How to Cash in on the High-Density Housing Trend - 5 Arch Funding

How to Cash in on the High-Density Housing Trend

Posted by Shawn Miller on June 26, 2017

Young families used to dream of moving to a house in the suburbs with a big, fenced-in yard and plenty of room to grow. But the lack of affordable housing in Southern California has prompted many millennials to adjust that dream. In and around Los Angeles and Orange County, developers are turning old, unused lots into high-density, affordable townhomes—and younger buyers are flocking to them.

“The ‘tiny house’ trend in rural areas is a very real thing,” says 5 Arch CIO/CFO Steven Davis. “Likewise, we are seeing more micro-MDUs in dense urban areas. Infill developments outside of city centers address Southern California’s affordable housing crisis. Meanwhile, area investors do not need to venture to Arizona to find homes priced to sell.”

So how can you cash in on the high-density housing trend, maximizing your profits with a fast flip?

It’s Still About Location

Even if the property is small and the homes are smaller, buyers still want the best of everything else in the community. “Infill developments in top school districts—close to shopping, parks, and a walkable downtown area—tend to do well,” says Davis.

It is even better if you can find an area with a strong sense of community, something millennials who are moving away from the city may seek. Fortunately, this is may be easy to find in high-density areas, where neighbors are close.

Make the Rehab Worthwhile

One advantage of less square footage is that you can splurge on amenities without driving the price out of the acceptable range for the region. “Granite countertops, hardwood floors, and up-to-date appliances should be part of any rehab project or new build,” says Davis.

Bonus? Because it is a smaller space, all of these luxuries will cost less than they would in a larger home.

Consider Flipping New Construction

It is no secret that Southern California is quickly running out of affordable land. That is why the high-density housing trend is so hot. Get in on the ground floor by flipping new construction. “You can take a chance on an up-and-coming community, have the homes built, and then find the buyers,” says Davis, noting that the one-year warranty offered on new construction can alleviate stress for both the buyer and the investor.

You may even consider purchasing an abandoned lot in an infill region and then flipping the land to builders. “In Southern California, if the price and the location are right, you can practically count on a fast sale,” says Davis.

Be Ready with the Capital You Need

Of course, the best opportunities are always available to cash buyers. Whether you plan to buy new construction, townhouses that are a few years old, or vacant lots, 5 Arch can give you the funding you need. “Homes in the best areas move fast, and infill developments are no exception,” says Davis. “There is a vast market in Southern California for these smaller homes and the prize goes to investors who can move quickly.”

Homes May Be Small, But Profits Can Be Big…
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