Grant Programs Available

[Anonymous]

REINation,

As you know we do renovations in Hamilton Ontario. We do a lot of work with landlords and multi residential. There is a grant program available in many cities that is supported by CMHC. CMHC will provide large grants for improvements on single family homes and multi-residential and is a nice program to assit with bringing your property up to standard and code. They also include making the property pretty.

In the city of Hamilton you need to use a contractor or carpenter that is licensed with the city. I`m not sure of the rules with other cities.

You can contact CMHC directly at 1-800-704-6488 to get a package or in the city of Hamilton you can contact Marilyn Kay at 905-546-2424 x 2758 and she will hook you up.
Let me know if you have any questions and I will fill you in on the forum so we can all take advantage of this great program.
Thanks Carol

 

[OlegP]

QUOTE (CarolGarrett @ Feb 6 2009, 02:51 PM) REINation,

As you know we do renovations in Hamilton Ontario. We do a lot of work with landlords and multi residential. There is a grant program available in many cities that is supported by CMHC. CMHC will provide large grants for improvements on single family homes and multi-residential and is a nice program to assit with bringing your property up to standard and code. They also include making the property pretty.

In the city of Hamilton you need to use a contractor or carpenter that is licensed with the city. I`m not sure of the rules with other cities.

You can contact CMHC directly at 1-800-704-6488 to get a package or in the city of Hamilton you can contact Marilyn Kay at 905-546-2424 x 2758 and she will hook you up.
Let me know if you have any questions and I will fill you in on the forum so we can all take advantage of this great program.
Thanks Carol
Hi Carol,

Do you know what requirements are attached to this program? If my memory does not fail me, you have to agree to turn your property into either low income housing or seniours housing in order to receive the grant. Am I correct?

Thank you.
Oleg

 

[Thomas Beyer]

QUOTE (CarolGarrett @ Feb 6 2009, 02:51 PM) ... advantage of this great program.
yes, indeed "free money" !

downside: rent caps for 15 years .. and thus value and cash-flow cap .. is this servere DISadvantage worth the "free money" ??

 

[bb2]

I have a 7 plex in Brandon that has been approved for a grant worth 168,000. It is in need of a lot of work. As soon as I bought it I applied for the grant. What I found out this week is that I have to put in 100,000. When I first bought this property over a year ago the realtor touted this as a "great opportunity" because of the possibility of the RRAP program paying a substantial part of the renovation. The numbers he threw around that I would have to pay was zero to maybe 20,000. It all sounded great back then but now with the limit on what I can get for rents I don`t know if it is such a great deal.....I`m still looking at the options....obviously it would bring up the value of the property......I do need to upgrade it.....

Brenda Bastell

 

[Thomas Beyer]

QUOTE (bb2 @ Feb 6 2009, 08:06 PM) .......obviously it would bring up the value of the property......
would it ? With capped rents for 15 years ??

 

[Nir]

Thomas is 100% correct!

Brenda, How will it bring up the value if rents are unfortunately capped and a 7-plex value is mainly a function of: 1. Current CAP and 2. Potential Future CAP.

Carol, you did not mention a thing about capped rents(!?) if this is the case as Thomas mentioned, does it not make it a TERRIBLE deal?

Thanks Thomas!

Neil

 

[jeffjas]

QUOTE (investmart @ Feb 7 2009, 01:12 AM) Thomas is 100% correct!

Brenda, How will it bring up the value if rents are unfortunately capped and a 7-plex value is mainly a function of: 1. Current CAP and 2. Potential Future CAP.

Carol, you did not mention a thing about capped rents(!?) if this is the case as Thomas mentioned, does it not make it a TERRIBLE deal?

Thanks Thomas!

Neil


Capped rents do not mean "no increase" at all, it just means the owner is allowed the same regulated increase that everyone else is. If you go with the RRAP program your motivation is not necessarily to create capital appreciation, I as most taxpayers would frown upon this approach because property owners should not be using public money to line their own pockets in this way.

What it does allow is for a property owner to improve his/her property with little or none of their own money, the result is less maintenance headaches because of all the improvements, easier to rent out & better tenant profile it is likely an easier sale should you ever want to sell the place.

It comes down to whether you have the ability to take on a capital project yourself with more risk and hench better rewards or use the grant with less risk and less payback.

Lets be serious, a building that`s been totally upgraded will always sell for more than a similar building that isn`t, even if they have identical rents.

 

[bb2]

QUOTE (jeffjas @ Feb 7 2009, 08:32 PM) Capped rents do not mean "no increase" at all, it just means the owner is allowed the same regulated increase that everyone else is. If you go with the RRAP program your motivation is not necessarily to create capital appreciation, I as most taxpayers would frown upon this approach because property owners should not be using public money to line their own pockets in this way.

