- An old real-estate adage is one you should forget: “buy the worst house in the best neighbourhood.”
- Scott Durkin, the president of the real-estate brokerage Douglas Elliman, said in an interview with Mansion Global this month that it’s better to buy outside of the best neighbourhood because “it will eventually spread out.”
- There are several ways to spot an up-and-coming neighbourhood, like keeping an eye out for new businesses and restaurants where people congregate and for an increase in renovations.
One well-known real-estate adage is one you should forget: “buy the worst house in the best neighbourhood.”
Instead, it’s all about having an eye for the nearby up-and-coming area or next hot spot, according to Scott Durkin, the president of the real-estate brokerage Douglas Elliman.
“They used to say buy the cheapest apartment in the most expensive building, but it’s better to buy slightly outside if you have to and can’t afford to be in the area,” Durkin said in an interview with Mansion Global, published this month, about the best area for investing in luxury properties. “It will eventually spread out.”
He added: “You always want to listen to your contemporaries, and the people you spend time with. People love to talk about real estate, and you can get a sense of where things are going.”
He said to “keep an eye out to where people congregate, where the best restaurants are, things like that.”
But that’s not the only way to spot an up-and-coming neighbourhood.
An influx of stores and businesses – like a coworking space, an organic grocery store, or small boutiques – can be a sign of an emerging or gentrifying area, as can an increase in construction trucks in the street signalling renovations, according to the real-estate site Trulia.
Proximity to the subway or bus lines, as well as neighbourhoods characterised by a certain architectural style, also signal a potential for revitalization. You can also do a little more research and ask your agent which areas are seeing a decline in the number of days houses or apartments are spending on the market – it could be a sign that a location is picking up.
When it comes to buying a property in a nearby neighbourhood, avoid overpaying for a place that won’t have high resale value – a standard homebuyer pitfall, Robert Gladstone, the CEO of Madison Equities, previously told Business Insider.
He advised against paying 30% to 40% more than all your new neighbours do for a similar property and instead buying a place with longevity that will increase in value over time.