Buying in the Valley - Q&A

--------------------------------------------------------------------------------
Pete,
I have been reading your blog/website for awhile now. Keeping updated on the
progress of the riverwalk and davis. I wanted to ask you about buying real estate in canaan valley.
What is your opinion about real estate in davis/canaan? We are talking to several real estate agents and most of them
say davis/canaan hasn't been affected and what they have listed is the best "deal" in the valley.

We have been looking in canaan more so than davis. The reason being is, that one day we would like to move to davis but want to own a few
rentals properties in the area so that we have some kind of income when we make the move.. We are not sure that
we would be able to find decent paying jobs.

My question to you, i guess is: where would you buy in canaan/davis for around $200K that could be rented to skier and/or use as
vacation rental?

thanks

RESPONSE: when it comes to a $200k home in the Davis/ Canaan area there there are three rental scenarios: 1)short term/vacation; 2) season, 3) long term. For a property at this price point you would get supplemental income only from short term or seasonal rental, if that is ok. Of the 10 or so people I know who own a Canaan house (in the $200-350k area), most or all hate the vaca rental program. The agents take 30%+ and add on all kinds of marked up maintenance expenses caused by renters. They seem to book the properties they feel like booking and my feedback is that they do a poor job of it. You end up with your house run down a bit, alot of annoyance, and not much to show for it.. My sense is that the vaca rental market in the Valley has deteriorated except for a new wave of much higher end properties in prime locations. One other exception seems to be the self-marketers who have web sites and are extremely diligent in self-marketing their homes to repeat users. Unfortunately, there are more casualties on the road to vacation rental success than there are contented owners.

Canaan valley has in fact been affected and will be moreso this year. For example, my friend bought a new home in Tline 4 years ago for $370 and is now going to sell it in the low $300s. Her agent confided that CV is down 20%. Oddly, CV agents don't use the MLS much and don't consistently supply a comprehensive list of comps when you are buying or selling. Traditionally in Canaan, there is a lot of unrealistic overpricing reflected in listings, and there are also many unlisted homes that their owners would sell if they felt the market would absorb them. What you want of course is a seller that is not fishing, and is doing what is necessary to move the house.

Davis has perhaps been affected by a few percentage points, but as you can imagine, a house that would have sold for $85K has not fallen 20% -- perhaps 5 or 10% in Davis but not more, simply because they were already a bargain. Davis has a solid long term rental market with good rent-to-value ratios. A quality $100k house brings about $8,000 net income. As of yet, there really is no short term or seasonal market to speak of in Davis/thomas.

I am not sure if this suits the relocation scenario you contemplate, but consider the concept of two structures or units. A scenario we find very attractive in Davis is the arrangement of a house plus garage apartment, or two houses, a duplex, or a connected pair of structures called a side-by-side. You rent one of them out long term (eg 1 year lease) and either rent the other as vacation or not at all, depending on your schedule. In some cases the renter can be made the caretaker (ie mowing the lawn, watching for problems) for consideration in their rent. This type of scenario can reduce utilities, is easier to keep an eye on, reduces the risk of an isolated but not occupied structure, and includes the option to occupy the entire property in the future. There are full timers looking to rent full time in Canaan as well.

As for what I would do with $200k to buy a rental/vacation/retirement property, the neighborhood is very much a life style decision, but if Canaan or Davis, I would definitely consider a property with two units and rent one out long term.


Pete

PS - if you don't mind I may post this Q&A on the blog without your name...