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The Cons of Buying a Home in Up-and-Coming Areas

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The Cons of Buying a Home in Up-and-Coming Areas
4 min. read

Image: watchara panyajun / Shutterstock.com

When buying a home, you may find yourself drawn away from the pricey, top-rated neighborhoods, and looking into up-and-coming areas instead. With both lower house prices and the investment opportunity, such areas are certainly attractive. Yet before you decide to buy a home in up-and-coming areas, there are some drawbacks that are worth considering.

It’s a Risky Move

Spotting an up-and-coming neighborhood is not an exact science, and unless you’re a real estate investor flipping properties for a living, you might find yourself out of your depth. Moreover, assessing the property value is not as easy as running comps and finding the median figures, so you might have to resort to the expertise of a real estate agent for the purchase. Then there is also the problem of hidden costs. Some houses in up-and-coming areas can be run down, old, or in need of dire repairs, so what seems like a bargain when you first buy it might in fact cost more in renovation and rehabilitation.

The Long Game Might Not Pay Off

Some areas may take up to five, even ten years to transform from up-and-coming to established and sought after neighborhoods. There’s also the risk that they may not deliver on their promise for growth. As such, you can find yourself stuck with an investment on which you can’t make the return you were hoping for. It can also be tempting to buy the worst house in the neighborhood and hope that it will be caught in the rising tide of neighborhood property value. However, if your area experienced a false start and never picked up on the trend, or worse, depreciated below market value over time, then you’re left with a house or a plot of land that you will struggle to find buyers for.

Neighboring Houses Might Damage Your Curb Appeal

Let’s face it, some houses in up-and-coming areas are not always a sight to behold. Even if you buy a vacant lot and build a stylish home on it, if your property is wedged between a dilapidated old house and a long-abandoned convenience store, it will significantly detract from its curb appeal. This can be very problematic if you’re looking to sell your house later on, and can even put off potential tenants. You can, of course, bank on the area picking up fast enough that neighboring houses will be bought and renovated accordingly, but it’s a waiting game that you may find yourself unable to play.

Not the Best Choice for Families

Some up-and-coming areas tend to have higher crime rates than established neighborhoods. Also, the school districts that the area you’re looking to buy into may not be the best. Your children’s education may be negatively impacted due to lack of local funding, and while you can always opt for private schools, this is a cost that could mount up to negate the savings you should have made by buying a home in a cheaper neighborhood in the first place.

Lack of Infrastructure and Amenities

Because up-and-coming areas are, well, up-and-coming, they may be lacking when it comes to amenities such as shops, grocery stores, healthcare facilities, and even bars and restaurants. You may find it difficult to get the products and amenities you’re used to and may find yourself driving out to other neighborhoods for your basics. Commuting to work is another point to consider, as up-and-coming areas may not have the same road infrastructure as more established areas, or might not even be on a public transport route. This will increase your non-housing costs in the long run, as well as take up your spare time.

You Might Have Missed the Wave

Keeping up with market trends is time-consuming and requires a thorough understanding of the industry. If you don’t do your research well enough, you may find yourself too late to the party, and notice that the prices for both land and houses in up-and-coming areas have either grown to match the ones in established neighborhoods, or even stagnated, making the prospect of reselling your home for more than you paid for it less feasible than you initially thought.

As with any purchase, make sure that you do your due diligence before buying a home in an up-and-coming area. Hidden costs and the possibility of not making a return on your investment are worth keeping in mind, just like the possible changes to your lifestyle. There are, of course, perks to buying a home in such areas, so if you haven’t been put off by the disadvantages, take a moment to read about the advantages of an up-and-coming area.

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