Gentrification: Making Money Buying in the Hot Neighborhood

Have you ever heard of someone like Salim Bhabhrawala?  He bought a house in the DC market for $165,000 in the early 2000's and now, just about 10 years later has people knocking on his door offering to buy it from him for $1,000,000.  He hasn't sold yet, but he probably should.

How did Salim get so lucky?  He was the beneficiary of a residential housing phenomenon known as gentrification.

In layman's terms gentrification is when yuppies with money discover an older neighborhood that is a bit run down but has solid houses and they start buying those houses and fixing them up (the right way).  Like Salim, they buy the houses for a couple of hundred thousand and when they are done fixing them up they have homes worth a half-million or more.

For those of us who live in the Charlotte, NC think... NoDa (aka North Davidson Avenue near uptown).

Often these homes were built in the early 1900's.  They are still structurally very sound, but they need updating in almost every way you can think of.  A typical developer will take a 1,200 square foot home and by raising the roof (literally) turn it into a 2,100 square foot home worth three or four times what s/he bought it for.

My business partner and I bought this house is a nice up-and-coming neighborhood in Salisbury, NC.  Because the area is still not quite hot, we upgraded it from a 2 bed 1 bath to a 3 bed 2 bath home, but left the granite countertops for the next owner.  We did put in a nice new kitchen, 2 new bathrooms, all new wiring and plumbing, and moved the laundry hookups from the kitchen to the basement. Click on the link http://202heiligave.2seeit.com/ to see more.

http://202heiligave.2seeit.com/

But, if you just go looking for an old home to fix up and hope to make a killing, you may be disappointed. As everyone in real estate knows, the three most important things are 1) location, 2) location and 3) location.

If you buy in the wrong neighborhood, you will end up with a house that is a really gem, set in the snout of a pig of an area.  It won't sell for what you have in it, and after all that expensive fix up, you won't want to rent it out to someone who may punch holes in the walls, or put scorching hot pans on top of that nice polished granite countertop.

So, how can you know if the neighborhood is getting or about to get hot?

The Wall Street Journal recently published an article on just this topic.  They highlighted the story of Salim and tell you the indicators that a neighborhood in about to take off.

http://online.wsj.com/news/articles/SB10001424052702303914304579193923938184500?KEYWORDS=hot+neighborhood

You can use the link to look at the whole article, or just check out the key points I pulled out...

• Check out the nearby neighborhoods.  Are some of them already gentrified, or in the process?  Often times you can get the best deals buying in the path of progress.
• Check out the local retail scene.  Does the neighborhood store sell wine by the gallon, or do they have some upscale offerings.  They won't stock it if it isn't selling.  And if more expensive wines are selling, that is a sign the upscale buyers are already living in the area and starting the gentrification process.
• How sound are the houses?  They likely are neglected, but are they falling down or just abused.  One Brooklyn entrepreneur bought a 5,000 square foot, five story brownstone that had previously been split up into single rooms, occupied mostly by drug users.  But the house was located in an Historic District and was surrounded by other big, beautiful, but neglected homes.  The developer bought the house for $1 million and it is now worth $4 million.
• Look for renovation, construction, and government investments in infrastructure in the area.  Those are legs the neighborhood needs to keep standing and they indicate that banks, government and homeowners see the area as a sound investment.
• Look at the numbers... 
• What is the employment/unemployment in the area and which direction is it headed?
• Is the average home price in the area below the city average and trending up?
• What is the percentage of rentals and which direction is that headed?
• What is the rent rates compared to home prices?  Is it stable?  If the home price is too high relative to rents, you may be looking at a local bubble from speculators.

"Gentrification is back in a big way, with all its opportunity and risk."

Take note that the author of the Wall Street Journal article mentions both opportunity and risk.  You don't have one without the other.  The best way to maximize the opportunity while minimizing the risk is to work with people who know the area and know the business.

If you are looking to take advantage of gentrification opportunities in Cabarrus or Rowan counties, my business partner Bob Yon at New Dream Home Solutions can help (http://newdreamhomesolutions.com/).

If you want to dive into the Mecklenburg County (Charlotte) market, send me an email (Tom@CharlotteWealthPartners.com) and I will put you in contact with folks I know who have their finger on the pulse of the market in various parts of Charlotte.

