Why Infill Real Estate has Great ROI
The US housing market is in full boom – but it is not without challenges. Today, housing inventory, especially in urban areas, is at record-low levels, home prices continue to skyrocket, and the housing supply is struggling to meet rising demand. And, with a market that is more than ever in the hands of sellers, Columbus, Ohio, is no exception.
However, not all real estate investments are created equal, so it has never been more important for developers to research the data, calculate costs, weigh the risks involved, and find a residential infill development project that offers the best return on their investment (ROI).
Investing in urban infill projects in Columbus, Ohio, can be an excellent investment strategy for experienced and first-time developers to reel in maximum ROI at minimum cost. How? Learn more by visiting Rockford Construction.
What Are Urban Infill Lots? Let’s Cover the Basics
Before diving into why investing in infill development is so beneficial for investors, let’s focus on what is an infill lot.
An urban infill lot is a space located between existing buildings. These infill lots are often found in developed and populated urban neighborhoods. There are many possible reasons why these sites have not seen productive use. It might be the result of missed urban development opportunities, environmental contamination, opposition by community organizations, or they might be urban lots left vacant when underused properties were removed.
Vacant lots can come with some significant challenges like design freedom and possible restrictions imposed by the local government. But, their location in highly desirable areas within established neighborhoods makes these lots perfect for new construction and urban infill.
Urban infill development is undeniably a particular investment not suited to all developers. However, it can yield impressive ROI to intelligent investors looking to build new retail and office spaces, single-family homes, or multi-family structures.
Why Does Infill Development Offer a Great ROI?
In a highly competitive housing market, investors need to pinpoint the right investment opportunity, calculate returns and costs, and determine the future profitability of an infill development site.
This is even more important when developing properties such as these in sought-after communities throughout Columbus, Ohio. Here’s how infill development can boost the overall ROI of your investment portfolio and increase your chances of success.
The Location of Infill Lots Makes Them Highly Desirable for Home Buyers
The first reason why urban infill investments offer a higher ROI than other development projects is that these lots are often in highly sought-after locations for townhomes as well as single-family homes and multi-family buildings.
Indeed, infill lots are the existing land between buildings in highly built-up areas such as residential neighborhoods near business districts. They usually offer all daily amenities, easy access to public transportation, and employment opportunities – which are all important features demanded by today’s residential buyers. Urban infill lots are perfect locations for the development of new living spaces.
Infill Lots Make for the Perfect Business Premises Too
Whether you are an investor looking to buy equity in a business development project in Columbus, Ohio, or you are a business owner looking for the perfect site for a new construction venture, urban infill development can offer good ROI.
Thanks to the enviable location of these lots – surrounded by potential customers and near the city’s business center – they can boost the chances of success and profitability of any business. In a highly competitive employment market, it is also important to consider that infill lots are easily accessible by potential employees, making it a clear competitive advantage when looking to attract top talent.
The Initial Cost of Development Is Reduced by Existing Infrastructure
While it is important for investors to estimate the ROI that a development project will yield, understanding the costs involved – and how to reduce them – is just as essential for urban infill investment success.
Infill development and investing in urban infill projects can help investors reduce the capital required in more than one way:
- Thanks to the location of these vacant lots in existing neighborhoods, they are likely to already have the needed infrastructure and access to resources such as sewage, water systems, telephone and cable lines, and power. This is a considerable advantage that can reduce all infrastructure expenses that an investor should otherwise face – which can range from $10,000 to $30,000!
- Infill is also a type of transit-oriented development project that allows residents and employees to move around without a car, which reduces the need to build amenities such as parking lots. In turn, this can reduce the capital cost for parking by 25%, thus optimizing the available space. Infill housing adjacent to businesses encourages retail “foot traffic” and cuts down on the need to create surface lots or dedicated retail parking spaces in the neighborhood.
Infill Lots Are a Green Investment Opportunity
With a greater percentage of property buyers taking into account sustainability in their buying decision-making process, it is important to understand why infill lots are a green investment.
Considered “smart growth projects,” infill development can boost an urban area’s growth while reducing the need to expand environment-impacting infrastructure. Additionally, new studies have found that, compared to projects in undeveloped areas, the impact fees for infill projects were 2 to 10 times lower.
What’s more, is that infill reduces the need for car trips, can revitalize neighborhoods, and cut down the urban area’s carbon footprint. Also, this unique feature of infill development can truly make or break your advertising strategy and marketing campaign.
Infill Developments Help Meet Demand in Highly-Populated Areas
After the pandemic-induced “escape to the country,” many home buyers are now flocking back to build-up communities and cities. However, it is in these locations that housing inventory is at an all-time low.
Multi-family and single-family infill projects offer a high-effective investment to create new affordable housing options and boost an investor’s net profit.
Infill Properties Offer Better Investment Performance
When looking to find an appropriate ROI, investors need to calculate both the risk and the expected financial performance of a development project. And that is exactly what makes urban infill projects so beneficial.
In the long run, infill projects retain much more value than projects in undeveloped or outlying areas, and they are more resistant to crises. For example, during the 2008 housing market collapse, development projects close to the city’s business district remained nearly as valuable and sought-after.
Additionally, research has shown how real estate properties located within walkable areas of the city – such as those built as part of infill development – tend to retain their value over time and offer better returns.
Whether you are looking for your first investment in Columbus, Ohio, or you wish to amplify your portfolio with a high-ROI project, real estate infill development can be an opportunity to seize. Get in touch with our consultants at Rockford Construction to start your urban infill development project, and to understand what returns to expect for your investment.