As a mortgage and capital broker operating in a number of markets around the US, one thing that sticks out when analyzing an investment property's potential for a client is the health and overall development of the surrounding neighborhood. Of course, any great property will always be subject to the surrounding conditions of the area it finds itself. The beautiful Victorian needing a small amount of finishing to be a slam dunk resale property will never realize its full potential if the property next door is known for frequent police visits and a foul smell emanating from the basement windows. This is why real estate professionals rely on sales comps to tell the story of a surrounding area, because they put qualitative data into a quantitative value. Utilizing this data as well as other in depth knowledge, this will begin a series of posts about several different sub-markets in cities around the US in the midst of a real estate investment explosion.
The mantra of "buy low, sell high" demands that investors should always be looking for signs of the next neighborhood ready to explode in terms of property values. With the trend in the US still leaning towards a reverse exodus back into urban zones, there are still ample opportunities to seize upon no matter what market you're in. For example, Northeast Washington, DC was a realty dead zone for decades following the riots in 1968. Over the last 12-15 years however large swaths of this quadrant of the city have seen enormous gains in property value over time, leading to what many investors believe is now an overweight market in some micro-zones. Looking on the bright side, this glut of residential investment in DC has opened the door for smaller, less brand-name areas to benefit on the back end of this realty boom. A good example is the Brentwood neighborhood.
Sandwiched between the now-booming sub-markets of Eckington, Brookland, and Ivy City, Brentwood is poised to become the next residential hot spot for property flips and condo developments. Property values are still relatively low compared to those aforementioned areas, and according to the DC Recorder of Deeds and Labor Statistics, home values in the neighborhood have lagged behind its counterpart subsections since 2009 to the tune of roughly 15% on average. This means that in order to catch up to the surrounding area, many investors are starting off at a sizable advantage on purchase price alone. Our forecast for this neighborhood is positive for the foreseeable future, buyers should still be able to find good inventory at prices that will yield high margins on estimated outsale figures. As more desirable units begin to creep into the area as spillover from the aforementioned surrounding neighborhoods, it will be a matter of time before Brentwood is considered among these residential areas as well, with property values to support it.