Why you want to buy in a Hipster Area & Find the next Brooklyn or Silverlake

[Matt R.]

I was reading an older post from 2013 as I do. I am not sure how many posts I have read but I feel like I have a BA in BP at this point. In one older post it talked about some new hipster areas and there were some opinions as why not to buy in them - which I thought was flat out silly advice for investors. I wanted to touch base on why you might consider Hipster areas vs non Hipster. These areas exist in nearly every major city.

This seems obvious to me as hipster areas have the highest appreciation and rent growth. Why? Location and demand. Vacancy rates are virtually zero. I know of one apartment in a longtime hipster area that has had 3 tenants since the mid 1950s. Talked about low turnover. Vacancies and turnovers are cash flow killers. Hipster areas can take that factor off the table for decades apparently.

Now getting back to appreciation and rent growth. Let me go over some basics. 

One good reason for hipsters is forced appreciation. This is self explanatory. You can look at some examples on BP where a redo in these areas brings in hundreds of thousands of equity and doubles rent in months. 

The new Airbnb factor. Yes it is more work but in some areas you can triple or more returns with this move. For example in Studio City, you can rent your house for $4000 or VRBO for get this.....$10,000+ a month. See Mashvisor.  Actually, they reported 17k a month but I will stop at 5 figures. You have more options in hipster areas.

Let's consider a straight up buy and hold. If that hipster area has rent growth and appreciation built in it could have returns in the hundreds of thousands in as little as 10 years. Check the calcualtions for 3% rent growth and 5% appreciation. If you get in the next Brooklyn or Silverlake area you will be stoked.

Let's say that hipster property is 320k and rents $2200 today, add in the above rates and in 10 years you gain $290k equity. Cash flow would be in the $800 per mo arena. Do yourself a flavor flav and get a hipster property today. It just might be the best investment you could ever make. Why? Equity gains, rent gains, forced appreciation, more options, easy to rent and easy to exit. (I know some say you can't do anything with equity, this is absurd)

Agree or disagree - thoughts?