What Are Signs of Gentrification Starting

Weymouth, MA · Member since 2018 · 18 posts · 3 votes

What are some signs you see of any area that is gentrifying or about to gentrify to any veteran real estate investors or even people who have seen a bad neighborhood turn into well developed in a period of time ?

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Mike Dymski

Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes

coffee shops that call coffee something other than coffee, tight pants, short running shorts, Trader Joes, lots of bikes, attitude glasses (non-prescription), wine and tea stores, mustaches, edgy (slightly pornographic) art, etc.

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Dean Letfus
Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
7y
The most obvious is where a street had lots of board up's and in a relatively short space of time the street all becomes occupied. And you stop seeing red and blue bandanas on street corners.
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Max T.
Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
7y
being adjacent to a gentrified area
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Account Closed
Member since 2018 · 175 posts · 103 votes
7y
It’s a good question. I am fairly new to this so take anything I say with a grain of salt. I just bought a MF in a city that I believe will grow (I did not buy for appreciation though). I drove around and looked for/did the following things:
Increase in jobs (lower unemployment)
Companies moving in
Commercial real estate being built
Hotels being built
Property values increasing
Change in govt leadership
Areas near grew
Talk to people in the community
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Doug Pintarch
Rental Property Investor · Harrisburg, PA · Member since 2018 · 369 posts · 406 votes
7y
No more shoes hanging from power lines by their laces.
Sidewalks being repaired.
Check cashing places closing / moving.
A small park being made and cared for.
Boards leaving windows.
Speaking from what I've seen where I live, 3 times now to different neighborhoods. Harrisburg PA.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
for a case study one simply needs to go to Charleston SC and cruise around the NW side of town in a historic rough area and see the transformations happening.. bull dozer bait next to a 500k new build.. all infill..
cranes everywhere.. Drive 1 mile to south of Broad and houses are 2 to 20 million.. Location location location.
most every rust belt or mid west city has a area like this that is close in and those areas are transforming..
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Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
7y
coffee shops that call coffee something other than coffee, tight pants, short running shorts, Trader Joes, lots of bikes, attitude glasses (non-prescription), wine and tea stores, mustaches, edgy (slightly pornographic) art, etc.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
@Mike Dymski Mike your describing Portlandia... just add in some purple and pink hair some cool tats and piercings. And artisinal ice cream farm to table .. Portlandia the city that young people go to to retire !!
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Charley C.
North of Houston · Member since 2018 · 350 posts · 181 votes
7y
I am a war torn veteran of urban tear downs (Houston). I have since moved on but can tell you what happened
What you don't first see but will see later, is groups and friends, cliches of people with no kids but lots of income. Mostly young (late 20's early 30's) or young at heart. These people start moving in. In an episode of Shameless they called them Hipsters, I called them Dink's double income no kids. No kids because the schools still had stabbings, gang fights, drugs, horrible.
You may start seeing these DINCS throwing good money after bad trying to fix up old nasty structures but why? because all their friends are doing the same. They might be good at their jobs making money there but they were not so smart at rehabbing buildings that had no hope. I never did, everything I did started with a bulldozer.
When looking for commercial indicators. Look for unique really good restaurants, stores, bars, salons, boutiques, usually not major brand type places but a whole lot better. Owner operated and kicking *** at it. The folks that patronize these places are smart young top performers at their respective jobs getting paid big bucks aka the dinks
Got to find some comps of residential nice stuff, in the early days it was really hard, once we got enough comps moved in in the early 1990's, then all hell broke loose, then there were tear downs everywhere. The rest is history. Lot money was made.
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Charley C.
North of Houston · Member since 2018 · 350 posts · 181 votes
7y
@Max T. said a mouth in a few short words. If you want to make a play next to a already rocking and rolling gentrified area. That circle will grow where ever its the most compelling and price also compels don't forget.
What I didn't say was after the dinks got things all rocking and rolling in a sustainable manner, then came the empty nesters in their 50's, they made the center of the circle bigger pushing dinks further out and higher too, lot of mid rise and condos started popping up but condos are not for everyone, the ground dwelling dinks kept creeping pushing the boundaries out further.
