Buying a home soon? Choosing your next neighborhood strategically could not only save you $40,000 off the bat, but your home may actually appreciate at a higher rate than comparable homes.
When choosing which neighborhoods you may want to buy in, instead of focusing on what the hippest spots are right now, figure out which neighborhoods are up and coming. In Madison, buying a home in the *already* super hot neighborhood can cost you $40,000 more than a similar home in the up and coming neighborhood across the street.
So how do you know which neighborhood is the next rising star, and what should you remember as you shop for your next home?
Start by figuring out why these neighborhoods are gaining popularity- is it because the market is so hot that it’s the only place to buy an affordable house? If that’s the only reason that people are buying there, you may want to reconsider.
If the neighborhood is gaining popularity because there is promise of new, forward thinking community development or a revitalization project, you may be onto something.
By buying a home in a neighborhood that isn’t already the most coveted (but shows promise) you may have more opportunities to shape the neighborhood as it evolves plus you’ll likely see bigger returns on your investment.
Think about it stock terms: if you bought shares of Google at its initial public offering (IPO), you would have paid $85 a share. Today that stock is selling at $778 a share, so had you invested $1,445 to purchase 17 shares of Google at it’s IPO, your investment today would be worth $13,226; that’s an ROI (return on investment) of 800%.
While you cannot expect this kind of ROI in real estate, I’m simply using it as an example since it’s familiar and easy to grasp. You get the point though, don’t you? It pays to get in on a good thing early.
Of course, this strategy isn’t for everyone.
Sure, buying a home is an investment, but your home’s location brings with it a certain lifestyle that may be just as important (if not moreso) to you. If you don’t want to wait for the amenities that make those “rockstar neighborhoods” so desirable to make their way to you, well, that’s a pretty valid reason to spend the extra dough to be in your favorite neighborhood. There is, afterall, a great reason why those neighborhoods are more expensive- people that live there don’t often leave, and people that want to live there are lining up to get in.
If you’ve enjoyed this post and want to learn how to buy and renovate your next home while essentially getting a $30,000+ “thank you” gift from your municipality, subscribe to our blog and stay tuned. Likewise, if you have your own secret ways to save money when buying your next home, we’d love to hear about them!