Hello Everyone Investing in Hamilton Real Estate!!
Hope you’re all doing wonderful in your lives and in your real estate.Â If you own property in Hamilton, there’s a 7.9% chance that you do.Â 7.9% increase in Hamilton average resale price that is!!Â For those of you who have already calculated, understood the risks and took decisive action, congratulate yourselves for being BOLD.Â Assuming a 20% downpayment, your return is 39.5% (=7.9%/20%).Â 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.Â What
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.Â 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).Â In cities like London and St. Catharines where the real estate investors were organized, fought together and won.Â 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
- 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.Â 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.Â 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.Â I suggest you do the same.
- Tenants do have the right to refuse access to their property for inspection.Â 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.Â Same with central Hamilton. ~ what has the city or university done to build more dense student housing?Â In a perfect world, Mac and Mohawk would have high rise apartment buildings just for students.Â 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!Â 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.Â 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.Â Have a plan or property manager to deal with it.Â Even if you have a PM you still need to check on your properties.Â One investor I met got fined for garbage even though he has a PM.Â 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.Â I may have nothing to hide but I still don’t want big brother looking over my shoulder.Â 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.Â 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.Â Are criminals and gang members going to register their guns?Â 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.Â 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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