A redevelopment area may be defined as any of the following:
- A site with existing buildings where infill housing and/or new buildings, whether residential or commercial, are expected to increase density
- Previously occupied vacant sites where new construction will take place
- An area where existing buildings will be demolished and replaced with new ones
- Previous industrial yards to be cleared of toxic wastes or contaminants, and used as sites for new construction
- A suburban retrofit, where residential lots or vacant buildings will be re-used to improve the area’s walkability
- Areas of a “shrinking city” slated for revitalization through better land use
- A rural area that’s being populated to become a denser residential area
Benefits of buying a home in an area slated for redevelopment
There are many advantages to buying a home in an area slated for redevelopment.
- You can expect the value of the property to rise once the redevelopment is in full swing or is completed. Buying a home in its pre-redevelopment price means you can realize substantial gains in the future.
- A redevelopment area offers many opportunities for investments. Often, local governments offer properties for sale without bidding, as long as the developer’s redevelopment plan falls within given guidelines. For example, you can buy an existing warehouse and redevelop it into a multi-family property. Or you can buy a vacant lot and build an apartment on it.
- In addition to this, the local government may also offer other incentives, such as tax increment financing.
- In redevelopment areas where new housing units will be built, you can buy a rental property at attractive prices. As the objective of a redevelopment is to increase the area’s density and to revitalize activity, there’s an excellent chance that rental properties will be in high demand once the redevelopment takes place.
- You can obtain excellent financing terms for a home. In many redevelopment areas, the local government encourages the purchase of newly constructed homes through the “Second Mortgage” program. Typically, this program allows homebuyers to finance around 70% of the home’s cost through a regular mortgage, such as a conventional or FHA loan. They can then finance the remaining 30% through loans from the city or town government at below-market terms.
- The United States Department of Agriculture also offers loans to homebuyers in identified rural areas around the country. The terms of USDA loans include no down payment, interest rates lower than FHA loan rates, and possible financing of closing costs. The objective of these loans is to entice homebuyers into buying a property and moving into the identified rural areas.
Buying in a redevelopment area often means you will be getting a newly constructed home instead of a previously owned one. If you’re buying a vacant lot, you also get the chance to build your dream home from the ground up.
A newly built home offers a number of benefits:
- It gives you greater flexibility for customization.
- It is generally maintenance free for the first 5 years
- You typically get a 5-year warranty from the builder.
- It incorporates the latest safety and energy-savings standards.
For more information on redevelopment areas in San Diego, get in touch with me today.