Stereotypes are like old habits, they die hard. It didn’t come as a surprise, then, that my old man was up in arms during a recent family gathering when my niece mentioned that she was moving to Harlem. It took a lot of explaining from the Millennials at the table to make Pops understand that Harlem isn’t what it used to be.
As it turns out, many of my niece’s friends had already made the move north of Central Park and were loving their new community. It got me thinking—if these twenty-somethings were making the move to Harlem, are other Manhattanites too? Should I seriously consider investing in Harlem real estate in the year ahead? I did a little digging and here’s what I found.
The Harlem Real Estate Investment Property Renaissance
The facts and figures are pointing to another Harlem real estate Renaissance. Harlem remains Manhattan’s most undervalued neighborhood but prices are on the rise. Indeed, the average price per square foot for townhouses has shot up by 171% since 2009 and the neighborhood also boasts a 15% average growth rate. At this rate, Harlem prices could catch up with Manhattan averages as soon as 2028. It also appears that the retail sector is already taking notice, led by a much-hyped Whole Foods that is set to open next year. As the middle class looks toward Harlem to escape Manhattan’s crazy house prices and retail outlets continue to move into the area, demand in Harlem is poised for growth.
When I analyze neighborhoods for investment opportunities, I look at a number of different factors. From my point of view, Harlem’s potential looks very promising in three of these factors. Here’s how I see it:
- Rental income potential. When I look at the stats, I see huge potential for rental income in Harlem. Despite remaining the least expensive Manhattan neighborhood, rental prices have shown a steady year-over-year increase of nearly 5%. As more of the middle-class and higher-end retail outlets move into the area, rental rates are likely to increase even more. This is great news for buy-and-hold investors.
- Growing sales prices. A steady increase in asking prices is always a good sign that a neighborhood is ripe for investment. It also gives you greater flexibility with the exit strategy if you decided that buy-and-holds are not for you.
- Increasing demand. Unaffordable rents across the rest of Manhattan are increasingly driving the middle-class towards Harlem, which, in turn, is becoming much more inviting thanks to a blossoming retail sector and greater multiculturalism in general. In other words, my niece isn’t the only one packing her bags.
Even just two of these three factors are enough to get me excited about a neighborhood, so you can imagine how I feel about Harlem. There’s one problem I can’t look past, however. With rentals currently comprising such a large percentage of the housing stock, getting a foot on the ladder could prove difficult. Lucky for me, I have a trick up my sleeve.
Gaining an Investment Foothold in Harlem
With the low number of resident-owned homes, many investors could struggle to find the right opportunities in Harlem. Thankfully, I don’t see it being a problem for me. As an independently owned and operated HomeVestors® franchise owner, I’m able to leverage the nationally-recognized “We Buy Ugly Houses®” brand and marketing campaigns to promote my business. The upshot is that homeowners who are ready to sell come to me. In the coming year, I’m confident about finding suitable investment opportunities that offer the best potential returns.
If you’re thinking of investing in Harlem real estate, consider giving HomeVestors® a call to find out what the brand can do for your business too.
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