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13 Signs Of A Smart Real Estate Investment

Most prospective real estate investors can spot red flags indicating a bad investment — a long listing time, steadily declining asking prices, high neighborhood turnover, etc. But what about "green flags"? Signals that an investment might be promising are just as important to consider, and you don't want to overlook them when you're hunting for a great real estate deal. Unsurprisingly, most homes in the Greater Boston Area fit the bill. These attributes are provided by Forbes.


1. It's Located Near A Big Tech Company HQ

The people working for big tech companies like Google, Amazon, and Facebook are pretty safe, employment-wise. They will be here a while, unlike certain motor companies that do not innovate or outsource. Those tech employees need to eat, play and sleep. By buying properties in the areas these employees work, you will be in a great place to cash in off their success and longevity. In Boston, one of the largest tech companies is Wayfair, an e-commerce giant. Their offices are pictured below. 

e-commerce giant Boston Office

2. The Neighborhood Is Walkable

We work with some highly analytical real estate investors who are using "walkability" as a solid means for determining investment potential. Walkability means combining factors like metro/transit access, bus stops, retail/shopping and parks and assigning a score to a neighborhood based on how close or walkable these amenities are. If a neighborhood has a rising walkability score, it's a winner.


Once a neighborhood is in high demand, prices will increase and start to push people to the outer lying areas. Especially in big cities, buyers start to look to areas within close proximity where the prices are still lower. People tend to overlook these areas until they are already very popular, but getting in early is the key to the best investment opportunity.


4. The School Systems Are Highly Rated

School systems can impact a home's value significantly and if in a school district that is highly rated, a home that otherwise may suffer because of location, age or condition may still provide a wise investment opportunity. School ratings aren't everything, of course; sometimes a school with a less than stellar academic performance may offer other advantages such as strong arts or athletics.


5. It's Near A Body Of Water

Water is the most desirable real estate, whether it be the Hamptons or any other ultra-high luxury market. It employs a completely different program, and real estate firms need to highlight its unique, programmatic attributes beyond its land value. There is only a finite supply available, especially when concerning new construction homes, so it’s almost a less-is-more game– isn't the Charles River just lovely in the morning?

6. There Are Lots Of In-Progress Commercial Projects

It's easy to love a neighborhood with a long track record of stable home values. But really savvy buyers can see into the future. Buying into neighborhoods that have as-yet-uncompleted commercial projects (such as renovations to shopping malls, or an "in the works" football stadium) equals green flag. We know the area will gain attention in the near term and desirability and value will go up.


7. There's Been Steady Market Appreciation In The Area

When buying an investment property, the best “green flag” signaling that you’re buying into the right neighborhood is its past. Real estate history can predict the future. Steady and consistent market appreciation over decades with an occasional plateau, but no significant dips? Now that’s a great indicator of a winning market.


8. Local Retail Sales Are Soaring

While demographics are the most commonly observed measures for development, household income and density do not always tell the full story. Traffic is important but if it's heading the wrong direction or not stopping, it doesn't provide much assistance. Strong sales for surrounding retailers can give confidence to tenants, and therefore developers, to overlook the other indicators. 


9. Popular Business Franchises Start Moving In

Most corporations have real estate divisions that spend millions of dollars each year studying where they should build new locations, so let them do your research for you. I focus on Class B investment properties, so I look for neighborhoods where the new McDonald's, Walmart or Super-Kroger is moving in. For Class A, look for Whole Foods, Starbucks, etc. — sure signs of a changing neighborhood.


10. There Are Signs Of New Growth

If I drive through a neighborhood and see any signs of renovation, remodel or new construction, it is an easy sign that this area is starting a transformation. Not all transformations are created equal, though. Timing is often everything. If the comparative sales aren't in the area to support a buyer's purchase price, it may be a wait-and-watch decision.


11. It's Located Near Major Transportation

With all the highway infrastructure throughout Texas, I have never seen a property in close proximity of a highway or port take a nosedive in value. With the millions of dollars poured into the roads, highways, and ports, the property surrounding these structures will go up in value regardless of the surrounding markets. If you see dollars being spent on roads, that’s a green flag to invest.


12. Prominent Neighborhood Structures Are Being Rehabilitated

Rehabilitation of prominent structures, i.e., a disused fire station, vacant commercial property, or any other civic structure, is a harbinger of future commercial development. Before developers commit to new construction, especially when there are no comps to support new construction, rehabs provide a convenient intermediate step. Check out our blog on churches for examples of this paradigm.

13. Residential And Road Expansions Are Happening

When residential and multifamily construction starts popping up out of the fields and there is road lane expansion, it is a sure sign of future growth. This is the time to start buying up the hard corners and land around the area for future development projects. A recent sale of land doubled in price after the road expansion was completed in front of the property.