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 buy, build and become a homeowner in upcoming areas.
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 building 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, but when you invest in a less popular neighborhood, your buying power can go much farther.
Whereas Ksh 8,000,000 might get you a 3 bedrooms’ house in the city center, it could buy you more than one plot of land in Koma Estate, a growing neighborhood not too much farther away and build a home of your dreams from scratch.
When you buy land and build 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.
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 a space that already exists.
So you can install those hardwoods in the kitchen or use those brick walls as a design element. 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.
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 quick move, you can significantly increase the home’s resale value after building.
When a neighborhood starts to transition, it often takes five to 10 years for it to really transform. 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. You’re not only benefiting from the return on building, you can also benefit from the appreciation of the neighborhood.
4: Appeal to a larger pool of tenants and buyers
If you’re purchasing land to build 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,
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. 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.
5: 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.
If you buy land and build a home with the intention of renting it out, there is an opportunity there to provide clean, updated, affordable housing to the people who already live in the area.