How To Help Your Clients Pick The Right Neighbourhood

How well do you know the neighbourhoods in which you ply your trade?

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There’s a big irony that goes with up-and-coming neighbourhoods and in a city with many neighbourhoods, Toronto realtor John Pasalis has seen it time and time again.

“There’s a huge emphasis on neighbourhoods,” says the president of Realosophy Realty, “but what I find is I get a lot of buyers interested in up- and- coming neighbourhoods until you show it to them. A lot of times, they’re thinking cool, young, and hip and then they see it. ”

Up-and-comers or those neighbourhoods on the cusp of being the next hot real estate market often start out as ugly, rundown districts bereft of the badges of gentrification such as young families and thriving commercial activity. Some are former industrial areas. The homeless or people living on the fringe reside there.  Others are just old, outdated and untended neighborhoods that could use an injection of charm and vitality.

Six years ago, that was what clients thought of about Leslieville, Toronto’s  east-end neighbourhood now known for vintage furniture shops, film studios and cafes. The then-derelict neighbourhood needed more than a little TLC. Today, Leslieville real estate prices have reached those of Riverdale and the Beaches.

At about the same time, Toronto realtor Steve Arruda began suggesting his clients look to Starbucks as a barometer for a neighbourhood’s upward evolution. Because the coffee giant does its research and has a good track record, he encouraged clients to consider investing in neighbourhoods in which a Starbucks was soon to open or had just opened.

“It’s the latte factor,” says Arruda, who owns Urbanopolis.com, a full-service realtor affiliated with Century 21. “If you see a Starbucks opening, it’s a catalyst for something happening soon. Starbucks don’t open at Jane and Finch. They open in neighbourhoods that are on the verge of something trendy happening.”

The benefit to either moving into or investing in a neighbourhood on the rise is that if you get in early enough there’s money, sometimes substantial money, to be made.

Those who are drawn to emerging neighbourhoods tend to be more creative and artistic types, says Pasalis. These people are often on a restricted budget and are trying to get into a neighbourhood so that they can put their stamp on it.

“The people who buy very early have the most to gain,” he says. “Neighbourhoods don’t appreciate at the same rate as across the whole city. Up-and-coming neighbourhoods typically double the appreciation rate of the city as a whole. So if a city house is appreciating at five per cent, the up and coming would be 10 to 12 per cent.”

So how do you determine the gold mines from the duds? The key, says Pasalis, is doing your homework and knowing what signs to look for. Here are his top three tips:

The first step is to pick a neighbourhood that will gentrify in five to eight years. To do that, look for the early signs of improvement such as people moving into the side streets, fixing up their homes, and adding curb appeal.  Once that happens, it’s often followed by the neighbourhood’s commercial district, where you’ll see lively looking cafes and shops starting to open.

Established neighbourhoods that have already gone through gentrification often bound emerging neighbourhoods, he says. In the case of Leslieville, Riverdale, the Danforth and the Beaches, all well-established areas, flank the neighbourhood.

The second pointer Pasalis offers is that the houses in the neighbourhood must have some redeeming features. Curb appeal is critical. Victorian era homes are a good example of this. Their charm will appeal to younger buyers who often fuel the improvements in an emerging neighbourhood.

“The types of neighbourhoods that don’t appeal are older rundown houses that are completely different in style from one to the next,” says Pasalis. “That’s where one home is built in the forties and one in the eighties and they’re not in very good condition, maybe the aluminum siding is falling off.  Even if an old Victorian is rundown, you can see the potential, whereas in a neighbourhood where all the houses are rundown, it’s less likely that that neighbourhood will change very soon.”

The third factor in trying to determine a neighbourhood ripe for improvement is to keep an eye on urban areas near main arteries that are close to transit.

Realosophy’s website (www.realosophy.com) offers dozens of very useful and free GTA neighbourhood profiles with a breakdown on schools, house pricing, restaurants and shops, how walkable a neighbourhood is, where the nearest Starbuck’s is and demographics on everything from average household income and languages spoken to the number of families with and without kids.

www.hoodreports.com offers similar information for real estate professionals willing to pay $299 for a one-year license. The fee means you can access information that helps define a neighbourhood based on such demographics as crime rates, schools, EQAO test results, ethnicities, closest transit, population density of the neighbourhood, the marital status of its residents, median incomes, types of dwellings and the age distribution of its population.

“One of the ROIs we demonstrated is that the time you spend looking for information requires lots of energy and effort,” says website co-owner Amit Garthani.“To do that for each client is a lot of work.”

Garthani and his partner Ovi Comes started Hood Reports in February, 2010.

What realtor Glenn Perdue,who works for Remax Realty Specialists in Mississauga, likes about www.hoodreports.com is that it breaks down all sorts of statistical information based on the address he enters into the software. “If a client wants information on a specific house, I can pull up local schools and crime stats. A lot of people will ask if there are a lot of robberies in area. This shows it up front. It’s helpful and inexpensive.”

Perdue says the program is easy to use and the information can be emailed to clients even before they’re taken on a showing.

Information like this can fulfill consumers’ growing need to be well informed and educated before making a decision to buy. Once a client is armed with the report, their decision to buy or not to buy is generally reinforced.

“The(se types of reports) reports (don’t) scare people away from purchasing a specific home. I think the more information the public has, though, the better position they’re in to make decisions.”

Gary Singh, a sale rep at Kingsbury, says many of his clients are interested in learning about a neighbourhood’s schools. Their second concern, though, seems to centre on what ethnicities comprise the neighbourhood in which they are looking.

What information do you collect when researching a neighbourhood? What do you find your clients are asking about today that they didn’t seem too concerned with a few years ago? What do you look for in a neighbourhood that is emerging in popularity? And what tools have you used to get this information to your clients?

PropertyWire.Ca did not recieve any payment for this story.