“Nice” neighborhoods usually translate into being pretty, charming, secure, oftentimes historic, convenient and/or upscale. But “nice” sometimes comes with overzealous neighbors, a slew of regulations and a general ambiance of “no, not interested.”
Here are several watchwords to look for when your clients are looking to buy to own and/or buy to rent in a really “nice neighborhood”:
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- NIMBYism – The old (N)ot (I)n (M)y (B)ack (Y)ard neighborhood vibe has the potential to cripple investment potential for both owner-occupied and rental properties. NIMBYism neighborhoods and neighbors tend to like things “just the way they’ve always been” with no changes (even for the better in the case of some crumbling structure) and no deviations from neighborhood norms. Even if zoning regulations are in your favor, a NIMBYism atmosphere has the potential to block your client’s efforts every and any way possible.
- Historic Designations – Properties with historic designations specific to their neighborhood, municipality, locale and/or state are governed by rules about what can and cannot be changed or updated. Often such properties are governed by multiple zoning and preservation standards/bylaws. Even the interiors of historic properties can be afflicted with dysfunctional plumbing or insulation/ventilation due to withheld approvals from conservation or historical commissions. Often, historically designated properties are hamstrung by having to hire commission-approved architects and engineers…particularly when such professionals are not readily available.
- Rental Restrictions – Fluency in local, city, state and HOA rules about short- and long-term rentals is essential when buying both owner-occupied and rental properties. For owner-occupied properties, who knows when your clients may decide to rent out any or all of their initially owner-occupied property? Some single-family and/or rental property may have limitations on renting such as a one-year waiting period before renting out the property during which time the property must be the owner’s primary residence. Or perhaps some neighborhood has a no short-term rental policy. Or perhaps a building has a rule that only one rental per property per year.
- Permit Parking Only – Does the property come with one parking space per residence or one parking space per bedroom? Does the property have parking for guests of renters or does that guest have to drive around the neighborhood endlessly to find a “legal” parking spot before your guest can come into your rental?
- Homeowners’ Associations Are Friendlier to Owners than Renters _ HOAs oftentimes have decision-making powers over who can and cannot rent your property. Absolutely check out online reviews to determine whether or not there have been complaints from former owners/renters.
- Slow Inspection, Permitting and Approval Turnarounds – Usually, cities have two-week turnarounds for inspections permitting and approvals. If the city in which your client’s new neighborhood lives has longer turnaround times, your client will have to adjust his/her renovation/improvements schedule. Your client may also have to adjust his/her timeframe concerning the usability of that property for her/his own personal or rental purposes.
- Properties on Vacation and/or Pedestrian Pathways – Properties in cities, beach resorts, ski towns and/or rural areas that are on or near “walk-up” public pathways or attractions will have a lot of people traipsing around and/or through your client’s property. There is nothing one can do about this.
- Noise – Is the property near a freeway, train tracks, an airport, a main thoroughfare, a cluster of hip bars and/or restaurants? If yes, double check on the neighborhood’s designated closing and quiet times.
Thanks to Millionacres of The Motley Fool’s Lena Katz for source data.