Does bad street condition make it hard to attract tenants?

Question

I had a recent walkthrough of a potential duplex investment in San Diego, and it definitely needs work. One of my concerns is the condition of the road leading up to the driveway of the duplex. The asphalt is non-existent and it’s essentially a dirt/gravel road with lots of potholes. Will the bad condition of the road make it harder to attract tenants?

Some details - the road is not managed by San Diego county, and it doesn’t appear that the city of Lemon Grove has done any work on it (I can’t find documentation anywhere that this road is city-managed though).

Zachary Sharpell · Answer

@Scott Mac, good point. If the road is not city managed, does the city have the ability to increases taxes if they are not responsible for the reconstruction and subsequent upkeep?

@Bob Reinhard, I would absolutely prefer paved; however, I didn't want to assume potential renters would have the same expectations. For example, I would not consider renting something on this street (or one similar to it) as I would not want to drive up and down it everyday/night. This is my dilemma - I don't know if it's safe to assume potential tenants would have the same preference as I do, or if they don't mind the poor street condition.

Dan H. · Answer

I think you question is not the most pertinent question.  You must find out who is responsible for maintains that road.  Most important you must verify that the property you are considering has no financial responsibility for the maintenance of the road.  I have a private road that I am responsible for 25% of the maintenance costs.   If 3 of the 4 owners decide anything the 4th is out voted.  There is another private road on my property that serves 5 homes with a large empty lot planned for two more homes.  So it will service 7 homes, but the maintenance is paid by only 3 of the homes.  It is the agreement that was created long ago.

Hopefully this makes clear you need to find this out.  Ideally it would be on any disclosure.

Good luck

Bjorn Ahlblad · Answer

@Zachary Sharpell a few tenants will find that attractive most will not. My primary is a prior rental of mine that is a half mile down a one lane dirt road. Most renters do not find that appealing especially in rainy season. I rented it for a couple of years; it was always rented but under market. In my case that was OK because I had bought it with the intention of eventually moving in anyway. You can easily determine who is responsible for the road by visiting the county or jurisdiction online. Some counties will allow you to do searches on line you will need your parcel number to start. In my county the offices are closed but the online system is operational.

Scott Mac · Answer

If it's a private road probably not.

Zachary Sharpell · Answer

That sounds like a good idea:) It's one of those cases where it looks great on paper but not in reality.

Bob Reinhard · Answer

@Zachary Sharpell

If you are torn, why not make the wise choice and just pass on this deal?  There's will be others with more compelling choices.

Success!

Bob Reinhard · Answer

@Zachary Sharpell

Rhetorically, given the choice between paved and unpaved, which would you choose?

Much success. Bob

Scott Mac · Answer

Hi Zachary,

Nice view, those don't come cheap in So Cal.

It might be wonderful being up there at night.

In So Cal the unpaved road adds an unknown amount of risk to the deal.

Not just attracting residents, but the possibility of the city increasing the taxes due to curb and gutter installation, and how will that be calculated under the Calif property tax codes (increasing your expenses).

Can you handle the risk? That question is something to consider when looking at this deal.

Good Luck!

Zachary Sharpell · Answer

Hardscape appears to be very expensive, some rough estimates I was reading were ~$200/linear foot for a 20' wide street for total reconstruction. If that's the case, this road would be ~$250k to reconstruct. Split that among 10 homes (assume best case scenario of all homes sharing the responsibility equally), and that's not a nice bill.

Thank you for the input, everyone!

Dan H. · Answer

I am less sure about that road than the front road.  The rabbi that was shot a year ago has the two homes that have no road cost responsibility.  I suspect if he wanted the road fixed, and those responsible for the costs do not, the rabbi could pay for the road fix but cannot force the others to fix the road.  I suspect the side road has a at least 2 out of 3 of those financially responsible determine the repairs seeing the front road has a 3 out of 4 decide (but front road has not been a problem because if someone goes through the effort to get quotes we will pay our share (25%) to maintain the road).

Hardscape is expensive.  You want to be leery of maybe being financially responsible for access hardscape costs especially when already in poor shape.

Good luck

Does bad street condition make it hard to attract tenants?

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