Whether you plan to flip a home or rent it out, you might want to pay attention to which grocery stores are near a potential investment. Research shows properties near grocery stores can yield a greater ROI.
If you’re investing in a home, it’s important to consider more than just its internal features and curb appeal. Neighborhood amenities also influence demand for homes, which in turn drives value. If you pay attention to existing amenities as well as future community plans when selecting an investment opportunity, you may get a higher return on your investment.
Data from ATTOM Data Solutions show which popular grocery store chains have the greatest impact on home appreciation, home selling ROI, and gross flipping ROI for investors. ATTOM is a company that collects multi-source property data to drive innovation across industries. To assess appreciation, ATTOM looked at average value increases between 2015 and 2020 for homes in zip codes with at least one Trader Joe’s, Whole Foods, or ALDI grocery store.
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Investors earn more on properties near Trader Joe’s
The average home seller ROI for homes located near a Trader Joe’s store was a whopping 51%, ATTOM found. Properties near a Whole Foods had a home seller ROI of 43%. And homes near ALDI lagged behind with an ROI of 41%. But all three provided better returns than the average home seller ROI for the nation. That was about 35% in 2020. Turns out, it pays to invest in property near a popular grocery store like Trader Joe’s. However, if you’re aiming for a fix-and-flip deal, you might have better results purchasing a home near an ALDI grocery store.
Gross flipping ROI is greatest on properties near ALDI
Properties located near ALDI grocery stores are ideal for investors looking to fix and flip. They have an average gross flipping ROI of 58% and an average home value of $250,850. Homes in close proximity to Whole Foods stores had a gross flipping ROI of 36%. Properties near Trader Joe’s had 30%. That’s lower than the national average gross flipping ROI, which was about 39% in 2019. If your strategy is to fix and flip, properties near ALDI could end up being a goldmine. But if you’re hoping to earn rental income, look for homes near Trader Joe’s stores.
Grocery store proximity allows for charging higher rent
Investors looking to earn rental income may find that properties near grocery stores are more lucrative. Renters are more likely to rely on public transit. And therefore, benefit more from renting within walking distance of a grocery store. And when high-end grocery stores are located in close proximity, rent prices rise for multifamily housing properties. Initial rents are 5.8% higher for buildings with one of these stores located at street level.
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Other neighborhood amenities to increase your ROI
Grocery stores are just one of the neighborhood amenities that attract homebuyers and renters. When comparing investment opportunities, you should also consider the following neighborhood amenities:
- Public transportation and walkability: Walkability is important to homebuyers, and nearby public transit systems both drive higher median sales price increases (up to 24% higher) and higher rent prices due to demand.
- Restaurants and coffee shops: Proximity to a local Starbucks can lead to an especially lucrative ROI. Zillow data show that over a 17-year period, homes close to Starbucks coffee shops appreciated 96%, compared 65% for homes located further away.
- Public parks, dog parks, golf courses, and hiking trails: Analysis shows that homes adjacent to parks and open spaces are worth 8% to 20% more than similar properties located further away from green spaces.
- Good schools: The demand for highly-rated schools drives up home values in those districts. Data from the National Bureau of Economic Research shows that aggregate per pupil housing values increase $20 for every $1 of added state spend per pupil.
- Trees: Greenery around homes or on the street can add between 3% and 15% in value to houses throughout the neighborhood.
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If you find an investment property that has many of these amenities nearby, you could beat the average ROI for a fix-and-flip or buy-and-hold investment. A higher priority might be finding a great price or making the appropriate renovations. But it’s worth considering how existing amenities and future community plans will impact your return on investment.