Up-And-Coming Neighbourhoods
There’s definitely something
to be said about getting into a neighbourhood before prices get too high and
you can no longer afford it. Up-and-coming neighbourhoods can be great for
getting more bang for your buck, but you have to be careful when you look at an
up-and-coming neighbourhood. Is it quickly becoming the new hot spot to live,
or are you going to have to deal with high crime rates and a rough
neighbourhood for years to come?
We stress the importance of
buying nice homes in nice areas, especially for our Rent to Own strategy. By
offering something desired you can ask for more rent, and help your
tenant-buyers realize their dream of becoming proud homeowners.
If you’re familiar with our
Rent to Own strategy you know we only do these in starter homes (if you’re not
familiar with Rent to Own investing, you can read about it here). In any
economic cycle, there is one market that is always active, or most liquid, and
that’s the starter home market. We limit our search to starter homes in
communities that meet these three criteria:
- It must have population growth greater
than the provincial average. This means more people are moving in than
out.
- The average family income must be greater than
the provincial average. This means people have jobs, and it’s an indicator
of diverse employment.
- There must be infrastructure or
transportation improvements in the community. Things like highway
improvements, sewage development, or new GO train stops.
However, if you can’t buy in
these in-demand nice areas, you may be looking for something in an
up-and-coming neighbourhood. Many “rough” neighbourhoods get labeled as
“up-and-coming,” but it is important to know how long you’re going to have to
hold onto a property before the community has arrived at the “desired
community” status. Here are 13 signs a neighbourhood is on the rise.
13 Trademarks of Up-and-Coming Neighbourhoods
- Can you get a latte? If you can get a specialty drink (and
we’re not talking about McCafé) within walking distance, the neighbourhood is
quickly approaching that “hot neighbourhood” status you’re looking for. This is
a great sign that businesses are taking notice of the area, and if people
haven’t started taking notice yet, they will soon.
If on-trend
businesses are moving in, you’re looking at a good neighbourhood. This could be
boutiques, nice restaurants, cafés, art galleries, etc.
- Fixing is in the air. Look around, are people putting time
and money into their home? Is there a local pride of ownership? Are homes being
flipped? Are old buildings being converted into lofts? These are all good signs
that money is being poured into the community. People investing into an area is
a good sign of things to come. People tend to care about where they are putting
their money.
- Is the city making improvements in the
neighbourhood? How
does the city maintain gardens, fountains, parks, public building façades in
the area?
- Does it have good bones? This goes hand in hand with local
repairs. Are there plenty of historical homes and beautiful architecture?
People typically don’t put money into something that doesn’t at least have
potential.
- Are the sidewalks and parks busy? This is clearer on a summer day, but
look around and see if people are active in the neighbourhood. Does the
neighbourhood have the amenities people are looking for, or do they have to go
elsewhere? People being out and about is another sign that people feel safe in
the neighbourhood, which is always a good sign.
- Check out the neighbourhood at night
and on weekends. You
should know what the neighbourhood is really like. For that you have to spend
some time there, and that time can’t always be during a weekday. You need to
get a true idea of the location. If you don’t feel safe there, it isn’t a nice
neighbourhood and probably isn’t somewhere where you want to invest.
- How are the schools doing? Are there school improvements? How are
test scores? What is the graduation rate? What programs do the schools offer?
- What is the owner/tenant ratio? While there are exceptions (like in
big cities), it’s important to know what the owner/tenant ratio is. The more homeowners
in the area, the more stable a neighbourhood tends to be.
- Another good
sign of an up-and-coming neighbourhood is if the crime rates are on the decline. You definitely don’t want them on the rise,
and they shouldn’t be higher than the city’s average. As a city improves, crime
tends to move elsewhere. This is another sign of gentrification.
- Houses aren’t sitting on the market. Days on the market (DOM) are getting
shorter and shorter in up-and-coming neighbourhoods. People know the
neighbourhood, and are moving in. This is a great sign of demand, and there is
power in a high demand.
- It’s accessible by transit. People want to be able to easily get to and from the
neighbourhood. If the area is lacking in public transportation, it isn’t
convenient for a large audience of people.
- It’s next to a hot neighbourhood. You may not be quite in the hot neighbourhood, but
if you’re close there is a good chance your neighbourhood is going to get
swallowed up by the great neighbourhood as the demand continues to grow.
- It has an arts scene. A high population of artists is often the first sign
of an up-and-coming neighbourhood. It is soon followed by art galleries, restaurants,
specialty stores, and boutiques.
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