What it does allow is for a property owner to improve his/her property with little or none of their own money, the result is less maintenance headaches because of all the improvements, easier to rent out & better tenant profile it is likely an easier sale should you ever want to sell the place.

It comes down to whether you have the ability to take on a capital project yourself with more risk and hench better rewards or use the grant with less risk and less payback.

Lets be serious, a building that`s been totally upgraded will always sell for more than a similar building that isn`t, even if they have identical rents.

I appreciate all the feedback on the RRAP program as I contemplate spending $100,000 on my 7 plex (presently only a 6 plex). This will give the one extra suite, generating maybe 600.00 more per month.The building circa 1920 needs much upgrading and with or without the program I will need to spend a substantial amount of money.

Thanks
Brenda Bastell

 

[Thomas Beyer]

QUOTE (jeffjas @ Feb 7 2009, 08:32 PM) Lets be serious, a building that`s been totally upgraded will always sell for more than a similar building that isn`t, even if they have identical rents.IF they have similar rents .. my understanding of the severe rent restrictions and income levels of tenants allowed is that RRAP is primarily a federally funded program aimed at municipalities and non-for-profit organisations that rents to low income people ..

so before you apply please understand the RESTRICTIONS placed upon you as a landlord for rents and incomes of tenants !

We have 15 buildings in Canada .. and we decided NOT to pursue it for the 2 reasons mentioned !

Do your due dilligence !

 

[Yev]

Other negatives to consider with getting a grant:

1. Low-income tenants = more repairs/maintenance on tenant turnover
2. You CAN NOT raise rents to market level at turnover
3. You will have a very hard time selling the property if it is `bound` by one of these grants.

I have looked at a property in Ontario that is in this situation (grant and forgivable loan). They have been asking MUCH less than comparable properties and they have offered many, many incentives to sell this property - to no avail!!! It has set on the market for over 6 months without ANY action!

However, if you feel that you WANT to provide low-income housing and take care of the property for the DURATION of the grant limit - this may be worthwhile to consider - then, in 15 - 20 years, you will have a property which has not been recently renovated and whose rents are way below market... this may appeal to a future buyer if you will want to sell it at the right price...

My 2c...

Yevgeni

 

[invst4profit]

Unfortunately I have discovered that any kind of a deal that the government has there fingers in often has rules and restrictions that are not favourable to investors in the long term.
If it looks too good to be true dig deeper and (as with this thread) you will discover the true facts.

 

[jeffjas]

QUOTE (Yev @ Feb 8 2009, 03:42 PM) Other negatives to consider with getting a grant:

1. Low-income tenants = more repairs/maintenance on tenant turnover
2. You CAN NOT raise rents to market level at turnover
3. You will have a very hard time selling the property if it is `bound` by one of these grants.

I have looked at a property in Ontario that is in this situation (grant and forgivable loan). They have been asking MUCH less than comparable properties and they have offered many, many incentives to sell this property - to no avail!!! It has set on the market for over 6 months without ANY action!

However, if you feel that you WANT to provide low-income housing and take care of the property for the DURATION of the grant limit - this may be worthwhile to consider - then, in 15 - 20 years, you will have a property which has not been recently renovated and whose rents are way below market... this may appeal to a future buyer if you will want to sell it at the right price...

My 2c...

Yevgeni


My understanding is that the loan must be paid out if the building is sold, so the new buyer would not be affected by the restrictions and second, the RRAP program is only available to properties that fit a certain criteria namely targeted areas and buildings. The funds are made available to the municipality which then decides which areas of the city need the improvements.

You will only get the grant if you already own a building in a "targeted" community which in other words is low income, which means you already experience the same issues you mention.

Its a program that has its purpose, its not a capital appreciation program designed to produce a big gain for the owner on selling.

Besides you`d be surprised at how people begin to treat their rental units when they see improvements going on...I`ve had "higher" income tenants that look good on paper but lived like pigs.

 

[fumbrunner]

I`m glad I did a search for this thread before posting a new one, since this is a program I have been looking into.

I guess the question I have: is there a situation where applying for the grant does make sense.

ie..If you are in a rent controlled area such as Manitoba or Ontario, would this grant not have some upside? I was looking at the marginal rent rates and they seem to be competitive.

Does anyone have any experiences applying for these? I`m assuming there are a number of things that would help get the grant approved such as letters of support, cost-sharing agreements, etc.

Anyone have any insights?

 

[MikeDix]

QUOTE (fumbrunner @ Jan 29 2010, 01:44 PM) I`m glad I did a search for this thread before posting a new one, since this is a program I have been looking into.

