Above is a photo from the 1986 movie 'The Money Pit' starring Tom Hanks and Shelley Long. Cast as two optimistic homebuyers seduced by the charm of a vintage house being sold for cheap "under distress", the property and their ordeal turns into a madcap nightmare complete with corny ending. For all its "aw shucks" and "golly geez", there's a frightening realism to this flick which depicts anything and everything that can go wrong with a renovation. Click the photo above to enjoy a clip from the film! It's Hilarity!
Needless to say, no one wants to find themselves in a Money Pit like this.
Which brings me to segue onto more "Tales Of Upper Hillsborough" and our search for property in Charlottetown.
If you recall the last installment (click HERE to link to it), James and I had offered on a quirky single family 'Cindy Lou Who' of a dwelling that garnered zero response from the Sellers. Their lack of negotiation ultimately served us well, as James and I decided buying a property with more than one unit would be a better strategy.
Why buy a property with two or more units?
Being absentee owners for at least nine of the twelve months each year, we felt it prudent a tenant should permanently occupy a portion of the house. Their tenancy would provide a steady income stream, keep our insurance premiums reasonable because it would rarely be fully vacant, and give us the opportunity, if required, to offer a reduced rent to the tenant to do household maintenance like snow removal, lawn maintenance and putting out and bringing in the garbage bins during our absence. A steady tenant would limit our risk too, for if finding a temporary tenant to rent the proposed furnished suite James would occupy each summer didn't pan out, we wouldn't be stuck carrying the entire cost for the dwelling. Even though this meant a higher acquisition cost than the previous $99,000 listing we bid on, the additional income stream would support a more expensive price point and larger mortgage.
Feeling more comfortable and confident with this approach, we embarked on a search for properties that could be more than one unit three summers ago. Here are some of the properties we viewed:
This ramshackle three unit dwelling was in a good area next to one of the large government office buildings. From our perspective, its location meant it would appeal to govenment consultants who would require rental accommodations for a year or less. Offered at $199,000, it generated $1800 per month plus hydro which was a good return. However, one of the units was occupied by a tenant who had dozens of terrariums filled with an assortment of snakes and spiders, plus a cage of mice whose sole purpose were for feed. It gave me the heebee jeebees. Even though one should try overlook what's in a property, I had no desire to own a residence filled with snakes and spiders. Yuck! We promptly passed on it.
This smart Triple AAA located single family centre hall dwelling lent itself to being converted into two one bedroom apartments. Listed for a reasonable $239,000, we decided to pass on this due to the time and expense of converting it to income from afar, and because we felt uncomfortable purchasing a house covered in asbestos siding. The steel roof has since been added by the new owner.
This pair of semi-detached dwellings on a busy arterial road were offered together as a pair for $240,000. Generating $2400 per month, on paper this was good value. However, the property seemed structurally compromised and in dreadful condition. We felt we would need to gut it. It sold quickly. The new owner hasn't done much to it over the past three years.
This pretty duplex was only a few properties from the waterfront and across the street from a park in the heart of downtown Charlottetown. Listed at $279,000, its spectacular location and sizable lot brought us back a few times to view. The basement had serious foundation cracks along with significant water penetration issues that created a musty smell throughout the property. Foundation cracks can be a huge expense. Plus there was the risk of mould. Add to it all the cosmetic improvements required left us feeling daunted. We felt this purchase was beyond prudent.
This classic shingle cottage steps from downtown had just been renovated into two units. The two bedroom garden suite was magical. The one bedroom suite was bursting with charm. And it's $212,000 price tag was perfect! The moment we drove by this house we knew it was "the one". We quickly phoned our realtor asking him to book a viewing and meet us at the property. He called back shortly thereafter to tell us it had just sold that morning. We were crushed. Boo hoo!
After two years of James actively researching the downtown real estate market, and a couple of trips under my belt getting to know Charlottetown better, we felt we were prudent educated consumers ready to make a purchase. As it turns out, a property James had originally passed on the year prior returned to market a week before my trip east. After some deliberation, we decided to submit an offer to purchase conditional on financing and inspection.
Stay tuned to see what we ended up buying in our 'Tales of Upper Hillsborough' installments.
~ Steven and the urbaneer team