrinking school could be a total red flag. On one hand, it might simply be the result of an aging population. Keep in mind that if you have kids, that means fewer playmates. On the other hand, if the local school is enrolling fewer kids, it might be that parents are opting to utilize private, home or charter schools instead. A less-than-stellar school should give you pause, whether you have kids or not.

Not sure about schools? Check for online ratings for schools in the area or seek out community social media pages where you can ask current and past residents about the specifics.

Traditional brownstone row homes

Watch for pride of ownership. Image: Suzanne Tucker/Shutterstock

Red flag #3: Poorly maintained homes and yards

It’s no secret that poorly maintained homes equate to a poorly maintained neighborhood, but the issues are more than skin deep. Homes that are left in disrepair and poorly maintained yards tell you something about the level of pride in a neighborhood. When homeowners are proud of their area, they want to ensure their properties do the neighborhood justice. Homeowners that are happy in their area are more likely to keep their homes and gardens looking neat as a tribute to the location. It doesn’t matter if the average home is 1,500 square feet or 15,000 square feet: well-maintained properties are a community effort. If you notice that most homes are in disrepair, steer clear.

Red flag #4: Potholes

Hey, every street has a few cracks and potholes and it shouldn’t be held against your dream home. But when a city or town is lagging in public services, it could be a red flag signaling you to look elsewhere. Look beyond the other houses and your potential property. Does it look like the city takes pride in upkeep and services? Streets that are badly maintained don’t just make for a bumpy drive. It could mean slow snow removal in the winter, a lack of community events or even issues with water. Sometimes, it can even mean that the city is neglecting a certain neighborhood. When you’re at the mercy of city services, it’s important to assess a neighborhood on that level to ensure you’d be getting what you need — when you need it.


A lack of people could mean a dangerous neighborhood. Image: Stephanie A Sellers/Shutterstock

Red flag #5: No people

When you drive through a potential neighborhood, what do you see? If it seems like there aren’t a lot of people out and about, it could be more than just residents who value their privacy. People might limit how much time they spend outside — especially in their front yards — when neighborhoods are unsafe. A lack of kids playing and residents on their porches or even doing yard work should be a red flag that residents don’t feel safe spending time around each other. Sure, you might prefer privacy, but even if you’re not really into community events, you still want to feel safe in your new neighborhood. You can benefit from a safe community by looking for areas where residents spend time around each other, even if they aren’t directly interacting.

When relocating to a new area, you’re definitely focused on a house that can become a home for you. But don’t forget that a large part of the way you live is where you live. A neighborhood might seem innocuous, but some investigation is always needed. While one red flag might be no big deal, a slew of issues could seriously affect your day-to-day. Make sure that a community is safe and civil before you consider relocating and you’ll love your new home that much more.

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