Urban Real Estate Development: Understanding & Profiting From This Trend
We are clearly in the middle of a massive push back to urban living, sustainable design, and gentrification of old areas.
I think this is an incredibly wholesome trend. Fix the old, instead of just pushing past it and throwing up another generic neighborhood on the outskirts of town.
I live and invest in downtown San Antonio and getting to be apart of the growth and change happening here has been one of the most rewarding part of my business.
If you’re thinking about investing, developing, or being apart of the growth and change in your downtown here are a few things you must consider:
1. The Homes Are In Terrible Shape!
When I first started investing in real estate I was purchasing, rehabbing and selling the home or “flipping” it. I’ve done dozens of these projects, and one of the biggest difference from flipping in suburban v. urban areas is how great the dilapidation is!
How bad could it be you might ask?? Check out this transformation on one of the worst homes I ever purchased (it was on the city demolition list): House Flipping Secrets Revealed
You will have to fix every part of the home! Start with the foundation and just work your way up. Expect to spend tens of thousands (if not over 6 figures) on these rehabs.
2. Politics, Politics, Politics!
Sad, but true. In areas that are receiving a lot of attention and growth everyone will be looking at EVERY project going on. From nosey neighborhoods, to code compliance officers, to city officials. These aren’t projects that can benefit from flying under the radar.
I’ve found it’s much easier to get way out ahead of this potential problem and have as many meetings as possible on the front end. Try and get as many people involved and invested in the success of your project as possible.
Be prepared for neighborhood HOA meetings, city hearings, and everyone wanting to give you their two cents on what you should build or rehab.
3. Historic Districts (and more politics)
Many downtown areas will have neighborhoods that have been designated historic districts.
Basically this means you’ll have a whole different city department and team of people looking at and giving you feedback on what you can and can’t do. In some cities, if you don’t follow these guidelines they can shut down your project. (Yes, I’ve had this happen to me!)
This will also usually require you go to hearings to get approval on all exterior changes. This can dramatically increase the time it takes to get your project completed. Be sure to factor this in on the front side!
4. Rehab the Old or Build New?
Another exciting part of downtown development is the mix of housing product you’ll see. Many times, large percentages of the original houses in an area have been demolished so there’s room for new infill product.
This is one of my favorite parts of infill development and something my business is doing more of.
I’d recommend you find a profitable niche and stick to perfecting it over and over again.
Currently I’m transitioning my business from rehabbing old homes to building infill neighborhoods of 5–15 homes each. These are insanely profitable!
I’m able to capitalize on needed density, construct new, beautiful homes, and once I find a piece of land do multiple doors on it instead of constantly shopping for the next project.
Investing and developing real estate in an urban area isn’t always easy, but being apart of changing a city, building cool urban homes, and running a profitable business is extremely rewarding!
If you want to learn the 5 Things I Wish I Had Thought About Before I Started Investing click here!
You can also find me on pretty much everywhere @chrisfgill
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