Residential real estate investors do not create a market. Investors act upon the early signs for the next trending area and seek opportunities in the early transformation stage.
To locate the best investment on the bell curve, investors must enter a market when the curve is on an upswing. This is the cycle where the prices of acquisition and renovation are the most competitive.
As a hard-money lender in the Los Angeles area, I thought advising investors on recognizing the early signs of an up-and-coming area was necessary.
The early signs are:
- employment and economic growth,
- transportation and infrastructure improvements,
- data analysis,
- neighborhood revitalization, and
- lifestyle factors.
Employment and Economic Growth
Employment opportunities indicate an upswing in the economy and quality of life in a market area. Investors need to follow the construction. Will there be a new hospital, employment campus, or retail centers bringing diverse job opportunities?
These are the areas where the demand for housing and retail will increase. The labor force follows the jobs, and the labor force needs the support of retail and housing.
Transportation and Infrastructure Improvements
When the government and private/public partnerships begin investing in an area to enhance or expand public transportation, this signifies growth and increased property values.
Major employers will not enter a market without government investment in roads, highways, and transit lines.
Transportation and infrastructure projects also create and support ancillary jobs for the growing labor force. These ancillary jobs are those created by schools, public amenities, and retail centers.
Data Analysis
Rather than analyzing graphs and investing in online software and platforms, partnering with a residential Realtor who knows the market will prove invaluable. Analytical tools are fine but do not compare to on-the-ground market knowledge and experience.
The Realtor will have the software and access to the data to help with this search.
Perhaps the exchange for this market knowledge is the use of their services in locating properties for your portfolio.
As the data is reviewed, look for changes in demographics and the status of affordable housing supply. However, do not solely depend upon the data—drive the market and select a neighborhood based on your observations and “feel” for the area.
Neighborhood Revitalization
An investor should recognize a revitalization as an indicator of a change in demographics and the eventual increase in property values.
The indicators of gentrification are subtle, and knowledge of the local government is necessary. Is the area in an enterprise zone or an area designated for opportunistic zoning and small business incentives? Art galleries, cafes, boutiques, and locally-owned businesses speak to the investments by the local government and the property owners.
Lifestyle Factors
With some of the above indicators in place, the next step is to look to social media and local publications for grand openings or announcements for new construction.
Lifestyles will certainly change with diverse employment opportunities, infrastructure investments, and small business incentives from local governments.
An investor only needs to recognize the opportunities for growth and investment. The market indicators will be there. The employers choosing an area and the developers creating new spaces have already performed the heavy lifting to measure the viability and feasibility of a market area.
The investor needs to follow.
Another vital source of information on upcoming market trends is active lenders. If you are interested in purchasing real estate or need funding for your next project, contact the highly reputable and respected hard money lender in Los Angeles, PB Financial Group. PB Financial is a premier, direct hard money and bridge lender who has been providing quick funding since 2006 and has funded over 2,700 hard money/private money loans. Our objective is to satisfy your financing needs on important real estate projects throughout California in an efficient manner.
To learn more about how to successfully finance your next real estate venture, please contact PB Financial Group at 877.700.3707 to schedule a consultation or visit www.CalHardMoney.com to learn more.
