Up-And-Coming Neighbourhoods

There’s definitely something to be said about getting into a neighbourhood before prices get too high and you can no longer afford it. Up-and-coming neighbourhoods can be great for getting more bang for your buck, but you have to be careful when you look at an up-and-coming neighbourhood. Is it quickly becoming the new hot spot to live, or are you going to have to deal with high crime rates and a rough neighbourhood for years to come?

We stress the importance of buying nice homes in nice areas, especially for our Rent to Own strategy. By offering something desired you can ask for more rent, and help your tenant-buyers realize their dream of becoming proud homeowners.

If you’re familiar with our Rent to Own strategy you know we only do these in starter homes (if you’re not familiar with Rent to Own investing, you can read about it here). In any economic cycle, there is one market that is always active, or most liquid, and that’s the starter home market. We limit our search to starter homes in communities that meet these three criteria:

1. It must have population growth greater than the provincial average. This means more people are moving in than out.
   
   
2. The average family income must be greater than the provincial average. This means people have jobs, and it’s an indicator of diverse employment.
   
   
3. There must be infrastructure or transportation improvements in the community. Things like highway improvements, sewage development, or new GO train stops.

However, if you can’t buy in these in-demand nice areas, you may be looking for something in an up-and-coming neighbourhood. Many “rough” neighbourhoods get labeled as “up-and-coming,” but it is important to know how long you’re going to have to hold onto a property before the community has arrived at the “desired community” status. Here are 13 signs a neighbourhood is on the rise.  

13 Trademarks of Up-and-Coming Neighbourhoods

1. Can you get a latte? If you can get a specialty drink (and we’re not talking about McCafé) within walking distance, the neighbourhood is quickly approaching that “hot neighbourhood” status you’re looking for. This is a great sign that businesses are taking notice of the area, and if people haven’t started taking notice yet, they will soon.
   
   If on-trend businesses are moving in, you’re looking at a good neighbourhood. This could be boutiques, nice restaurants, cafés, art galleries, etc.
   
   
2. Fixing is in the air. Look around, are people putting time and money into their home? Is there a local pride of ownership? Are homes being flipped? Are old buildings being converted into lofts? These are all good signs that money is being poured into the community. People investing into an area is a good sign of things to come. People tend to care about where they are putting their money.
   
   
3. Is the city making improvements in the neighbourhood? How does the city maintain gardens, fountains, parks, public building façades in the area? 
   
   
4. Does it have good bones? This goes hand in hand with local repairs. Are there plenty of historical homes and beautiful architecture? People typically don’t put money into something that doesn’t at least have potential.
   
   
5. Are the sidewalks and parks busy? This is clearer on a summer day, but look around and see if people are active in the neighbourhood. Does the neighbourhood have the amenities people are looking for, or do they have to go elsewhere? People being out and about is another sign that people feel safe in the neighbourhood, which is always a good sign.
   
   
6. Check out the neighbourhood at night and on weekends. You should know what the neighbourhood is really like. For that you have to spend some time there, and that time can’t always be during a weekday. You need to get a true idea of the location. If you don’t feel safe there, it isn’t a nice neighbourhood and probably isn’t somewhere where you want to invest.
   
   
7. How are the schools doing? Are there school improvements? How are test scores? What is the graduation rate? What programs do the schools offer?
   
   
8. What is the owner/tenant ratio? While there are exceptions (like in big cities), it’s important to know what the owner/tenant ratio is. The more homeowners in the area, the more stable a neighbourhood tends to be.
   
   
9. Another good sign of an up-and-coming neighbourhood is if the crime rates are on the decline.  You definitely don’t want them on the rise, and they shouldn’t be higher than the city’s average. As a city improves, crime tends to move elsewhere. This is another sign of gentrification.
   
   
10. Houses aren’t sitting on the market. Days on the market (DOM) are getting shorter and shorter in up-and-coming neighbourhoods. People know the neighbourhood, and are moving in. This is a great sign of demand, and there is power in a high demand.
    
    
11. It’s accessible by transit. People want to be able to easily get to and from the neighbourhood. If the area is lacking in public transportation, it isn’t convenient for a large audience of people.
    
    
12. It’s next to a hot neighbourhood. You may not be quite in the hot neighbourhood, but if you’re close there is a good chance your neighbourhood is going to get swallowed up by the great neighbourhood as the demand continues to grow.
    
    
13. It has an arts scene. A high population of artists is often the first sign of an up-and-coming neighbourhood. It is soon followed by art galleries, restaurants, specialty stores, and boutiques.