Hello Everyone Investing in Hamilton Real Estate!!
Hope you’re all doing wonderful in your lives and in your real estate. If you own property in Hamilton, there’s a 7.9% chance that you do. 7.9% increase in Hamilton average resale price that is!! For those of you who have already calculated, understood the risks and took decisive action, congratulate yourselves for being BOLD. Assuming a 20% downpayment, your return is 39.5% (=7.9%/20%). Not a bad return on a physical asset that is insurable and you still have mortgage paydown and positive cashflow on top of 39.5%!!!
But it’s not all good news as some folks in our local government want rental licensing. What
The 2nd most important debate.
that means no one really knows as city council sent the Planning Dept back to come up with firm recommendations to be presented in mid December. Licensing in different cities means different things: on one extreme you have Waterloo which is a huge mess and cash grab whereas in London a license is $25 per year (big deal). In cities like London and St. Catharines where the real estate investors were organized, fought together and won. In Hamilton, we are well organized amongst REIN members, Rock Star members, the Hamilton District Apartment Association and Realtors Association of Hamilton & Burlington (funny enough I’m a member of all four) so know that we are united in our fight to stop licensing from happening.
Here are my notes and analysis from attending the debate at City Hall
I was early. We were at capacity when the debate started
- Reasons for licensing: tenant safety, lack of fire alarms, property standards violations, over crowding of parking, excessive garbage, over intensification (students and single family home conversings into apartments) ~ by-laws already exist to enforce property standards, lawn maintenance, garbage, limit the number of families per home. Ontario Fire Code enforces tenant safety. I’m not sure what gap we’re filling here with licensing…
- Enforcement of the existing by-laws over the last 18 months looking to crackdown on illegal units and property standards resulted in almost 3,000 orders ~ this was a statistic given by the Planning Department in their presentation, however a councilor wisely asked the question regarding the breakdown between rental and owner occupied and guess what, over 40% of the orders were for owner occupied. Why would anyone present a figure that overstates the violations by landlords???
- Project Compliance identified 1,500 rental homes
- Only real recommendation I heard was for licensing to be for six units and under
- By-law infractions are placed on the door and not sent to the owner ~ my leases contain clauses for the tenant to be responsible for property maintenance. I suggest you do the same.
- Tenants do have the right to refuse access to their property for inspection. Other municipalities withhold your license if they do not get access.
- The coucillors whose Wards include Mohawk College and MacMaster University appear to be the largest supporters for licensing. Same with central Hamilton. ~ what has the city or university done to build more dense student housing? In a perfect world, Mac and Mohawk would have high rise apartment buildings just for students. This is where small investors and especially REIN investors pick up the slack and provide safe, clean housing for students who don’t have a lot of money.
- The City’s legal council have not enquired with the Landlord Tenant Board if licensing costs can be passed onto the tenant ~ SURPRISE! They can indeed! As with any business as costs go up, the end consumer aka tenant ends up paying those costs
- There has not been an apartment building built in the last 30 years. It is the single family home conversions that have absorbed the demand for rentals
Final takeaways from the licensing debate:
- Drive by your properties and check on your curb appeal, lawn maintenance, garbage situaion. Have a plan or property manager to deal with it. Even if you have a PM you still need to check on your properties. One investor I met got fined for garbage even though he has a PM. I’m a local so I check on my clients properties when I’m in the area, snap pictures with my smartphone and send them to the PM and clients. I may have nothing to hide but I still don’t want big brother looking over my shoulder. No different than being audited for taxes.
- The problem with licensing is all us good property owners will come forward and get licensed and the bad owners will not. Kind of like the national gun registry where the issue is with criminals and gang members owning guns not the hunters and gun club patrons. Are criminals and gang members going to register their guns? I think not
- Call or email your Ward councillor and let them know how you feel:http://www.hamilton.ca/YourElectedOfficials/WardCouncillors/ don’t worry about what you say/write, just say whether you are for or against and why. At the end of the day you will be a statistic.
- No ones knows what if any licensing will be or the fees charged
Hope that helps! Till next blog post – happy Hamilton investing everyone!!
