How to tell a city is gentrifying and if it is good to invest?

19 Replies

Hello fabulous investors!

I live in DC (or Arlington, VA, 5 min away) and my rent is about $1700 a month. I really don't want to keep paying that longterm, but of course properties in Arlington go for about $1-$1.5mil. I work by capitol hill and they are gentrifying the eastern market area which is very close to the hill. Word on the street is they are starting to gentrify places in Maryland to accommodate for more DC folk who can't afford the hefty pricetag.

So I have started looking in Maryland, in the hopefully less sketchy areas, for a good place to live in for a few years until prices go up, and cash out. I looked at a few places yesterday that were under $250k, and apparently were renovated by the same investor (the properties were about 10-15 min away from each other). Is that a good sign that investors are renovating properties in that area? I also heard that a developer just bought Iverson mall (a very hood mall) so maybe that is also a good sign?

I am a single woman trying to be smart about investing here. Can anyone guide me to tell me what are some good/bad signs in terms of investing in this kind of situation? This would be my first house. Also, the agent said he couldn't tell me what amenities the HOA had until I submitted an offer (that is crap right?). Any and all guidance is helpful! If someone could walk me through this.

Francys

You should just be more specific about where the properties are if you want opinions on the areas .

Regarding the HOA....the seller needs to provide a copy of the hoa docs to you, after you submit an offer. It is not provided before, because it has to be dated and up to date within 30 days of a ratified offer and they cost about $300 to get. So you do not get them before hand because they could be outdated by the time there is a contract.

Thanks Russel for your response!

I am talking about the district heights area, but really any place 20-30 minutes from eastern market. 

So no one can tell you if there is a pool or gym in the community, if there is snow cleanup, etc until you submit an offer?

What are your thoughts on that area?

Do some foot work, drive by places that interest you, speak to neighbors, someone is going to be outside, so pull up, introduce yourself and approach it as if you want to move into the area, not as an investor. Then ask questions, most people love to talk. :)

I tend to look at the local retailers going in as an indication of changing demographics as they study these things very thoroughly. How far is the nearest Starbucks/Trader Joes/Whole Foods and when did it open? Those three are the atomic bombs of gentrification. Are there any newly renovated "artist lofts" in the area or under construction. There will always be some blight in a transitioning neighborhood but how long does it take for the trash to be picked up or graffiti to be painted over?

Go to the local police station and ask for a crime map to see what type of offenses are taking place (minor vs violent crime). I flip and have rentals in a rapidly gentrifying area and it's still messy at times so you have to be sure you are comfortable with the homeless/squatters/addicts/mentally ill that will be your neighbors for a few years until they are pushed out. 90% of them are harmless and can easily be good neighbors if you treat them kindly and with respect. The other 10%
are not harmless so you need to be aware of how to protect yourself and your things. I recommend a big German Shepherd or Belgian Malinois.

Originally posted by @Francys Crevier
So no one can tell you if there is a pool or gym in the community, if there is snow cleanup, etc until you submit an offer?

They absolutely can, and probably should if they are interested in entertaining buyers. Without knowing much about the situation, I can only think of a few reasons why an agent wouldn't want to talk about that stuff over the phone: at the top of the list is that they flat-out don't know, for example because they are servicing a bulk listing (distressed property, etc).  Or maybe the agent was just having a bad day.

A listing agent should be able to rattle off a few amenities to a prospective buyer.  @Russell Brazil is correct about comprehensive HOA disclosures only coming under contract, though. Don't expect a litany of affirmative representations about a property before there's anything in writing.

Originally posted by @Francys Crevier :

Thanks Russel for your response!

I am talking about the district heights area, but really any place 20-30 minutes from eastern market. 

So no one can tell you if there is a pool or gym in the community, if there is snow cleanup, etc until you submit an offer?

What are your thoughts on that area?

 I personally would not buy an investment nor owner occupied property there, or anywhere in southern PG County. That is probably one of the worst areas of the metro area. Apologies to those who like that area.

