Thunder Bay, ON: To Invest or Not to Invest

[Bungee]

Hello,
I`m a new REInvestor and new to REIN....I currently live in Edmonton, AB (temp) but am originally from Thunder Bay, ON.
I have the option to purchase a house there that has a main floor rental unit and a basement (separate entrance) unit.
Property is close to the University and Hospital, in a desirable location.
I`m looking for input if I should go for it in Thunder Bay or not, from some REIN members that know a bit about that area. The ROI is about 13%.
Thanks

 

[GaryMcGowan]

Hi Victor,
I’m not familiar with the Thunder Bay
University towns are generally a good place to invest. But many questions do come up….
Long time members would ask you how does the REIN Property Gold Mine Score card add up?

What are the comps in the area?
Is there a demand for rentals? Vacancy rate?
What is the tenant profile for the building and surrounding buildings?
What is the purchase price?
What is the income?
How much are the expenses? Can you reduce them?
Are upgrades required?
Is it a legal basement suite?
Who rents the units now?
Can you rent to students for 12 months or 8 months of the year?
How close is the local transit?
How close is the local shopping? Walking or driving distance?

Here is a link to the Thunder Bay Economic Development web site which has some good information on it. http://www.thunderbay.ca/index.cfm?fuse=html&pg=151

Good luck
Gary.

 

[markl]

Hi Victor,

I have been to Thunderbay many times. I have never looked at their RE market. But here`s the general thinking on smaller centers is you should be able to get above average rent. I know people buying in towns getting a 12-15% cap rates.

Regards,

 

[ogopogo7bc]

Vacancy rate has just dropped to 2.2% in Thunder bay.

 

[Bungee]

QUOTE (GaryMcGowan @ Jan 23 2009, 06:12 AM) Hi Victor,
I’m not familiar with the Thunder Bay
University towns are generally a good place to invest. But many questions do come up….
Long time members would ask you how does the REIN Property Gold Mine Score card add up?

What are the comps in the area?
Is there a demand for rentals? Vacancy rate?
What is the tenant profile for the building and surrounding buildings?
What is the purchase price?
What is the income?
How much are the expenses? Can you reduce them?
Are upgrades required?
Is it a legal basement suite?
Who rents the units now?
Can you rent to students for 12 months or 8 months of the year?
How close is the local transit?
How close is the local shopping? Walking or driving distance?

Here is a link to the Thunder Bay Economic Development web site which has some good information on it. http://www.thunderbay.ca/index.cfm?fuse=html&pg=151

Good luck
Gary.

Thanks Gary...Most of these questions I`ve already got answers for some I just need to find a bit more details, but have the general idea. It`s close enough to the University to walk, if someone chooses, but it`s not right next door. The area in Thunder Bay is a more desired area, it`s a residential, housing area and one of the first questions I asked was about it was if the basement suite was legal, and it is. One street over has public transit. Shopping isn`t very far, i think its about 10 mins by foot. Renter demand apparently is high. I know the people that own the house, they want to sell it cuz they got a newer one and don`t want to deal with being a landlord, they said their add had so many people respond they had to remove the add in 1 day

So, i guess it`s just up to me to make the step.

 

[joe123]

I went to school at the university, and I was a renter. Every year I`d go back to Calgary for work, then get another place in September. One thing you have to watch out for is that due to a lack of summer jobs, students leave TB to go back home for the summers for work and family. My class was maybe 10% native TBer`s. Generally when I went, 8 years ago, landlords gave a "deal" on summer rent so they would keep the renters over the summer. Usually it was half price or less for the four months. However when I went the vacancy was in th 5% range, so who knows maybe they`ll pay the rent through the summer just to keep the place? Me and everyone I knew gambled to save the cash each year, store our stuff at friends places who lived there for the summer etc... So turnover was high. Vacancy in the summer was really high. However the school does offer more summer courses now than when I went. So I`d research that more... Everybody went shopping for a rental in August and December, perhaps that was when the phone was ringing off the hook? U of A I know has 8 to 9% cap rates around the university, and prices have dropped severely. I`d choose the U of A or lakehead for a rental. Thunder Bay was a hole, knowbody lived there by choice that I knew of, just because it was "cheap"., even friends from Winnipeg said it was a hole! The stink from the pulp mill, cold long winter, no jobs, low paying jobs if you could get one, and all cheap skates.... just my $0.02 though. I`m never setting foot in that city again

 

[John Murphy]

I like Thunder Bay as a place to invest!

 

[Alvaro Sanchez]

Regardless of the location, please note that such type of properties (with nanny suites) are the most challenging ones to managed as noised, shared utilities/facilities/etc. come into play. If you are new, I would suggest to get something that is purpose build (small duplex) to get your feet wet. Also being out of town owner, you would need an experience PM and budget properly for its cost.

Some PM companies stay away from this type of properties due same reasons...