I am not local, but I'm looking into the next step to invest in my first rental property in DM.
I am considering a property located on MLK Jr. between Forest and 19th.
I have put together my own list of comp rental rates for the area, but can anyone provide some more local knowledge into what income bracket this area usually falls into? Is this a Section 8 area? Or would I attract students from Drake Univ., which is quite near to the property?
I will of course run numbers on both ends of the range of my comps, but I am curious what the experienced folks have to say about this area.
This would be a full rehab duplex, possibly in need of foundation/framing work.
Thanks for any help you can provide!
That area does have some lower income housing, but it is also a great rental area if you are looking to do 8-9 month rentals for the University. You may also want to look just a tad SW of there, as there is a nursing school that would also be great for multi-year tenant options.
@David Baker thanks for the reply.
Do you typically charge more rent per month for an academic year (8-9 month) rental to compensate for the assumed 3 month vacancy balance?
Thanks for the tip about southwest of this area!
Definitely check out the crime maps. Some of those areas can get pretty sketchy. If that's your thing, no problem, but it could be a shock if it isn't. Obviously, if you don't mind, the opportunity could have a lot of upside.
I don't have a rental in the Drake area but Ames are 12 month leases so you don't have to factor in the summer vacancy. To my knowledge, Drake does have year round classes available so 12 month leases may be common. The renter pool just might be a bit less. I just am not certain enough to state one way or the other. As for the area, it is possible you'd have students available and I believe there is some section-8 nearby as well. Sorry, nothing conclusive. Good luck with the opportunity, though!
We currently live right up the road close to MLK and Hickman, a little east of Beaverdale.
I've looked at a couple houses off MLK and have passed on 2. We did bid on one (the southbound, west side of the road) a while back but couldn't come together with the sellers.
Like any major road but especially MLK it will come with certain challenges related to equity/holding value over time. I'm kind of bullish on the area as you get closer to downtown, and especially a little to the East of MLK as you get closer to downtown. The conventional wisdom though is that the pocket between University up to Hickman and even up to Euclid/Douglas is that to the EAST of MLK = bad, whereas to the WEST of MLK = good. I'm always dubious of arbitrary conventional wisdom and I'm not a real estate agent but I do buy the 'spillover' effects and the effects of perception. Perception changes over time and can change quickly at times-----
The real effects are that there's more wealth / affluence as you get further to the immediate west of this area you're describing, but you transition to more of a working class/working poor (although more diverse) population to the east of MLK.
I think it would be an absolutely great thing for Des Moines to get some investment into that MLK corridor that you're describing. That said, there's quite a bit of 'getting over the hump' that would be needed though as this area and the immediate to the east area is one of the 4/5 areas around town that I still see a decent amount of interspersed blight.
My view though is that there are some socioeconomic challenges with the area you are describing and its not close enough to downtown (almost, but not quite) to enjoy the upward and frankly much more desirable benefits of proximity from a long term equity perspective.
I think if you do pull up the crime maps you will see some of those challenges.
All this said though the macro picture of Des Moines is very solid, in my view, so if you get something for the right price I'd jump on it.
Personally I wouldn't mess with renting to Drake students. I'd get it fixed up nice and go for the good long term tenants.
I think alley access and a garage would be kind of important there in terms of your ability to get really good quality tenants. With that location you could get them. There are enough people willing to look past some of the perception problems I listed above....
Let me know if you want some more local perspective/thoughts etc. PM if desired.
Sort of implied by previous responses, but I'd suggest driving over, and looking around the neighborhood. I don't buy in that area for alot of the reasons already mentioned. Potential for upside as neighborhoods get renovated out from downtown, but feels like a gamble.
I don't know if the deal is even still possible, but I would get out there and walk it before I considered any. I've driven MLK daily for years and years. I would (personally) never buy a house there from between Douglas/Euclid to the north and University to the south. There is just too much junk, and the property will never be easy to sell. It's a busy, loud, fast street. I went to Drake, went to law school at Drake, and have been somewhat involved since I left. No Drake student I knew ever lived east of 25th. This was years ago, and it may have changed, but whenever I drive those neighborhoods, they are still plagued by blight.
I own 4 SFRs by Drake, currently all occupied by Drake students/young professionals, a 6-plex partially rented to Drake students but mainly lower income folk (inherited those who we plan to non-renew and have Drake students live there), and just got another Drake duplex which will be rented out in Fall to Drake students. Most Drake students (that I know, including myself, a former alumni) prefer not to live east of 27th St. My 2 cents. All our SFRs are a few blocks west of Drake and the 6-plex is 28th and Cottage Grove (2 blocks south of Drake).