Still hunting for my first income property, and having a hard time finding places that tick off all the right boxes, but I came across a place that I thought I would ask about here...
The Community - A depressed blue collar town - main industries in town are logging and mining.
- 4.5% vacancy rate
- 65% increase in rental units in past 4 years (a few major developments came online, driving up competition)
- Current draft plans show 5700 proposed single-family lots in the urban area (housing glut?) - completion dates unknown.
- average house price $250,000 (This listing is under $100,000)
- major employment sectors:
- 1. Health Care & Social Assistance
- 2. Retail
- 3. Educational Service
[/li]
[li]8.6% unemployment rate, [/li]
[li]Average family income - $33,000[/li][/list]
At first glance this doesn't look like a prime investment community - and its not. The unemployment rate is tickling the national average, and housing is readily available for cheap at a time when there are shortages in other communities nearby. On the other hand, the employment base in town is diversifying and moving towards research and development where it used to be a one-shot town with resource extraction. It is disheartening to see retail among the biggest employers though.
The house:
A converted town hall with three 2-bedroom units, literally in the shadow of heavy industry. It is on a double lot, and has loads of parking.
The building is partly converted, needing finishing touches, and the price reflects this - in a town that is already low cost real estate.
Remaining renos will likely run about $10,000
One unit is rented already at $1,000/month
By my math, the building will generate about $850/month in income once renos are complete, fully tenanted, 10% vacancy rate. BUT...
It is butt-ugly.
I mean looking at it you'd think graffitti would improve it. The building is a box with tiny windows and tin siding. It is painted grey with green shingles. I am not sure how much effort ($$$) it would take to improve curb appeal, and I doubt it will ever gain much value for resale. OTOH, since I would already need to work on the interior, Putting in windows/shutters, and a coat of pain is doable as pre-tenanting work, and may spruce it up a little.
How much of a factor is curb appeal in getting/keeping tenants? Is it a case of adding windows and paint to make it viable, or is it better to leave the ugly be and keep my cash in my pocket, letting the tenants tell me if it needs more pretty? And is the gamble of a weak economy in a changing town worth it for a place like this?