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American cities are considered living things. They’re made up of organic neighborhoods that provide built-in community, relationships, and loyalty to a place called “home”.

But over time, neighborhoods can show their age and blight can set in. Absentee landlords, weedy lots and empty buildings create what’s called the “broken window” syndrome—neglected areas become magnets for crime and poverty, leading to a downward spiral in property values and quality of life.

Thanks to real estate investors, however, there is a renaissance in America’s cities and neighborhoods. From long term investors to fix-and-flippers, they are transforming outdated neighborhoods and homes, improving property values, and increasing the housing supply.

Real Estate Investors are Invigorating Cities

American cities are considered living things. They’re made up of organic neighborhoods that provide built-in community, relationships, and loyalty to a place called “home.”

But over time, neighborhoods can show their age and blight can set in. Absentee landlords, weedy lots and empty buildings create what’s called the “broken window” syndrome—neglected areas become magnets for crime and poverty, leading to a downward spiral in property values and quality of life.

Thanks to real estate investors, however, there is a renaissance in America’s cities and neighborhoods. From long term investors to fix-and-flippers, they are transforming outdated neighborhoods and homes, improving property values, and increasing the housing supply.

Real Estate Investors are Invigorating Cities

House flipping is on the rise and is raising the standard of living in America’s cities. The Huffington Post notes that 207,088 homes and condos were flipped in the U.S. in 2017, the most since 2006.

The large stockpile of older homes in America’s cities is a bonanza for house-flippers. According to the Wall Street Journal,  the median age of a flipped home is now 39,  the oldest it has ever been. Flipped homes are about 10 years older, on average, than they were in 2006. Today’s fix-and-flippers tend to be experts at buying older homes in need of an overhaul. They market to buyers who want a move-in-ready home. Thankfully, there are real estate loans to fuel this drive toward improving the housing stock.

Better housing greatly enhances the lives of city residents, who make up 75 percent of America’s population. Millennials—the next big wave in home buyers—are drawn to the around-the-clock excitement of city life. Revitalization projects are creating community gardens and playgrounds where there were once trash-strewn lots. Developers are building pedestrian-friendly mixed-use developments with 24-hour “live-work-play” amenities.

For city governments, real estate investors are unsung heroes. Investment infuses a city with economic benefits. Without this lifeblood, cities suffer on many levels. A recent study by the city of Philadelphia found that abandoned inner-city homes took a huge financial toll:

  • $3.6 billion in lost household wealth due to blight
  • More than $20 million in extra city maintenance costs each year
  • At least $2 million in uncollected property taxes each year, from 17,000 vacant parcels.

Because of investment, including hard money loans backed by capital dependability, these conditions are changing across the country. Here are a few examples of booming inner cities in California alone:

  • The Mission Bay neighborhood in San Francisco transformed an old rail yard into an upscale housing and technology hub.
  • San Jose is reviving the western edge of downtown with many projects, including 5 million square feet of office space, 2600 residential units, 900 hotel rooms and more than 400,000 square feet of retail space. Some housing is designated for lower-income residents, and the area is laced with beautifully re-designed bike and walking paths.
  • Downtown L.A. rid itself of blight and embraced economic promise with LA Live, a massive entertainment complex with housing and hotels. The downtown area used to be dark and deserted, it’s now enlivened by inner-city residents who enjoy dining and nightlife.

Such projects bring cities increased property tax revenue, allowing them to repair infrastructure and invest in exciting new economic projects. But in the end, they mainly benefit the people who live there. Economic investment is the seed of a thriving neighborhood:

  • Renovated homes attract homeowners who maintain their homes and build relationships with neighbors. This creates a sense of community.
  • When a neighborhood gets a face-lift, it raises property values, driving prosperity. Residents enjoy new shops and services in an upward cycle.
  • Better living conditions can be dramatic for homeowners. Construction loans bring relief from problems like bad foundations, leaky roofs or a lack of heat or air conditioning. Bridge financing that allows an investor to buy a home can help fix broken flooring, bad plumbing, and withered landscaping.

An expanded floor plan can help people realize their dreams: a new nursery, or a backyard patio for entertaining family and friends. This is true at all stages of life. For example, private loans used for upgrading senior rental apartment buildings, where there was once a dilapidated structure.

Along the way, these changes add value to help build a nest egg for homeowners. In the end, real estate investment is a long-term partnership in which everyone—lender or investor, city or homeowner—benefits.