Erwin |Â MrHamilton.ca
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I found this very helpful. Thanks. I shall pen my letter this weekend!
Good write-up Erwin! Thanks for keeping us informed!
Elena
Thanks for the great info, and the extremely thorough breakdown. So nice to have the update. And to see you back on the blog!
As a Toronto investor buying in Hamilton for the first time I see that many of the smaller multi family rental units have apartments that don’t comply with the zoning, but are fire compliant. Fire related deaths are rarely created by landlords.
The City is looking for money, plain and simple. They don’t have the new construction activity to source lot levies, and fortunately not the hated double land transfer tax.
They already enjoy high enough taxes, and investors must fight to prevent the government from taking any more of our investment income.
Landlords have no friends in government.
Thanks in particular for providing contact info for Ward Councillors, as that is what we need to do to provide the most impact. Thanks as always Erwin for keeping us informed :).
I never see anyone make this argument and I do not know why.
I am fed up with this political, regulated industry. I am a 32 year old male and I own three houses. I started out when I was 24, I aim to buy a house approx. every 2 years. I was coming up on my 4th. I invest in Hamilton. I have become more and more involved and knowledgeable of the “rental situation” in Hamilton, and in Ontario in general.
The following is what I am subjected to, simply because I wanted to start a rental business.
– laws, rules, regulations, legislation, overly expensive (and unequal) tribunal fees, automatically continuing contracts, unenforceable contracts, dictated contracts…, the tribunal system, Tribunal system loop holes, tenant rights, tenants free access to legal support, tenant access to government money, a outright bias tenant / landlord system & rulebook, RENT CONTROLS, regulated yearly increases, a regulated upper and lower rent increase index (no higher than 2.5%, no lower than 1% per year), the whole sheriff application procedure, community based committees, unpaid water bills being added to my taxes, ALL EXISTING BY LAWS and fines, tenant activists, a sense of entitlement, if a tenant damages my home I do not fall under the legal system, privacy laws that effectively hide a tenants past eviction history, out dated rent collection systems (not allowed to bill a credit card), slow and timely procedures to follow when rent is not paid.
As a result enforceable tenant demands far out way reality. Bottom line we are treated as social housing aspects.
AND NOW I NEED A LICENSE?????????? What the hell! What enough systems do not exist already???? It needs to be safer for tenants????????????????????????????????????????
I consider myself a good landlord, I even have a property management company act as my partner on the properties I own, but as it is everyone already has their hand out for money when you buy/sell a house. NOW THE CITY is going to hop on the band wagon.
There is just not enough profit to continue on this way, or I have to up the rent. All of these rules are focused on making me (the landlord) responsible for the tenant, but yet I have no authority or ability to act. Tenants have all the power, and I have all the risk. My only tool is thorough screening (prohibited grounds anyone?)
Me… Just some small guy who grit his teeth and risked buying a house, worked hard and made a go of it. No tutor, no past family history, just took a risk. I don’t even rent to students, but I am still subject to the new student bias as my homes are around the school.
Rental housing is starting to wear me down. I am really starting to consider other investment options. I don’t know if the licensing will affect all homes, but with all the problems I face already, it is already hard enough to operate, and now this…. As it is one home is already running at a loss.
The Regulated (overly regulated) and political housing industry is for the dogs, or those with huge apartment buildings. I am a small fry and I am getting swept under the rug. (perhaps this is what the city wants…).
A normal business (that does not have the problems above) consisting of a simple transaction between a customer and a patron is becoming much more attractive. How did this industry get so screwed up? How many levels of government need to be involved before you can label my house as safe? Another cash grab under false banners?
Quite frankly, I don’t know if I can keep doing this. Or perhaps I don’t want to. Many other cities and investment avenues exist with a lot less BS.
Is there a reason to continue on with residential rentals? Is there anything left for the small guy to make a living on? Or am I doomed to be an employee until I am 70 with little chance of saving retirement income. Let alone pass something on to my kids….
All I wanted to do was operate a business… What a joke.