Forget buying the cheapest house on the best street - a real estate exec says there's a smarter move to make
- An old real-estate adage is one you should forget: "Buy the worst house in the best neighborhood."
- Scott Durkin, president and CEO of real-estate brokerage Douglas Elliman, said in an interview with Mansion Global that it's better to buy outside of the best neighborhood because "it will eventually spread out."
- There are several ways to spot an up-and-coming neighborhood: Keep an eye out for new businesses and restaurants, where people congregate, and an increase in renovations.
One well-known real-estate adage is one you should forget: "Buy the worst house in the best neighborhood."
Instead, it's all about having an eye for the nearby up-and-coming area or next hot spot, according to Scott Durkin, president and COO of real-estate brokerage Douglas Elliman."They used to say buy the cheapest apartment in the most expensive building, but it's better to buy slightly outside if you have to and can't afford to be in the area," Durkin said in an interview with Mansion Global when speaking about the best area for investing in luxury properties. "It will eventually spread out."
He added: "You always want to listen to your contemporaries, and the people you spend time with. People love to talk about real estate, and you can get a sense of where things are going.
"Keep an eye out to where people congregate, where the best restaurants are, things like that," he said.
But that's not the only way to spot an up-and-coming neighborhood.
An influx of retail stores and businesses, like a co-working space, an organic grocery store, or small boutiques, can be a sign of an emerging or gentrifying area, as can an increase in construction trucks in the street signaling renovations, according to a Trulia article syndicated on Business Insider.Proximity to the subway or bus lines and neighborhoods characterized by a certain architectural style also signal a potential for revitalization. You can also do a little more research and ask your agent which areas are seeing a decline in the number of days houses or apartments are spending on the market - it could be a sign that a location is picking up.
When it comes down to buying a property in the surrounding neighborhood, avoid overpaying for a place that won't have high resale value - a standard homebuyer pitfall, Robert Gladstone, CEO of Madison Equities, previously told Business Insider.
He advised against paying 30% to 40% more than all of your new neighbors for a similar property - instead, buy a place with longevity that will increase in value over time.