Monday, April 13, 2009

Brookesmith Heights....What a great investment!

Investing in Real Estate can be tricky, but if done correctly, can be the smartest thing you have ever done in your life. With the stock market being as unstable as it is right now and our 401k's trickling down from an ocean of wealth to a puddle of sorrow, we all need to be looking at different options.

If you are old enough, like me, you can remember when the Houston Heights was a sketchy area and people who owned properties there were selling them left and right. Families would sell loved ones estates because the reputation of the Heights was less than stellar. Boy have times changed, haven't they? With a massive revitalization, loads of civic associations and a neighborhood full of residents who genuinely love to watch this area thrive, the Heights has now become as desirable as West University. I can't even count the number of times I have been in the car with a client who said "Man, if only I hadn't sold my grandfather's bungalow over on Harvard". I just shake my head and think, "yep". Know why? Because that bungalow that was sold on Harvard 10 years ago for about $100K is now worth at least $220K in land value alone (depending on location, of course). And, if it has a decent house with good structural sound on it and original windows, floors, etc. Lord help me, you've got a goldmine.

That brings me to a little gem of an area that is a section of the Heights and hugely ignored. Because it is further northeast and on the less desirable side of Main St., Brookesmith is a neighborhood that is largely un-tapped. However, those in the know are starting to realize what is happening and making smart decisions by buying great investment properties. I can see what happened in Heights Proper (Historic Heights, Woodland Heights, Norhill Heights) just beginning to take place in Brookesmith.

Let's look at the numbers, shall we?
If we compare the lot values only (meaning just value of land without house) in Brookesmith from a few years ago to now, the changes are dramatic. Between 01/01/2005-12/31/2006, a 5000 square foot lot would be priced anywhere from $39,900-$105,000. The average selling price of a lot during this time period was about $67,842 with an average cost per square foot of $13.57. Pretty inexpensive, huh?

If you look at the data from 01/01/2008-today based on "sold" listings that were also listed as lot value only, the price has increased dramatically. The average selling price of a 5000 square foot lot in this period of time was $113,705 compared to the previous average of $67,842 and the average cost per square foot increased to $22.74 from a previous average of $14.57. Incredible isn't it? What does this mean to you? Well, the Houston Real Estate Market saw the largest increase in average sales prices per home and number of sales right smack in the middle of 2005-2008. The supposed "decline" started right before the strike of hurricane Ike in 2008. If you look at the data, during a major boom in the industry, when we were seeing 50% increases year over year, the average cost of a lot in Brookesmith was $45,863 less than it is currently. That is an increase of about 68% in the value of those lots. That is crazy amazing.

If you were to buy a lot in Brookesmith today, the cost would be 68% more than it was in '05-'06. However, this neighborhood is still not nearly at it's saturation point. In my OPINION, this is a great area to invest in. Should you move across Main and into Norhill or Woodland Heights, you are looking at paying about $50/sq ft for just the land as opposed to $22.47 for the same size lot in Brookesmith.

Now, let's look at actual homes, not just lots in Brookesmith. If we take the same years (2005-2006) and compare them to current numbers (2008-2009), this is what we end up with: During '05-'06, homes ranged from $37,500-$319,000 for an average cost per square foot of the building (not the lot) at $125.90. Obviously, the lower end of the spectrum were homes that probably needed some work and the higher end were homes built/renovated by the smartypants who had already seen this was a smart community to invest in. The average sales price of homes in '05-'06 was $149,006. How do you think the current listings in this market area compare? The average list price of a home (not lot) in this area is about $270,692 with an average of $141.43 per square foot. That is an 82% increase between what sold 3-4 years ago and what is listed today. How can you not think about investing here? Where else would you get that kind of return on your investment? The stock market? No. Savings account? No. CD's? No.

There are still so many lots with tear-downs, empty lots, homes that could use some tlc and renovated homes-all for sale in Brookesmith. If I was you and was looking to make a smart investment, I'd grab my Realtor (preferably me) and get there asap. Don't worry about some of the area looking a bit drabby. Remember, the Heights didn't look too great 10-15 years ago either. Just think, if you bought a home that was liveable, touched it up and rented it out at cost or a little above, you could have a home paid for (all by renters) in about 30 years. You wouldn't use any of your own money and your retirement will be a free home in a very nice area.

Now, I think that's a great deal.

Contact me if you want to make a smart decision and buy in this area:
Danelle Reed, Realtor
Boulevard Realty

1545 Heights Blvd.
Houston, TX 77008
danelle@houstonblogger.com

2 comments:

  1. You really know your stuff. I wish I had the cojones to do this!

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  2. Thanks! You do, you just happened to have purchased a new home about 4-5 mos ago and just had a child. I would say that I'd probably wait a minute or two to breathe as well...

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