Terrible Property Layouts

[Drew MacDermott]

I have been following the MLS in my area to understand how fast single family and multi-family properties sell, as well as understanding what type of property I would want to invest in. Here in New Hampshire, and the majority of the Northeast, I find many older homes have been renovated over several decades. You might encounter new room additions, a newer second floor, as well as old steam heating systems still kicking around. Several of these types of properties I have found have also been on the MLS for over 200 days, sometimes even over 400 days.

When I was renting in college, I had several deal breakers in an apartment and I feel I've set these as standards when looking for properties to invest in.  I could not see myself purchasing a property with a useless kitchen, or slanted walls on the second floor (due to the roof which minimizes useful living space, generally the bedrooms), or closed off rooms (I prefer open concept, as do many homeowners & renters today).  I just can't get my head around ever purchasing something so useless.

As a side note, everything in my general area is expensive due to high property taxes and regional demand (with Dartmouth-Hitchcock Medical Center and the Lebanon & White River Junction crossroads).  Running preliminary numbers on a few properties, I would have to offer, say, $120,000 maximum on a $200,000-$225,000 listing in order to achieve $100-150 cash flow per door.

Do you buy anything you can?  Do you throw out a potential property immediately due to poor layout or the type of house?  Do you find renters even caring about the layout?  I know I did, but some people just need a roof over their head.  I have many questions but I thought I'd lay out some thoughts on the forum.

[Ann Bellamy]

Jeff, it's more about what is common and acceptable in your area.  Cape style homes have lots of rooms with knee walls (slanted walls).  And on Cape Cod itself, where these houses originated, they are actually a preferred style in many cases.  In New England, you will see tons of them, they are very popular.  I live in one my self.  

If you are renting to doctors who work at Dartmouth Hitchcock, you'll probably not get lots of takers, but if you are renting to blue collar workers, it's a different story.  so you need to get to know who your customer is before you can begin to answer that question.

I can, however, assure you that you will have trouble getting someone in Lebanon to accept $120K on a $225K house.  The area maintains it's demand because of the factors you mentioned.  I don't have rentals in Lebanon, most of the investors I know who are up in your neck of the woods look at towns like Claremont.  I wouldn't, but some are very successful with it.