I guess the question I have: is there a situation where applying for the grant does make sense.

ie..If you are in a rent controlled area such as Manitoba or Ontario, would this grant not have some upside? I was looking at the marginal rent rates and they seem to be competitive.

Does anyone have any experiences applying for these? I`m assuming there are a number of things that would help get the grant approved such as letters of support, cost-sharing agreements, etc.

Anyone have any insights?

Hi fumbrunner,

The RRAP program comes in a number of flavours (Conversion of commercial, Rehab of existing, disability, etc..). If you have the right building and location, CMHC will fund up to $24,000 per suite (more if you are up north). I am using the RRAP-Conversion program (which is federal BTW) to convert a run down non-conforming mixed commercial/multi-family property into affordable rental suites. CMHC registers a second mortgage on title for the amount of their funding (in my case $120,000 for Phase 1). This money is foregiven over 15 years ($8k per year in my case) so long as I do two things:

1. Rent to low income folks as per CMHC definitions (must qualify at the start of the lease...they do not have to remain qualified after that..i.e. if the tenant gets a raise, it does not disqualify him).
2. The starting rent can be no higher than a discounted median rate for the area (specified by CMHC). This rent can be increased over time according to the standard provincial rules for rent increases.

If I fail to live up to the conditions then CMHC could claim I`m in default and the remaining balance could become due, with interest charged at 6%+.

If I sell the property, the new buyer has to either sign up to the remaining term and conditions of the funding, or I have to pay out the remaining balance plus accrued interest.

In my case it made so much sense to go with the CMHC RRAP because it significantly reduced my capital investment to modernize the building. The rents I was achieving in the existing two residential units before renovation were not that much different to the rents that CMHC imposes (because the building had so much deferred maintenance...this was a crappy looking building when I bought it). Converting the commercial space over to low income multi-family with RRAP grants from CMHC is a win/win for my low income tenants, my investors, the local community, and my business. The next phase is to add another 5 affordable suites, followed by 7 more in the final phase. In total it will have 19 suites (2 at market rates and 17 affordable) with CMHC hopefully approving the next phases. CMHC`s total investment at the end of Phase 3 would be $408k. The building will generate greatly improved monthly cash flow, and I will be able to invest $408k of my personal capital in other projects instead.

I look at this building as a minimum 15-year hold. I have no desire to sell it, so in this regard the 15-year restriction is not a significant issue in my case. If you are selective about what building makes sense for the RRAP, and are willing to invest long term, it can make a lot of sense.

Affordable rental housing is a market niche that I have focussed on very successfully for years. If you have a sound strategy and execute well, the RRAP can be a great addition to your quiver.

Mike
www.AffordableHoldings.com

 

[LifesMoneyPeople]

I sent you a reply through your site hope to be talking soon



Here is some info on what I was looking at a while ago



I start posting about half way through the thread




Hi fumbrunner,



The RRAP program comes in a number of flavours (Conversion of commercial, Rehab of existing, disability, etc..). If you have the right building and location, CMHC will fund up to $24,000 per suite (more if you are up north). I am using the RRAP-Conversion program (which is federal BTW) to convert a run down non-conforming mixed commercial/multi-family property into affordable rental suites. CMHC registers a second mortgage on title for the amount of their funding (in my case $120,000 for Phase 1). This money is foregiven over 15 years ($8k per year in my case) so long as I do two things:



1. Rent to low income folks as per CMHC definitions (must qualify at the start of the lease...they do not have to remain qualified after that..i.e. if the tenant gets a raise, it does not disqualify him).

2. The starting rent can be no higher than a discounted median rate for the area (specified by CMHC). This rent can be increased over time according to the standard provincial rules for rent increases.



If I fail to live up to the conditions then CMHC could claim I'm in default and the remaining balance could become due, with interest charged at 6%+.



If I sell the property, the new buyer has to either sign up to the remaining term and conditions of the funding, or I have to pay out the remaining balance plus accrued interest.



In my case it made so much sense to go with the CMHC RRAP because it significantly reduced my capital investment to modernize the building. The rents I was achieving in the existing two residential units before renovation were not that much different to the rents that CMHC imposes (because the building had so much deferred maintenance...this was a crappy looking building when I bought it). Converting the commercial space over to low income multi-family with RRAP grants from CMHC is a win/win for my low income tenants, my investors, the local community, and my business. The next phase is to add another 5 affordable suites, followed by 7 more in the final phase. In total it will have 19 suites (2 at market rates and 17 affordable) with CMHC hopefully approving the next phases. CMHC's total investment at the end of Phase 3 would be $408k. The building will generate greatly improved monthly cash flow, and I will be able to invest $408k of my personal capital in other projects instead.