Tom Sheppard is the author of "Millionaire Liars:  What Real Estate Gurus Won't Tell You (but Tom will), available in paperback and as an ebook.


The Home Finders blog was created by ADB Properties and The Gold Seal Homes Group to provide a resource for people in the greater Charlotte, NC area to find peace of mind through quality, affordable homes. This blog features properties that are currently available to rent or buy from affiliates of The Gold Seal Homes Group (www.GoldSealHomesGroup.com). All affiliates of The Gold Seal Homes Group agree to abide by high ethical standards and certain operating procedures that make it easy for people to do business with all affiliates.

Achieving Greatness - A Guest Column by Marketing Genius Jay Abraham

This is my friend and mentor Jay Abraham.  Jay recently sent me a letter I want to pass on to you.

Tom:

My life has been devoted to REALLY performing at optimal, I like to say at absolute "greatness." I'm not just about developing the greatness within myself, but equally focused on enhancing the greatness that I can stimulate, develop, support, direct, and concentrate in other people -- for themselves and for all the others that THEY impact.

I started recently thinking about it more overtly, clinically and critically, and I realized that there are four "explicit" elements to greatness.

First of all, greatness IS inherent in everybody. We have it in our DNA. I believe we're all pre-programmed for greatness. There's no one I've ever met who REALLY wants to be just average or mediocre. You don't want to be an average "whatever you do" i.e. real estate manager, innkeeper, or entrepreneur.

You also don't want to be mediocre (or average) as a spouse, father, mother, a contributor to your community, to the world, or to society. You want your life to be about something far beyond mediocrity.

If you are inherently programmed to want greatness (and driven to achieve greatness), why then, do so FEW people really realize it, manifest it, and accomplish it in their lifetime? That's the question. My answer is, there are four interesting forces or factors that have basically worked against you. None of them are your fault, you have to understand it. They are surprisingly easy to overcome.

1. The first one is that... no one has ever painted a picture for you of WHAT true greatness really could (and should) look like in all facets of your life, professionally, commercially and personally. No one has ever said, "Here's what being a great mentoring realtor looks like," "Here's what's being a great technology expert looks like," and looks like from MANY different vantage points, not just the abstract (amorphous), macro.

But, rather you need to look at it from a very critically, clinically, and granularly focused basis.

You need someone to show you, "Here's what it looks like in the way you conduct yourself towards your client," "Here's what it looks like in the way you communicate with clients, team members, venders." "Here's what it looks like in the way you execute your actions/activities," "Here's what it looks like in the way you articulate your offer/benefit/proposition," "Here's what it looks like in the way it's received (and perceived) on the other side."

2. The second part: If you don't have a "clear-cut" picture of what you're ascribing/aspiring towards, how in the world can you get there? It's like saying, "I don't know where I am. I don't know if I'm in Los Angeles or New York. I want to go on vacation, but I don't know where I want to go. I don't know if I want to go south or north." If you don't know where you are and you don't know where you're trying to get to, how could you possibly, know the path to take?
3. Thirdly: Most people don't have a clear-cut vision of the path to take for the first reason. They don't know where they're going. If they DO know where they're going, they still don't know how to get there, and no one has really showed them how to stair-step (slowly, safely, progressively) as opposed to trying to be an Olympic pole-vaulter from the get-go.

If you don't know what it looks like, you're limited, restricted, constrained, and impeded. If you KNOW what it looks like, but you don't have a clue what path is going to take you there, it's almost a pyrrhic victory.

If you know what it looks like and you know the path, most people don't have the self-confidence or belief in their own deservedness, ability, capability to really get pursuing it, to walk to the beat of the different drummer. So they stay on the sidelines... intimidated, uncertain, insecure, equivocating, and procrastinating.

4. Finally, if you've got the wherewithal to transcend all three of those levels, factors, forces, meaning:
1. You CAN get clarity on what greatness is supposed to look like at all ranges, realms, facets.
2. You CAN get an idea of the "destiny path" that's going to take you there, the safest, the surest.
3. You HAVE enough faith in yourself to get started.

