Home, East Home Investment


In my last instalment of the ‘Tales of Upper Hillsborough’, I shared with you some of the properties my friend James and I considered purchasing in our effort to find an affordable property in downtown Charlottetown that could generate a reliable income when we weren’t occupying it ourselves. Click HERE for that last post.

So here’s today’s lesson amidst the story.

Did you know all neighbourhoods have a life cycle of their own? Each location has its own economic, demographic, social and physical processes of birth, growth, maturity, decline, and transformation. Sometimes the life cycle of a neighbourhood is caused by the arrival and departure of a dominant cultural group over time or a noxious use nearby encroaches, expands and ultimately diminishes the quality of life. In city centres, over the lifecycle of some neighbourhoods it’s not uncommon for large dwellings to get converted from single family use into multiple units, and then deconverted and restored back to their former glory. Or, if the dwellings aren’t adequately maintained, a neighbourhood’s housing stock may become obsolete and demolished. If the centrality or desirability of a location warrants a rezoning or increase in density, it may result in higher density housing, a mixed use or even a new use. One certainty is that all neighbourhoods are constantly in flux and change.

If you’re never been to Charlottetown, population 32,000, it’s basically four neighbourhood quadrants built in the late 1800s and early 1900s that surround a commercial core comprising one main street (Queen Street) with a few offshoots containing a smattering of enterprises. Three of the residential quadrants abut water and one of them does not. Like most towns and cities in Canada, portions of downtown Charlottetown declined as the housing stock aged. This was compounded when the post WWII baby boom, and the arrival and popularity of affordable housing in the suburbs, prompted several generations to opt for the newer ‘nuclear-family friendly’ homes outside of town. As families exited and household size declined, the demand for large gracious family residences on small city lots fell out of favour. As a result, many were divided into inexpensive rentals that accommodated the marginalized and seasonally unemployed. By the 1970s, Charlottetown’s downtown neighbourhoods were also plagued by illegal boozecans serving this population, until the city cracked down on the problem in the late 80s. It’s only in the past two decades that Charlottetown has experienced a slow revival in the restoration and renovation of its vintage housing stock. Today there are signs of rejuvenation everywhere, with some pretty terrific affordable opportunities for lovers of architecture. Downtown Charlottetown has the capacity to be a postcard perfect collection of restored vintage housing. Its classic vernacular is exceptionally beautiful.

No matter how big or small your town or city, a good clue on what areas are emerging or undergoing a transformation is to watch where the artistic community is locating. With my friend James having played in the Charlottetown Festival for over a decade, he’s had front row seats watching his peers buy homes in the neighbourhood quadrant which does not abut water. Their attraction and subsequent investment to the area was due to its winning combination of affordability and proximity to the centre of town. These were also our motivations to make a purchase here. It takes about seven minutes to walk to Confederation Centre on Queen Street where James performs, and a three minute stroll to “Lot 30“, one of Charlottetown’s top rated restaurants. It truly doesn’t get more ‘downtown’ than that!


But it wasn’t always this way. For decades this quadrant was considered quite scary. As our now retired realtor and former city councilman told James and I:

“When I was a kid, I used to ride my bike down this street with a big stick across the handlebars to beat off the vicious dogs!” Apparently it was that frightening!


The presence of a creative arts community often signals a promising future for a neighbourhood’s revitalization. Even if these early pioneers are restricted in budget, the creative results of innovation and sweat equity can result in some remarkable and visually arresting improvements. Even over the past five years I’ve been visiting Charlottetown I’m seeing more vintage houses being painted in vibrant combinations of historical colours and some pretty fantastic picket fences in unusual patterns being built. These sorts of affordable improvements infuse a new vitality and spirit to formerly bland neighbourhoods. When the arts community invest in any location, their physical improvements and creative energy inevitably make a neighbourhood evolve into a hip, funky and vibrant destination. At any given time in most urban centres, there is at least one neighbourhood where this sort of change in occurring. If you’re looking for a long term opportunity, all you have to do is follow the artists.

After two years of James actively researching the downtown real estate market, and a couple of trips under my belt getting to know Charlottetown better, we bought this legal triplex on Upper Hillsborough. Despite its horrific facade, minimal landscaping, decrepit driveway and bland interior, this dwelling is located in a pocket brimming with creative people, plus it ticked all the right buttons for our requirements and objectives. And, for $153,000, it was as affordable as one could get downtown for a legal triplex. Here’s a copy of the MLS listing and a photo of the property on the day we were doing our pre-purchase home inspection.

Here’s what made Upper Hillsborough attractive to us:

Although it was a vintage house originally constructed in the 1880s, this dwelling didn’t have much character left except for the second level which had a few cherished details like maple flooring and original millwork around the trim and doors. However, while we love vintage architecture, we didn’t want to feel obliged to focus exclusively on a restoration. Instead, we were seeking a ‘house as blank canvas’ where we could infuse our own contemporary style on it. At the same time, we didn’t want a property that was covered in vinyl, aluminum or asbestos siding. After all, who knows what the condition is really like underneath?

With any property purchase, it’s critical the house be structurally sound. In the 1980s, this house was substantially renovated into a legal triplex containing three 2-bedroom units. Not only did they add a substantial rear-side addition (you can see this in the roof line), but they replaced most of the old stone foundation with a full-height poured concrete basement. The radiant heating system, wiring with three separate meters, and plumbing were all in solid condition. The roof and windows were not. The shingle-clad house also had no insulation which resulted in an annual oil heating bill of $4200 per year (Ouch!). Note, there is no gas on Prince Edward Island so the only forms of heating are oil or electric.

The existing income stream was solid but what attracted us to this house was the opportunity to improve it. Each of the three 2-bedroom units was plain, tired and worse for wear. There were no laundry facilities. None of the suites had a dishwasher. All of them had peeling paint. The three suites rented for an average of $630 per month plus hydro. With the annual expenses being just under $9000, the dwelling as-is generated a 9% return on investment. That outshines many investments in this day and age. Not bad eh? However, we did buy this knowing the house required work and that a substantial capital investment would be required in the future to both increase the revenue stream and make it our own. We estimated about $40,000 a suite plus $40,000 for exterior work. In our initial discussions, we felt we would tackle the improvements over a decade or two.

The home inspection didn’t reveal any surprises, though there would be some. And we had a few hoops to jump through to assume, blend and increase the existing $99,000 mortgage that had ten years left on it at a rate of 5.2%. Back in 2008 this was a pretty attractive rate. We hedged our bets that rates might increase by assuming the mortgage, but it turns out they dropped. Drat!

Three years ago, in autumn 2008, James and I became the proud owners of Upper Hillsborough and the landlords to three tenants. James returned to Toronto for his winter commitments. I focused on mine. And we began to plan our next steps.

What did we do first?

Stay tuned for more lessons, in The Tales of Upper Hillsborough.

~ Steven

Real Estate
Tales Of Upper Hillsborough

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