Are You “Gentri-intuitive?” How Successful Investors Spot Emerging Markets Before Everyone Else

July 1, 2015 By

Real estate success stories are on the rise again and sellers have started hauling in big profits – in many cases at least twice as much as initial purchase values.  The “average” home buyer is cashing out, yet it’s the savvy investor who has the biggest advantage.  

As a real estate and development attorney in Massachusetts, I regularly see real estate fortunes made first-hand, especially now.

Your next big windfall is within reach if you can master one of the most important skills in real estate:  awareness.

Here are the top 5 indicators our clients look for in an emerging neighborhood:

1. Behavior

When a community feels safer, there’s a good chance more people are likely to get involved in the local scene, which means an increase in residential activity. Look for signs that neighbors are beginning to interact with the community.

You’ll see:

  • increased foot and bike traffic
  • more pedestrians with baby carriages
  • farmer’s markets
  • weekend cookouts (open your car window and smell the burgers)
  • community theater (pay attention to anything “artsy” or “organic”)

You may be late in the game when:  bike paths have been constructed in natural areas, the neighborhood is in the path of a marathon, or weekly exercise or kids classes are hosted in the neighborhood park.

Landscape

Look for conflicting landscape characteristics that suggest an emerging neighborhood. New and shiny landmarks will begin to crop up in the middle of a depressed area, which could spell a potential gold mine. Other characteristics may include:

  • a tidy section of town within close proximity to littered streets
  • a green park located next to a vacant structure (i.e. warehouse)
  • freshly painted storefronts adjacent to run-down buildings (with shattered window panes or security bars)
  • new construction surrounded by dilapidation or graffiti
  • traffic improvements
  • parking lot construction
  • art installations on the side of buildings to beautify dilapidated buildings using local areas
  • dog parks

You may be late in the game when: full blocks are newly developed, new parking meters or recycle bins installed on streets, Starbucks or Panera open new doors, or when all the stores look inviting.

Traffic Flow

Observe the type of foot and vehicular traffic even more than the volume itself.  Also pay attention to different times in the day (that were relatively quiet a year before).

You might see:

  • young professionals walking past empty lots during their morning commute
  • a new transit station project in the center of a dilapidated neighborhood
  • young families in close proximity to a diverse group

You may be late in the game when: accommodations for commuters are abundant and already in place.

4. Investment

Real Estate Investors Spot Emerging Neighborhoods

Watch for signs that the community is planning for growth and investing in itself.  It’s all right in front of you:

  • new sidewalk or park construction
  • construction equipment
  • real estate developer signs
  • Main Street revitalization projects
  • Memorial parks
  • incubator offices open for entrepreneurs
  • a new medical center (the real estate industry often sees this as an indication of a community addressing a growing region’s needs)
  • City Hall is being renovated

You may be late in the game when:  a local chamber of commerce hosts a ribbon-cutting ceremony for a new park or an older office building was just refaced to a glass facade.

5. Sentiment

Although real investment development shouldn’t yet be in full bloom, you’ll notice the seeds of change taking root at a soon-to-be prime location. Indicators include:

  • Open storefront doors and windows
  • Excitement about an area
  • when the average “time on the market” becomes extremely short.

You may late in the game when: national restaurant chains and supermarket chains have already opened their doors.

Sensing an uptick in the real estate market takes research, skill and intuition, and there’s always room for error.  Even with awareness, hard work, perseverance, and a little luck are involved too.  Use every asset at your disposal, and surround yourself with a knowledgeable and experienced team, to maximize your chances for success.

Robert Pellegrini is a real estate and development attorney in Massachusetts and advises clients on permitting, zoning, and buyer/seller agreements.

Filed Under: Real Estate Investing

Real Estate Contract Traps & Pitfalls: 5 Ways Home Buyers Can Learn from Indiana Jones

June 26, 2015 By

Looking for a home can be an adventure – but buying one shouldn’t play out like an Indiana Jones movie. If it does, it can take some serious legal maneuvering to rescue a deal that could have stayed as safe as Dr. Jones before he landed in India.

Indiana Jones Real Estate Pitfalls and Traps

The traps and pitfalls that await you in the contract phase could spell out problems including:

  • losing your deposit to the seller
  • losing financing
  • scrambling to find a real estate lawyer in the 11th hour

Excluding snakes or crocodiles, you’re doomed if you ignore the fine print, critical dates, or how you communicate with the seller.

Here are 5 ways you can learn from Indiana Jones, when closing (in) on your prized possession:

1. “X” Marks the Spot

Sign, sign, sign. Your contracts, including the Offer, Purchase and Sale Agreement, and Commitment Letter, should remain as ironclad as the Ark. No matter what, make sure your agreements are in writing and signed by all parties. The seller can surprise the buyer during the final walk-through—when the buyer realizes the seller removed property (chandelier, washer/dryer etc.) that was originally discussed verbally as part of the deal. If it’s not in writing, it’s gone for good.

2. Timing is Everything

There are critical dates involved during the Purchase and Sale process that include home inspection dates, financing and, of course, the closing date. Be sure to “whip” everyone into shape before the ball flattens your deal by agreeing to extend your dates (in the form of a written extension) if necessary – or the whole expedition could be in grave danger.

“You’re gonna get killed chasing after your damn ‘fortune and glory!'”

“Maybe. But not today.”

Indiana Jones

3. Use Caution (with Your Communication)

You can inadvertently give your seller an easy out if you don’t stipulate in writing how both parties plan to communicate. This can come into play when the buyer requests an extension. “I never got the email, letter, fax,” is a common way sellers can make a quick get-away and destroy the entire agreement, leaving you in the dust.

4. Don’t Get Stuck Holding The Bag

Along your journey, you may encounter an appraisal that’s below the sales price, well after you surveyed the area for danger. This means your bank will lend less even though you’ve already committed to the purchase. In this situation, you would need to pay more out of your pocket to compensate for the lowered bank loan. Your contract however, if it’s in writing, can save you. If the agreement states that the seller must work with you to address this issue, your deposit will not be at risk.

5. Make Sure You Have Back-Up

Whether it’s a savvy business partner or real estate lawyer in the background, you’ll wish you had another eye to help you navigate complex issues that can arise. This could be the biggest investment of your life. Make sure you consult a professional, experienced in real estate transactions, before someone replaces your treasure with a bag of sand.

Attorney Rob Pellegrini is a Boston Real Estate Observer contributor and is the former Senior Attorney at Cumberland Farms Inc. and Gulf Oil. He now runs a private practice specializing in Estate Planning, Real Estate, Land Use, and Zoning. Pellegrini enjoys working with clients on real estate matters to ensure the closing and purchase meet the buyer’s expectations and divides his time between offices in Bridgewater, Stoughton, Dedham, Newburyport, and Boston (2015).

Filed Under: Buyer Advice