#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 “If a developer purchases an outdated apartment complex with the intention of fixing it up and renting it out, there is an opportunity there to provide clean, updated, affordable housing to the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.”
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.