Looking for clues on where to invest next? Here’s a hint: look for new Starbucks. According to CNBC and a new Harvard Business School paper, a new Starbucks is associated with a .5% increase in housing prices. Can coffee really have such an impact on real estate? No…but gentrification can.

One of the most frequent questions we get at Ali Safavi Real Estate is, “How do I find a good deal?” Of course, that’s a question with many answers, but finding immerging markets is always a good start. As I wrote about in “Hawthorne Real Estate Is Heating Up”, business can be a great indicator for what’s to come. A company like Starbucks is uniquely positioned to be a follower and trend setter at the same time. Most likely they’re seeing data showing a growth within the town. It could be population, home prices, business, or other factors. On the flip side, their presence could help draw other businesses and further expedite the gentrification process.

"The most natural hypothesis to us is that restaurants respond to exogenous changes in neighborhood composition, not that restaurant availability is driving neighborhood change," the paper concludes.

What does this mean for finding a good deal? There’s no announcement that gentrification is occurring – no website to check or tweet to read. It often starts slow with a few businesses or new apartments and grows from there. As a savvy real estate investor you have to look for the trends before the market has had time to compensate. There was just an article today about Microsoft buying up land In Arizona. That area will almost assuredly see an increase in home value.

Business and home value are inextricably linked. Businesses come in and home prices rise. Or in cities like Detroit and Flint, businesses leave the home prices can collapse. Pick a few cities to put on your watch list. Real local papers to keep your finger on the pulse of business trends. Finding a good real estate deal will be a far easier task if you make these tasks part of your daily routine.