slocan

[JessHunt]

I am looking at a 2-storey unit in the Village of Slocan, and am undecided as to whether Slocan passes the Goldmine scrutiny. The town presently uses private septic systems but is planning to install sewers (let`s not hold our breath on this one). City folks from Vancouver and Calgary are driving prices up in order to get that wilderness house near the lake; prices have doubled or tripled in the past few years. Rippling from the main centres: Nelson`s prices have soared, Castlegar and Trail are trailing. The outlying pristine Slocan valley is becoming a popular home to many online business people who can get away from it all and still provide their services anywhere via the Internet. There is now daily bus service from these centres to Slocan, which has made it possible for students and workers to live in the Valley. As to industry, lumber is the 2[sup]nd[/sup] to the industry that creates the greatest livelihood, which we won’t mention, but tourism is also fundamental to the economy. Prices are rising on materials. The mountains are red with pine beetle, but pine is not the only timber. The property: Upper floor is a 4/2 apartment, in need of some upgrading. Main floor is a terrible looking, slapped together mini-storage, which I would clean up and reno half into a Laundromat/vending machines and leave half mini-storage. There is no other laundromat in the vicinity, but there is a need. The building and lot are deteriorating as the present renter has damaged the property and been given the boot as of June 30. Listed since September at 249000. MLS®: K165567. Now, I have 3 questions. Does Slocan pass the Goldmine Scorecard? We are recommended to put in an offer within a week, but that means - how can we do due diligence in that time? How do you determine how much to offer? Actually, before I started this I should have asked you if this is where you ask questions like this. Is it? I guess that`s 4 questions.

Thanks, Jess

 

[invst4profit]

Due diligance is of primary importance. Include it as part of a conditional offer.
Why is an offer necessary within a week, who is telling you that?
As for offer amount, REIN teaches you the income to value formula. The value of the property is based on the rental income (todays income not future). Roughly calculate expences at 50% of monthly rent.
Using the rental income calculate the value of the property and subtract from that the expected cost of renovation work. That gives you the maximum price the property is worth to you as an investor. Resist the temtation to push the numbers to satisfy the seller (or your agent).

For a quick calculation:

Rent- 2000/month
expences- 1000/month
value- 1000x100= 100,000
value of property- $100,000 (minus repair/renovation costs)

This is a rough calculation to see if a property is close to being worthy of further evaluation.

 

[DonCampbell]

The only way to determine whether a region passes the Goldmine Scorecard test is by doing a LOT of homework, asking those tough questions (all of them), speaking with the regions economic development team/person, reviewing the stats from latest local census etc.

It is NOT difficult finding properties, once you find a region - that why speculators always end up hitting a financial brick wall. The hard work is in identifying whether the AREA it is located in has all of the elements that will make you a winner over the long haul (not short term "looks good" blip).

The time has come now for you to pick up the phone and get on teh internet and get the answers to those key Goldmine Scorecard questions. And one addition, due to the small size of the town, dive into the strength of the industries that are currently supporting it. What is the long term trend, are they growing, shrinking or staying flat. Do they really create the jobs and incomes that are increasing and therefore helping to increase your revenue and equity position.

ALSO, you must speak to a bank right away to determine the level of financing they will place a. on this type of property and b. this geographic area.

I HIGHLY Recommend you do not step over any of these critical steps.

 

[JessHunt]

Thanks so much to both of you. i wasn`t sure if the EDO would be the mayor or the dog-catcher, but there is a 2-day a week CAO (I forget what that is). So now I will wade back through the myriad information to try and find the questions to ask, or do we just take the Goldmine Scorecard and go through the questions on it? And try to sound as if she`s not getting a grade on her performance at the end. Skip a step? No, I`ll be going through binders, books, on-line forums, etc, etc to find the questions to ask. I`d miss a deal but I wouldn`t miss a step. If I miss a deal there`ll be another one, but if I miss a step and blow the deal I might be out of luck when the next deal comes along.