The moral of the story, it was always the dinks and their types of shops and living arrangements were walking point pioneering and making new gentrified places, not so much the builders and developers.
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Charlie MacPherson
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
7y
@Chris Munichiello Lots of good suggestions already in this thread, so I won't repeat them. Home pricing is a really important indicator, but by the time prices start rising, you may have already missed some opportunity.
In our area, prices have been on a long, steady incline - especially in Boston.
For example, the least expensive 3-plex in Boston is $500,000 and it has extensive fire damage! The next least expensive is $619,999.
The average sale price for 3-plexes in Boston over the last 6 months, excluding short sales and REOs was $1.1M.
People looking for housing that they can afford are being pushed out in concentric circles as they search for lower price areas. In Boston, Roxbury and Dorchester are already gentrifying. I think Mattapan will be next, as there's no place left within the city.
All three of those have some serious war zone parts. If you watch the local news, shootings almost invariably occur in one of those three sections.
If you have some risk tolerance and don't mind owning in the hood, I'd think about finding something in any one of the three.
The South Shore is still pretty reasonable price-wise. The average sale price for 3-plexes in Plymouth County over the last 6 months was $489,101. There's still opportunity here, but that's not so much gentrification as it is people looking for housing that they can afford.
The exception is Brockton. The west side (zip code 02301) is in very nice shape. The center-east (zip code 02302) is much more run down. The dividing line is really sharp and is about 8-ish blocks west of RT 28. The mayor has a plan in place to expand the nicer area from west to east.
There are supposedly some grants and low cost loans available for homeowners to improve their properties. So 02302 might be a good place to invest with an eye of it being in the path of progress, i.e., gentrification.
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Chris Munichiello
OP
Weymouth, MA · Member since 2018 · 18 posts · 3 votes
7y
@Charlie MacPherson good to see someone from Massachusetts contributing to my question I know exactly the 3 family for $619K you’re talking about on Erie Sreet and have asked many people from Dorchester who grew up there saying it’s one of the worst neighborhoods but I’m surprised millennials aren’t being pushed out of renting southie and Adams Street in dot and trying these other areas that are a bit more intimidating so they can still stay close to Boston
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Charlie MacPherson
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
7y
@Chris Munichiello Yep - that 3-plex on Erie St looks like there are somewhat below-market rents too.
Similar 2/1 rentals in the area are going for $1600 to $1894. These are showing rents of $1500, $1550 and $1650.
It was built in 1920, so a good inspection is necessary. It could still have knob & tube and ancient plumbing. It says it has a full basement, but at that age, it might be a dirt floor.
The listing says nothing about the heat or whether any/all utilities are separate for each unit. Those could be deal breakers.
It was originally listed last August at $729,999 and has had two price drops, now down to $619,000. If you could get $1700 per unit, you're a lot closer to the 1% rule than almost anything inside RT 128. It might be worth a look.
I'll bring my .38 - and two speed loaders!
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John FortesPro Member
Multi-Family Syndicator · Abington, MA · Member since 2017 · 603 posts · 347 votes
7y
As I agree with @Charlie MacPherson about Brockton. I'm just not sure what type of crowd is going to be sweeping in next. I know its definitely going through a change and I can see it when I'm driving around the city. I can't tell you what type of crowd (hipsters or empty nesters) will be coming during this plan that the mayor currently has in place. As I have shifted my eye on the local area due to this, I just haven't found anything yet to meet my criteria just yet. Though the need for more multifamily apartments is there but there is a lack of inventory.
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Barry Sanders
Brooklyn, NY · Member since 2018 · 79 posts · 30 votes
7y
Transportation providing easy access to already gentrified areas (under 1 hour)
decreasing crime rate which people may have been referring to indirectly
green space/ some space for communal gatherings/building -
increase in houses being flipped bringing in higher earning residents
increase in permits being filed
I also often browse city-data forum and read changing sentiments about areas you hear one side saying stay far away and the other who actually live there say its not that bad
depending on how early you are in the cycle will determine the number of signs you see but location is the first sign if its the only one you see you may be waiting a while
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Frank Wong
Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
7y
Just follow the money. If a company can build a 140-200 unit apartment building in the area you can invest there.
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Matt K.
Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
7y
