Residential redevelopment has taken on a whole new meaning since the recovery gained traction just a few short years ago. It’s no longer enough for real estate investors to simply mind their own business on a simple transaction. If for nothing else, their actions have a resounding impact on the local community. With a little ingenuity, however, that impact can benefit both your business and the surrounding economy. How? The answer is simple: ABCD.
Asset-based community development, otherwise known as ABCD, is more or less a plan to initiate and support community-driven development projects. “The appeal of ABCD lies in its premise that communities can drive the development process themselves by identifying and mobilizing existing, but often unrecognized assets, and thereby responding to and creating local economic opportunity,” according to the Asset-Based Community Development Institute. “ABCD builds on the assets that are already found in the community and mobilizes individuals, associations, and institutions to come together to build on their assets — not concentrate on their needs.”
Asset-based community redevelopment essentially highlights an area’s most desirable features and strives to improve them through the efforts of respective community members. Having said that, it’s not hard to see that residential redevelopers and ABCD aren’t mutually exclusive; it’s entirely possible for each to benefit from the other, and vice versa. If ABCD is responsible for, more or less, the gentrification of a region, it’s feasible that residential redevelopers will benefit from increases in property values, and most likely demand. If for nothing else, the more demand facing a neighborhood, the higher the area’s profit potential becomes.
Those residential redevelopers that want to remain true to their title should really evaluate their intentions. While the concept of real estate investing centers around buying property and selling it, residential redevelopers need to understand that their impact extends far beyond that of the typical transaction. As their name suggests, they can have a very beneficial impact on the surrounding community. Asset-based community development allows those already investing in real estate to extend their beneficial impact to the rest of the surrounding area. In implementing a strategy such as ABCD, residential redevelopers can not only make meaningful contributions to the area they serve, but it’s entirely possible for the right projects to contribute to their own bottom line; it’s a win-win for everyone involved.
While relatively new to the real estate investor school of thought, ABCD should have a lasting impact on the housing market as a whole, which begs the question: how can a single residential redeveloper use the theory of asset-based community development to their advantage, while simultaneously buttressing the market around them?
I maintain that real estate is a numbers game, and ABCD — at the very least — places the odds in your favor by increasing the number of people interested in a respective community. But the benefits of ABCD don’t stop there. Savvy residential redevelopers can tailor the features of their community to attract a specific demographic. Regardless of what population you intend to target, ABCD gives real estate professionals the ability to customize the experience they provide to prospective clients.
As a residential redeveloper, it is in your best interest to not only recognize your community’s strengths, but also to use them to your advantage. Take, for example, your average college town; chances are there will be an overwhelming demand for rental housing. With a little ingenuity, in addition to some dependable logistics, you should be able to build upon the one thing that is already attracting residents to your community. In this scenario, Asset—based community development will center around boosting the performance of rental properties. The more attention you can give to the best performing asset in a community, the better returns it will provide. What’s more, those that know about the emphasis being placed on a particular asset will have a distinct advantage over the competition, and there is no reason it can’t be you.
As a residential redeveloper, you need to recognize where communal efforts will be driven and tailor your exit strategy to the project people in your area have already deemed worthy of asset-based community redevelopment. Not surprisingly, some areas will have more distinguishable characteristics worth highlighting; like the college town rental situation I mentioned already. However, ABCD isn’t relegated solely to the obvious. It’s entirely possible that a community has untapped potential in an area few thought to look.
Dig a little deeper and uncover an asset waiting to be leveraged. Again, some areas may be more difficult to identify a distinguishable characteristic worth centering your efforts around, but when you do you could unlock limitless potential. Organize a movement to revitalize a particular area, and proceed to center your exit strategy around it.
Perhaps there is an old park on the outskirts of your town that could benefit from a makeover. Don’t hesitate to organize a community effort to restore it. At the same time, have the foresight to envision the potential impact such a move could have on local real estate. With a little planning, you could take advantage of an opportunity before anyone else even knows there is an opportunity to be had.
It’s time residential redevelopers took their title seriously. Their presence in a community comes with a lot of responsibility. Do your part and help the community with whatever it needs, but don’t be so narrow minded not to foresee the future implications of whatever it is you are working on. It’s entirely possible to help the community and your own business simultaneously.