Which Unit Should I buy?

[Ken15]

I`m looking at two identical end units of a block of four townhouses to buy as a rental investment. I can only purchase one. All things being equal except for the following:

Unit #1 is an end unit with a smaller lot. This unit is adjacent to another block of townhomes. In other words you essentially have neighbours on each side of you.

Unit #2 is also an end unit on a larger lot but is adjacent to a children`s playground. The playground is a small parkette for the townhouse complex. (80 unit townhomes with a handful of kids throughout the neighbourhood)

Which unit would be better from an investment perspective? I have heard parks aren`t ideal to be located beside? Is this true? Any other Pros / Cons???

 

[housingrental]

I`d go for unit 1 re noise of park for unit 2

 

[invst4profit]

I would stay away from the park unit as well.

 

[Mike Milovick]

QUOTE (Ken15 @ Feb 2 2009, 09:18 PM) I`m looking at two identical end units of a block of four townhouses to buy as a rental investment. I can only purchase one. All things being equal except for the following:

Unit #1 is an end unit with a smaller lot. This unit is adjacent to another block of townhomes. In other words you essentially have neighbours on each side of you.

Unit #2 is also an end unit on a larger lot but is adjacent to a children`s playground. The playground is a small parkette for the townhouse complex. (80 unit townhomes with a handful of kids throughout the neighbourhood)

Which unit would be better from an investment perspective? I have heard parks aren`t ideal to be located beside? Is this true? Any other Pros / Cons???

Hi Ken;

Its a bit of a no brainer to me. Have your realtor contact both listing agents. Advise them of the situation - that you are torn between the two units. Have the Sellers make an offer to YOU - in essence have them compete for your business. 100% they will fine tune their pricing - and you can decide which one is best from the offers.

In this situation, your primary decision should be quantitative based. From there, you can decide what`s better. i.e. apply the REIN First Funnel to what the sellers offers you price-wise.

From a rentability perspective, determine if there is a difference in rents between the two units. You may want to canvas other end units in the complex and well as units closer to the park. My gut is that there is not going to be a significant difference in rent between the two. Note the First Funnel does not force you to make a decision between larger lot or proximity to playground. : )

Note this strategy does not work in a "hot" market - I think you would have limited success with it in Waterloo - for example - but in other areas where real estate has been on the decline - or both units have been on the market for awhile - or where you have an especially motivated seller - it could help...

Mike

 

[Ken15]

QUOTE (MikeMilovick @ Feb 5 2009, 07:43 AM) Hi Ken;

Its a bit of a no brainer to me. Have your realtor contact both listing agents. Advise them of the situation - that you are torn between the two units. Have the Sellers make an offer to YOU - in essence have them compete for your business. 100% they will fine tune their pricing - and you can decide which one is best from the offers.

In this situation, your primary decision should be quantitative based. From there, you can decide what`s better. i.e. apply the REIN First Funnel to what the sellers offers you price-wise.

From a rentability perspective, determine if there is a difference in rents between the two units. You may want to canvas other end units in the complex and well as units closer to the park. My gut is that there is not going to be a significant difference in rent between the two. Note the First Funnel does not force you to make a decision between larger lot or proximity to playground. : )

Note this strategy does not work in a "hot" market - I think you would have limited success with it in Waterloo - for example - but in other areas where real estate has been on the decline - or both units have been on the market for awhile - or where you have an especially motivated seller - it could help...

Mike

Hi Mike,

I should clarify a few things. This is a fourplex townhouse I`m building in my own subdivision. I usually keep one unit out of each block I build and I`m having trouble deciding on which end unit I should keep as a rental in this particular block. I like to keep end units because I can get higher rents and better resale in the future. You as an agent you might have a better idea on this situation.

What is better from a re-sale and renting point of view.

Bigger lot vs smaller lot.

Beside a park or not.

Thanks,
Ken

 

[Mike Milovick]

QUOTE (Ken15 @ Feb 5 2009, 09:55 AM) Hi Mike,

I should clarify a few things. This is a fourplex townhouse I`m building in my own subdivision. I usually keep one unit out of each block I build and I`m having trouble deciding on which end unit I should keep as a rental in this particular block. I like to keep end units because I can get higher rents and better resale in the future. You as an agent you might have a better idea on this situation.

What is better from a re-sale and renting point of view.

Bigger lot vs smaller lot.

Beside a park or not.

Thanks,
Ken

Hi Ken!
Assuming the property is freehold (versus) condo, I might suggest a couple of things:

1. Buyers pay a premium on frontage - as opposed to bigger lot versus smaller lot. If one of the unit`s frontages is wider than the other, I would suggest placing a value of the difference in frontage. In Waterloo, the last time I checked, lot frontages were somewhere around $3000 per frontage foot. I.e. 50 foot frontage is a $150,000 lot. Calculate the difference between the two units in your market place.

2. Buyers will also pay a premium on backing onto greenspace. If you list MLS, this is a a property feature that can be selected by your realtor. On the other unit. Some people deem this to be a $5,000 to $10,000 benefit in our area...your realtor can run comparables with townhouses backing onto greenspace and those not backing onto greenspace...

3. Compare differences 1 and 2 and you should a quantifiable answer...if your decision is based on which one to sell to get you the most money...one of these units should come to the forefront...I would also think that based on rentability, advertising that your unit backs onto a park may be something that sets you apart from others...and if it will, at the very least, get you more eye balls on your ad than other competing rentals...even if, ultimately it is not a desirable a place due to noise...

Mike