when the grocery stores outnumber the liquor stores.......... you've missed the boat and it's already happened lol.
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Account Closed
Lender · Pensacola, FL · Member since 2017 · 658 posts · 626 votes
7y
All of the above. Sometimes a highly motivated developer can spearhead the effort, but it helps when local government wants the development to happen: Why Walt Disney chose Florida over New Orleans
You'll know when local government is behind a redevelopment from their council meetings. They announce their intention of urban renewal and then support it by creating redevelopment districts. Stuff happens when enough people want it to happen.
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Michael Bishop
United States · Member since 2015 · 401 posts · 394 votes
7y
@Mike Dymski lol I got a good laugh out of your reply.. this is literally Austin. Austin has grown like crazy even since I've been here though, so you're pretty spot on.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
@Charley C. Excellent description .. these are millennial's that are not brain dead and at least know that renting is just throwing money away.
I stumbled onto Charleston SC 6 years ago.. and built the 2nd infill new construction that was built for SFR in the area of America and Aiken st.. prior to that there was not an infill or new build for the last 25 years.. public housing rough area all of that. but LOCATION just screamed of gentrification.. 35 new builds later and price points when i started were 350k for a new build last one I closed was 650k.. and some have gone for over 1 mil i sold one last year for 1.2 it was a major remodel and a new home behind it.. bought by investor at 3 or 4 cap for student housing..
you can find these areas in most all cities these days. People get tired of 1 hour commutes and or as you say they are all about WALK SCORE .. and then when they do have kids the kids go to academy/ private school generally.
I was just there this week.. one of the main drivers of our success is the other larger new home builder that can get bank financing like we can.. they dont SELL they build and hold. and rent by room to students.. there were also 6 new multi story MF for student housing and regular rentals under construction within stones throw.. all huge projects
I know Dallas has its areas Austin has its areas. I was in Detroit a few months ago and you should see the new infill there you could have knocked me over with a feather but yes Even the suburbs of Detroit its happening..
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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y
Follow the hipsters
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Christian Hutchinson
Investor · Detroit, MI · Member since 2014 · 360 posts · 354 votes
7y
The typical cycle is:
Homosexuals/Alternative Lifestyles, Artisans, Prime Age Service Workers, Graduate Students/New College Grads, Young Families, Empty-Nesters, Regular-Families.
Typically the time to jump in Service Workers going to Grad Students.
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Matthew Baltzell
Rental Property Investor · Denver, CO · Member since 2018 · 183 posts · 172 votes
7y
It's always a good sign if there's a Starbucks, Whole Food's, Trader Joes, within a mile or two radius.
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Michael T.
Los Angeles, CA · Member since 2018 · 326 posts · 279 votes
7y
@Chris Munichiello quite often gentrification takes place in cities where there's a shortage of prime housing.
As many others have mentioned the signs of gentrification I won't repeat but you can look at certain cities across the US that have seen gentrification over the last 20 years to have a better understanding of what your looking at.
San Francisco - 1993 and 2003
Culver City, CA (part of Los Angeles) - 2010
Inglewood, CA - 2017 to Present
Portland - 2003
Seattle - 2001
Nashville - 2004-2009
It's exciting to be part of the gentrification process as you truly do see the trendy coffee shops, the Trader Joe's, Whole Foods, big branded hotels, and trendy housing options being added and developed.
I'm experiencing the gentrification process in Inglewood, CA right now and it's great!
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Michael T.:

@Chris Munichiello quite often gentrification takes place in cities where there's a shortage of prime housing.
As many others have mentioned the signs of gentrification I won't repeat but you can look at certain cities across the US that have seen gentrification over the last 20 years to have a better understanding of what your looking at.
San Francisco - 1993 and 2003
Culver City, CA (part of Los Angeles) - 2010
Inglewood, CA - 2017 to Present
Portland - 2003
Seattle - 2001
Nashville - 2004-2009
It's exciting to be part of the gentrification process as you truly do see the trendy coffee shops, the Trader Joe's, Whole Foods, big branded hotels, and trendy housing options being added and developed.
I'm experiencing the gentrification process in Inglewood, CA right now and it's great!
one of my clients wrote a white paper on Inglewood a few years ago and want me to fund deals there.
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Todd Dexheimer
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
7y
Art! when the art/theater people start moving in, then something is going on. Also, look for coffee shops, bars coming off of buildings, buildings being re-purposed, city initiatives, etc.
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