Hello Everyone with Hamilton Investment Property!!!
Our six week fitness/health/lifestyle challenge came to an end with a weight in, body fat measurements, strength test, and Crossfit competition. At the beginning of the six week challenge, I weighed in at 192.5, 10.9% body fat; after six weeks 195 lbs, 9.6% body fat. Not bad, but personally I’m more interested in how much weight I can move, e.g. a lift or number of pull ups but a positive result nonetheless.
Next the strength test, a dead lift for more weight than I’ve ever lifted before, 430 lbs.
After everyone’s lift, we each had 60 seconds to prepare for a 400m timed sprint. James Maggs, who is a pretty fast guy (he can wake up any day of the week and run a 10km), trash talked me saying I couldn’t beat his 1 minute 20 second time and I used that as motivation to set another personal best of 1 min 19 secs.
I’d like to thank Dan and Rachael of http://radixperformance.com/ for coaching me in health and fitness, my workout buddies who took part in the challenge: Tom, Mike, JP, Tim, James, and Cherry. When you hang out with fellow type A’s, who are successful and competitive, the gym becomes a workout mastermind where we all grow as individuals. The proof being new personal bests by every participant. I just wish such masterminds were available for business at these relatively low costs :D.
Hamilton Land Development Q&A by Charles Wah
Following Charles Wah’s excellent presentation on How to Develop Land, Hamilton investor and friend of the Mr. Hamilton Team, Chris Hook, had some very good follow up questions he sent to Charles after asking his permission. Before we get into the questions, a quick funny story about Chris.
We’ve been working with Chris “the Captain” Hook for over four years and have become friends. Here’s an email exchange between Chris and I:
Chris: Am I reading that right? Did that house at Pinewoods just sell for $370k?
Me: You are correct, sir!
Chris: So 1. That’s insanity, 2. If you remember the first house you took me to look at was 39 Pinewoods, list price was $209k and I was hesitant to buy. I should have bought 2 of them. I need a drink.
[To provide some context, the subject property is freehold, would have rented for $1,400 plus utilities so checkmark cash flow, located on the Stoney Creek mountain near the Red Hill Valley Parkway and soon to arrive major employers Maple Leaf Foods and Canada Bread Company. READ: MAJOR ECONOMIC FUNDAMENTALS]
Me: That’s what I was thinking.
PS – I’m going to use your last email for my marketing purposes 🙂
One of my greatest fears as an investor is the fear of missing out. Fear of missing out on potential profits and when you’re a real estate insider to Hamilton understanding economic fundamentals and seeing first hand how folks from Toronto are coming to Hamilton in droves to rent and buy then you have an idea where prices are going to go. Unfortunately for Chris, he was hesitant to pull the trigger and his cost? $164,000 of price appreciation. Psychologically, losing $164,000 feels much worse than gaining $164,000 but it still sucks when you quantify it as three years of income, hence adding three years until you can retire (remember that only half of your capital gains are taxable and most investors refinance to buy more properties…). I hope I’m not giving Chris more reasons to drink 😛
Anyways, here is Charles Wah’s response to Chris’ land development questions:
- Location (transit, infrastructure, schools, shopping, other amenities, is the surrounding area mature or being developed?, etc)
- Is the surrounding area mature or being developed?
- Are there subdivisions in the area? If so, are they single family houses, townhouses, etc?
- Sources of noise (commercial, industrial, road, highway, etc)
- Access to a highway
- Lot size and layout (square, rectangle, pie shape, irregular, etc)
- Lot grading (flat, sloped, etc) including any topographical constraints (e.g. steep slopes)
- Designation under the municipality’s Official Plan (may differ from zoning)
- Are there any environmentally sensitive features such as woodland, watercourses, etc? If so, are they regulated by any local conservation authorities? What setbacks will be required from these features and how much of the property can be developed?
- Are there municipal services (sanitary and water) available at the street?
- Are there any existing buildings? If so, can they be rented out to mitigate costs in the short term? Are the buildings on septic or sewers, well water or municipal water? Are there any heritage designations?
- Is the property on a major road or side road?
- History of the site
- Any possibilities of contamination in the soil?
The list above should give you an idea to start but it certainly is not an exhaustive list.
2. How do you determine the correct number of houses/townhouses on a piece of land to build?
- Target market
- What is in demand?
- Are there other developments nearby to estimate supply vs demand?
- What density is allowed in the current zoning and designation? What is the existing density in the surrounding area? Does your proposal fit the character of the neighbourhood?
Again, the list above is not an exhaustive list.
4. Do you have any financial analysis that you did (even with fake numbers), just so that I can get a sense of costs and what kinds of things were included in determining ROI?
- Land Acquisition
- Development Soft Costs and Professional Fees
- Landscape Architect
- Geotechnical/Soil Tests
- Stormwater Management
- Financial Consultants
- Servicing Costs (i.e. Hard Costs)
- Tree Removal
- Silt Fencing
- Miscellaneous Site Works
- Fill Requirement
- Street Lighting
- Road Works
- Lots/Street Trees
- Entry Features
- Retaining Walls
- Municipal Costs
- Application Fees
- Engineering Fees
- Utility Fees
- City Development Charges
- Regional Development Charges
- Park Levies
- Special Area Levies
- Local Improvement Charges
- Finance Costs
6. Did you bring in any partners (i.e maybe money partners) and if so, what do you think the key was to selling them on the project?
Yes, I partnered together with a local reputable builder which was a major milestone for various reasons. First, they could provide their experience and mentorship so I get to learn and it helps to expedite the development process. In addition, it means we already have a purchaser for all of our lots which makes it much easier to approach the banks for financing. As a developer, I’m responsible for obtaining approvals and servicing the lots. The builder is responsible for constructing the houses which is something I didn’t want to get into for my first projects.
7. How did you find the builder and determine it was the right builder for the project?
I met with several local builders. All of the meetings (if I even got them) led to nothing especially given my age and lack of experience. I was fortunate to find the right fit.
8. What is your timelines for completion of your projects? And how difficult is it to try and project a timeline?
Thank you for reading everyone! Don’t forget, if you want to raise your real estate game, you absolutely must be surrounded by other successful investors, our next Mr. Hamilton’s Inner Circle is Nov 26th, register here: http://mrhamilton.ca/innercircle/. Change your context, change your results.
Until next time, happy Hamilton real estate investing!
Erwin Szeto | MrHamilton.ca
Sales Representative, Owner of Hamilton Real Estate Investment Property
Rock Star Real Estate Inc., Brokerage
PS: If you are just starting out investing, start by spending more time with like minded people and take guided tour of Hamilton by joining us for the next Mr. Hamilton Inner Circle by clicking here!!!