More Great Places to Invest in Foreclosures!

Terms like “up and coming,” “on the rise” and “gentrifying” are red flags to realtors and homeowners alike. Many are using these terms to describe less-expensive neighborhoods where prices have shot up over the past year. These are neighborhoods that are definitely worth looking at buying foreclosures, especially with the price dip in the past year.

The increase in value is usually more than just a reflection of the overall increase in property values in the U.S. since 2001. Factors such as improved crime rates, schools, access to public transportation and high employment makes these areas extremely attractive to buyers who are price-sensitive.  Along with Zillow.com, Business Week.com came up with a list of the next “hot” neighborhoods in 10 of the U.S’s biggest cities. By looking at Zillow’s database of past home values, they identified neighborhoods in each of the 10 biggest cities that had seen the most appreciation in home values since 2001, and not including neighborhoods where the average home value was above the average for the city. So what were the results? Neighborhoods with a recent history of noteworthy appreciation, and reasonably affordable housing. Although these neighborhoods are not exactly underdeveloped or undiscovered, they have what it takes to become great investments, as well as great places to live. Even though some of the neighborhoods have had double-digit appreciation since 2001, the prices are still relatively low (compared to the average housing prices in the city), which leads us to believe there is still room for substantial growth.

There are 4 things to look at when investing in foreclosures in a growing neighborhoods that is close to a major city.

First, you need to look at the transportation-is the neighborhood close to mass transit and/or the highway? In a growing neighborhood, it is crucial that getting in and out is easy.

Second, does the neighborhood have room for commercial infrastructure, such as restaurants and shops? People become familiar with neighborhoods through shops and restaurants, these bring people to the neighborhood, which can then lead to them buying in the neighborhood.

Third, do the zoning laws favor multi-units or larger units, whether for commercial or residential? If so, then the neighborhood will gentrify more quickly.

Finally, what are the local politics of the area? If local politicians are in favor of more growth, then the area is likely to grow quickly and easily. But if residents and commercial business owners are fighting local politicians at every step, growth is going to be difficult and slow-and may prevent others from wanting to come to the area.

You always hear about the guy who bought up part of a neighborhood and developed it and got rich-but buying in situations like this are risky. Our advice-don’t be the first one to buy in the area….better to be the 2^nd or 3^rd guy, and know that you are making a good investment.

10 up and coming neighborhoods-

1. Dorchester-suburb of Boston. Median home price $415,483

2. East Garfield Park-suburb of Chicago. Median home price $240,187

3. Civic Center-suburb of Denver. Median home price $208,773

4. Pico Union-suburb of Los Angeles. Median home price $597,784

5. Little River-suburb of Miami. Median home price $329,963

6. Kingsbridge Heights, The Bronx-neighborhood of New York. Median home price $936,439

7. Cashion-suburb of Phoenix. Median home price $229,234.

8. Mission Bay-suburb of San Francisco. Median home price $835,895

9. University District-suburb of Seattle. Median home price $447,927

10. Tiffany-suburb of St. Louis. Median home price $138,823

These are all great, growing neighborhoods that would make great investments. Foreclosures in this area would be even cheaper than the median home prices you see above, and would make a fantastic investment.