1. The Town:
My city has a population of about 400,000 people, and is highly suburban. Our land area is about 400 km^2 by my own estimate, but this is probably a low-ball.
Further to the permanent population, we are a universtiy town playing host to one of the largest universities in Canada. The universtiy brings over 30,000 students to the area, and these students need somewhere to live.
2. Rental Market:
With 30,000 students, there are many opportunities for student rental properties. The going rate for one bedroom in a 5-bedroom house is approximately $350-$450/month. Two-bedroom apartments range from $800-1500 depending on proximity to the university.
I currently have 13 bedrooms for rent at an average of $400/bedroom per month. I include all utilities in this cost, and provide cable TV and highspeed internet as a perk. My vacancy rate, is unfortunately about 20% due to the difficulty in securing tennants over the summer months when they are not in school.
I hope to greatly improve upon the vacancy rate for the next rental season (May 2007 – 2008) by developing a more comprehensive marketing plan. Last year I was working full-time and finishing up a Masters degree, so my advertisements started too late.
The city’s downtown core has undergone a major revitalization in the past 5-years, which has vastly improved property values in the area and made it ‘hip’ to live downtown again. The downtown is surrounded by hundreds of large victorian homes that are just waiting to be subdivided into apartments, so this i another area of opportunity.
3. Housing Costs:
Small 5-bedroom houses are going for in the neighbourhood of $160,000 around 3km from the University. At a distance of 1km, the price jumps to over $200k.
4. Example Income Potential
In May we purchased a 5-bedroom townhouse for $145k. It is fully-rented at $1975/mo, with expenses around $1160/mo. Monthly cash flow: $815/mo (before income tax).