What frequently happens, then -- even if you get that far IS, normally, you can muster up the courage, self-reliance, commitment, resourcefulness to get started on that path and you have the clarity of the vision where you're going.

However, if the first time gets rugged, or you get detoured, or derailed, or impeded, or frustrated, or embarrassed, normally what happens IS that's the last time you do it.

Think about anything you've ever done differently for the first time in your life, taking up a hobby, taking up a skill, whether it was a foreign language, golf, long-distance running, anything. The first time you ever probably did it, you were terrible, and it was easier to really abandon it than it was to pursue it and go forward.

You immediately default and spring back to status quo. You go back to where you were before, and the reason is that you have no one to believe in you, to support you, to love you enough, admonish you enough, cajole you enough, and inspire you enough.

You need all four of those Elements --- to achieve Greatness. That's my belief. You need someone masterful, to support, direct, develop, course-correct, inspire, encourage, and fuel your progress from mediocre to magnificence. Someone to set you and keep you on all the right paths.

This is NOT a solicitation for a compensated program or seminar. I'm selling nothing whatsoever here. It's merely an explanation of WHY you haven't - YET achieved the greatness that you and your business deserve - and how to make your greatness as an entrepreneur and human being happen - beginning today.

Jay Abraham 

Click this link "I want to be Pre-eminent" if you would like to get a FREE copy of Jay's groundbreaking explanation of "The Strategy of Preeminence".  Or, fill in the form below.

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PS:  If you are looking to buy a home in Rowan County, we have a nice one at a great price.  Learn more here.

Also, if you live in North Carolina, I have opportunities for you to get a nice return on your money.  You can get the security of real estate, the protection of a bank and all without the hassles of tenants, toilets or termites.  Right now I have two opportunities related to houses near Hickory.  If you want to know more, send me an email.  TSheppard@ADBProperties.com, don't forget to mention you heard about it in this blog first. 

Or, if you want to know more about how to make money in real estate without tenants, toilets or termites get three FREE ebooks worth nearly $100 at www.RobTheBankLegally.com.

The Home Finders blog was created by ADB Properties and The Gold Seal Homes Group to provide a resource for people in the greater Charlotte, NC area to find peace of mind through quality, affordable homes. This blog features properties that are currently available to rent or buy from affiliates of The Gold Seal Homes Group (www.GoldSealHomesGroup.com). All affiliates of The Gold Seal Homes Group agree to abide by high ethical standards and certain operating procedures that make it easy for people to do business with all affiliates.

Negative Leadership

I was just looking at a posting in Linked In.  The question someone posed was about the curse of negative leadership.  The person posting the article made the statement, 

"I can never learn from a negative person nor can I work under one. Not only Culture but what about Retention?"

While there is no arguing about the damage a negative boss does to the organization and individuals within that organization, I maintain that if you cannot learn from a negative boss, the problem is your attitude, not the boss.

Having served in the military, I learned to deal with negative bosses because I didn't have the luxury of  picking my bosses. I couldn't quit. I had some positive ones and some negative ones and several who were both under various circumstances. 


The reality is that you can learn from negative bosses and from positive bosses. And, the lessons you learn are not always negative from negative and positive from positive. 

I had one "positive" boss who was so "empowering" that he would never make a decision, even when he was the one who really needed to make the call. I learned from him that when you're the boss, there are some things you cannot delegate. 

I had a negative boss from whom I learned both the power and price to be paid for a "live to work" mentality. 

Of course, the ideal is to have a positive work environment and your relationship with your boss is one of the most important factors in determining that environment. But as we hear time and again, it is not your circumstance that determines your outcomes, it is your attitude.

On an unrelated note... if you know someone who is looking for a nice home in the Salisbury, NC area  consider this 4 bed 2 bath home... http://1030whisperwood.2seeit.com/



The Home Finders blog was created by ADB Properties and The Gold Seal Homes Group to provide a resource for people in the greater Charlotte, NC area to find peace of mind through quality, affordable homes. This blog features properties that are currently available to rent or buy from affiliates of The Gold Seal Homes Group (www.GoldSealHomesGroup.com). All affiliates of The Gold Seal Homes Group agree to abide by high ethical standards and certain operating procedures that make it easy for people to do business with all affiliates.