In recent years, the real estate market has seen an uptick in progress after the great recession of 2008. Pending home sales are on a continuous path of improvement, which gives hope that the housing market is going to return to its former state. The cause of this improvement can be found from investors. When investing in local housing, the investors have a measurable and immediate impact on the social good of a geographic region.
One way investors can inject a spike into the housing market is through home appreciation. When investors acquire a piece of land or building with plans to restore it, this starts a process that the surrounding neighborhood can benefit from. Through these renovations, the price of the project increases which, in turn, increases the appreciation rates of any surrounding plots, dwellings, buildings, etc. Essentially, that means that by adding new renovations to an area, the homes in that neighborhood increase in value.
Apart from increasing a neighborhood’s value in homes and buildings, job creation is another benefit. To renovate and flip a house requires jobs in contracting, inspecting, appraisals, electricians, plumbers, and roofers, just to name a few.
Investors today are more concerned with their carbon footprints than investors of the past. Most are able to implement a “green” strategy to maximize energy efficiency. By renovating within this strategy, the negative effects that older homes “contribute” to the environment are mitigated. Some methods that investors utilize are using energy efficient lighting and wiring, insulated window installments, replacing carpet with hardwood floors, and replacing toilets, faucets, and shower heads with low flow version to cut down on water consumption.
Another benefit of local housing investing is revitalizing impoverished communities. To encourage investors to develop low-income communities, the New Markets Tax Credit was set up in 2000. It was created to spur revitalization efforts of low-income and impoverished communities across the country. Essentially, this means that investors will receive a tax credit against federal income taxes for creating Qualified Equity Investments in qualified community development entities.
Investing in local housing can help the surrounding community if done so correctly. It takes a clear understanding of the housing market coupled with a clean set of principles to invest safely and to produce the aforementioned benefits for the community the investing affects.