@Russell Brazil so you do not think that place will improve in a few years, especially with a developer purchase of Iverson mall?

Do you recommend any areas that would be a better investment?

No I don't think it will improve.

Almost any area is better. District heights, suitland, oxon Hill, Temple hills is the worst part of the entire metro area, so almost anywhere is better

Oh well I did say district heights, not temple hills lol

Look for hipsters. The deeper their roots the better odds. 

Follow the hipsters

Originally posted by @Francys Crevier :

Oh well I did say district heights, not temple hills lol

 I was grouping them altogether as being the worst areas of the metro area.

Always needs to be a catalyst. Find the catalyst.

@Francys Crevier I personally don't know too much about the DC metro area but I would also look at the population growth of folks with jobs and income growth as well. Also what are the age groups moving in and are they moving in because of jobs.

I am a real estate investor in DC and I have a place that you would be interested in. It is in the Suitland area which is right outside of DC, near the areas in Maryland that you are referring to. It is also minutes from the nearest Metro station. 

@Francys Crevier How to tell if an area is gentrifying!? A few great responses above! But follow and find when the city approves mid/higher-end mixed use commercial builds in otherwise undesirable neighborhoods! We have some approved to build in the not so nice neighborhoods in North Nashville..and now its a feeding frenzy to buy up the old houses and lots nearby. 

@francys crevier.  Not sure some folks have done all their research in PG county, so I would recommend you do your own research to determine what area improvements are being done and are forecasted.  Suitland in particular is preparing for a huge homeland security building specifically by the branch ave metro.  They have recently built a convenience road, added more upscale dealerships such as infinity, just built a huge beautiful apartment complex with about 800 units and that same builder will be back in a couple years to do another mixed use building with apartments and retail.   Streets are being paved etc.   As you already indicated an investor had purchased Iverson mall.  Is it hood in Suitland?...absolutely, no healthy food options, poor customer service etc.  Are there areas nearby that offer better options..I.e. Waldorf....absolutely.  I do think certain parts of the area will improve in a few years and certain parts will continue to be hood.....as is DC from block to block.  Keep in mind that not every investor knows everything about every area and I would do my OWN research before heeding advice of one who says oh those are just the worst areas in all of MD, as was Capital Hill years ago....which is still SE DC. 

I was in your same situation single woman...I lived in Crystal City in Arlington, for two years and was tired of paying hefty prices.  I can say that the neighborhood I live in is great, I have great neighbors in a quiet community and I can walk to the metro in about 8 min....oh and did I mention I live IN SUITLAND/camp springs.  I will say that if you have kids or are looking to do family planning you may want to research PG county school systems prior to making your decision.  ;)

  I totally understand your pain living in Arlington.  There is a lot of money to be made in PG county from rehabbing to rentals....do your OWN research and reach out to people working directly in that market!!!  Best wishes to you!

@Crystal Smith Thanks for that lovely post. I actually busted out laughing at one of the comments above. I just recently purchased in Suitland (literally borderline DC) and so far soo good. Home prices are lower (compared to across the street in SE, which are double the price) as in $175k compared to the invisible border that separates DC & MD, where DC homes are high $280k (For the SAME property size/type!!!).

@Francys Crevier If you want to catch the wave, I'd def suggest buying in that area. A few things I would advise you look out for is....

- Find areas that many investors are going to (vacant lots of land - 'If I were an investor, what are the benefits of buying this lot of land')

- Neighborhoods where the homes are being renovated (bringing property values up)

- Anywhere next to a Metro is ideal (I just missed out on a great townhouse next to Capital Heights station. I'm sure you've notice what's happening to metro stations & DC becoming a public commuter city)

- Review market rates (Rents)

- Nothing beats driving around the area and checking for yourself (day & night)

- Read articles (Bisnow, Business Insider, Washington BizJournal)

Please let us know your journey and how things are going.

Just my 2 cents ;)

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