Focus on the Path of Progress for Your Real Estate Investments

By Eric Tyson

Buying real estate in up-and-coming areas with new development or renovated properties not only greatly enhances the ease of finding and keeping good tenants but also leads to higher occupancy, lower turnover, and higher rates of appreciation.

In virtually all major cities, some areas are experiencing new construction and growth — and have the reputation of being the area to live in. But by the time most folks feel this way, you’ve lost an opportunity to get in when prices have more appreciation potential. So here are a few indicators to use to stay ahead of the game:

  • Follow the retailers: You can often take a clue about where you should invest by looking for major retailers who do extensive research before making a decision to open in a given neighborhood. For instance, maybe a new Costco or Sam’s Club is anchoring the new shopping center.
  • Follow the highways: One of the best and most obvious indicators of where new development is headed is transportation. But make sure the roads or mass transit projects actually get built. With so many funding and environmental challenges today, it can be extremely risky to invest in real estate based on proposed transportation projects. But after they’re built, you’re sure to find real estate investment opportunities.

But the path of progress isn’t limited to new development. Many cities have areas that have seen better days, and local leaders are doing their best to revitalize these tired and even blighted sections of town.

A key component can be redevelopment districts that are formed with the property tax revenues being diverted to a special redevelopment agency that promotes new projects through a streamlined approval process and financial assistance. Often, the traditional downtown areas are being redeveloped with many incentives for developers and owners willing to be among the first ones in.

Although redevelopment areas can be great opportunities, significant risk is associated with investing in areas that are dynamic and changing. Like transportation projects, sometimes the best intentions of local leaders and redevelopment agencies can hit a snag.