Well, I would have liked my first "I just bought a rental property" post to be a bit more of a brag, but it isn't! I bought an apparently nicely cash flowing property (better than the 2% rule) in a flood zone in the bad part of an already run down small Vermont city. Assuming decent occupancy, the numbers work well, even with good flood insurance, but that may be assuming a lot. Unfortunately, I let my concerns about flooding distract me from the much more serious handicap of no, and I mean NO, parking. The building has four 3-bedroom units and four tight fitting curbside parking spaces. However, from November to May the city has an on-street parking ban from 11:00 pm until 6:00 am. During the winter months there is literally nowhere to park. There is no room around the building to squeeze in more than, extremely optimistically, maybe two cars. The business across the street had been allowing my tenants to park in his lot in the winter if they paid him $200 for the season, but they abused the privilege, messed up his plowing, parked more than the allowed number of cars, etc. He says that this year he will put up a fence and allow no parking.
Aside from the obvious nuisance of no parking, this limitation means that I have a very reduced tenant pool in an area that already has pretty shady tenants. I was expecting to rent to a lot of Section 8 tenants, but now I realize I will mostly need to rent to those without cars, which often means they don't have much employment, either. I also learned today that this part of town has a lot of addict tenants because it is within walking distance of the courthouse where they need to check in periodically and many of them have had their licenses taken away. I really thought this purchase through well!
Have any of you faced a similar situation? If so, did you come up with any clever solutions? I would like to come up with a solution which is secure going forward, so that it can increase the value of the building.
Ideas I am considering are:
1. Offering to pay some of the cost of the fence for the business across the street and paying also for a security gate to be installed. Charging tenants perhaps $30/month/car to use the lot, giving them secure access to the lot, and paying the owner of the lot a set amount at the beginning of the winter for each car that tenants plan to park there. Is there a way to do this so that the agreement goes with the deed on both my property and the property of the business across the street? What would be the incentive for the guy across the street to agree to such an arrangement, given that he wants to sell his business sometime in the next few years? Is a little extra income enough of an incentive?
2. Buying a 2 bedroom house about 1 1/2 blocks up the street that has a side yard that could be made into parking for at least 8 cars, if I could get it for a very cheap price. Again, is there a way to have my parking arrangement on the deed of both properties so that future buyers of either one would see the arrangement as an asset rather than a liability? Is buying another property in this neighborhood just throwing good money after bad? At least the second property is elevated above the flood zone...
3. Figuring out something other than providing parking that would make my apartments appealing to some particular segment of the population that would pay rent and be decent tenants. (Too bad this city is too small for bicycle messenger fleets.) They are good sized, decent apartments. Each is two floors. They each have a basement (which may get wet!). They each have a sunny backyard in which tenants could have a garden. The building is 2 blocks from a bus line with hourly buses. I own three other units and am a very responsive landlord, fixing things promptly and staying in communication with tenants.
Any brilliant ideas out there? Please!
