How to Pick a Location Poised to Become the Next Big Thing
You have very likely already heard the cliché regarding the importance of location when it comes to determining real estate value. The value of two homes that share all of the same qualities in terms of size, construction and quality can be priced in a radically different manner if one has a view that overlooks the ocean in Malibu and the other is located in a far less desirable area. Real estate investors understand the importance of location and are able to make long-term projections regarding the areas that are most likely to become the next in-demand place to live.
The strategies used to accomplish this are actually quite simple, and investors and traditional homebuyers alike stand to benefit a great deal by implementing this approach. In fact, finding areas poised for future growth may be as simple as taking Los Angeles or Las Vegas Bus Tours as a means of easy research of some of the more popular areas for real estate and investment. Not only is this an easy way to perform some cursory initial research, it is also a great deal of fun as well.
Consider the recent growth of Williamsburg in New York City. Priced out of Manhattan, many up-and-coming artistic types found themselves looking for a place to live that was cheap enough that they could afford it on a limited budget, yet still close enough to the gallery showings and other opportunities for recognition only available in Manhattan. These artistic types began moving to Brooklyn and Williamsburg, and the influx of young artists altered the composition of the neighborhood and made it a location almost as desirable as any neighborhood in Manhattan.
Many of those cheap, budget-friendly properties are now worth in excess of seven figures just over a decade later, so those who got in on the ground floor not too long ago are now reaping the reward of a life-altering real estate investment. While some of these newly minted real estate magnates earned such a sizable return through a happy accident, there are plenty of others who also benefitted simply by recognizing the real estate trend in its earliest stages. So how can an investor identify the next big thing in real estate?
The first lesson to take away from Williamsburg is proximity and scarcity. Brooklyn and its many neighborhoods benefitted from its close proximity to an area with high-value real estate that became valuable due to limited housing options along with significant and consistent demand. In this case, artists needed to live near the city in order to pursue their career of choice but could not afford Manhattan. Brooklyn’s proximity and inexpensive properties were the obvious choice for those in need of a place to live. This can be applied to any area, and it certainly is not limited to high-density populations like the one found in New York City.
Another approach to identifying an area poised for outstanding growth also has to do with proximity, as finding an inexpensive area that is not densely populated but is in close proximity to a popular area can yield excellent results for a real estate investment. This is often the case in popular beachfront areas, as an undeveloped area that has all of the qualities that appeal to homebuyers can quickly rise in value once the lack of affordable options in the developed area causes buyers to look elsewhere.
The Florida coastline is a great example of this, as stretches of oceanfront property between West Palm Beach and Miami were largely undeveloped not too long ago, making a home with an ocean view incredibly affordable when compared to the posh locations it was situated between. As time passed and South Florida became much more densely populated, development quickly took place and drove the values up a significant degree. That stretch of beach rarely includes a property that can be purchased for anything less than seven figures today, so those who had the foresight and did the research are now able to enjoy an absolutely massive return on their investment.