I look at this building as a minimum 15-year hold. I have no desire to sell it, so in this regard the 15-year restriction is not a significant issue in my case. If you are selective about what building makes sense for the RRAP, and are willing to invest long term, it can make a lot of sense.



Affordable rental housing is a market niche that I have focussed on very successfully for years. If you have a sound strategy and execute well, the RRAP can be a great addition to your quiver.



Mike

www.AffordableHoldings.com

 

[fumbrunner]

QUOTE (MikeDix @ Feb 4 2010, 10:33 PM) Hi fumbrunner,

The RRAP program comes in a number of flavours (Conversion of commercial, Rehab of existing, disability, etc..). If you have the right building and location, CMHC will fund up to $24,000 per suite (more if you are up north). I am using the RRAP-Conversion program (which is federal BTW) to convert a run down non-conforming mixed commercial/multi-family property into affordable rental suites. CMHC registers a second mortgage on title for the amount of their funding (in my case $120,000 for Phase 1). This money is foregiven over 15 years ($8k per year in my case) so long as I do two things:

1. Rent to low income folks as per CMHC definitions (must qualify at the start of the lease...they do not have to remain qualified after that..i.e. if the tenant gets a raise, it does not disqualify him).
2. The starting rent can be no higher than a discounted median rate for the area (specified by CMHC). This rent can be increased over time according to the standard provincial rules for rent increases.

If I fail to live up to the conditions then CMHC could claim I`m in default and the remaining balance could become due, with interest charged at 6%+.

If I sell the property, the new buyer has to either sign up to the remaining term and conditions of the funding, or I have to pay out the remaining balance plus accrued interest.

In my case it made so much sense to go with the CMHC RRAP because it significantly reduced my capital investment to modernize the building. The rents I was achieving in the existing two residential units before renovation were not that much different to the rents that CMHC imposes (because the building had so much deferred maintenance...this was a crappy looking building when I bought it). Converting the commercial space over to low income multi-family with RRAP grants from CMHC is a win/win for my low income tenants, my investors, the local community, and my business. The next phase is to add another 5 affordable suites, followed by 7 more in the final phase. In total it will have 19 suites (2 at market rates and 17 affordable) with CMHC hopefully approving the next phases. CMHC`s total investment at the end of Phase 3 would be $408k. The building will generate greatly improved monthly cash flow, and I will be able to invest $408k of my personal capital in other projects instead.

I look at this building as a minimum 15-year hold. I have no desire to sell it, so in this regard the 15-year restriction is not a significant issue in my case. If you are selective about what building makes sense for the RRAP, and are willing to invest long term, it can make a lot of sense.

Affordable rental housing is a market niche that I have focussed on very successfully for years. If you have a sound strategy and execute well, the RRAP can be a great addition to your quiver.

Mike
www.AffordableHoldings.com

Mike, how did the application process go? Here there is a preliminary RRAP proposal that needs to be submitted, I suppose as a preliminary screening tool. Did you have quotes for all the work with the application? Did you have letters of support from community groups?

 

[MikeDix]

QUOTE (fumbrunner @ Feb 5 2010, 07:27 AM) Mike, how did the application process go? Here there is a preliminary RRAP proposal that needs to be submitted, I suppose as a preliminary screening tool. Did you have quotes for all the work with the application? Did you have letters of support from community groups?

Hi fumbrunner,

This is a copy of an email I just sent to another REIN member asking similar questions:

There is a fair bit of paperwork but if you follow the steps it is straightforward. The following is from memory:[/size] 1. Check the CMHC website for the RRAP programs. Decide which one best suits your situation. RRAP-Conversion is specifically for the conversion of commercial footage into residential. This is the one I did. Determine what combo of Bachelor, 1Bed, 2Bed, 3Bed you want. Remember you get the same $24,000 max grant independent of the size of the Unit (but the rent cap is also set by unit type...bit of a trade-off here). Put together a rough budget and overview for the work that needs doing. Contact the local CMHC office and ask for the forms package for the approriate RRAP program.2. Once you have filled out the first set of forms (there are several to complete along the way), CHMC will determine if there is a fit with them and you/your project. If yes, they will ask to send an inspector to the property. Make sure you attend in person, as this is a great time to `sell` your project concept. He will take photos and report back to CMHC about whether the building is suitable.3. Assuming the inspector gives the green light, CMHC will then ask you to do a full narrative appraisal (c. cost of $2500-3500) for `as is` and `as complete`. Although a little pricey, you will get a very useful document that will show whether your project makes economic sense. Also a detailed breakdown of the projected financials for the project and building. Plus your personal net worth.4. Make sure you having either the zoning for multi-family, or qualify under your provincial Local Govt Act (BC in my case) for non-conforming status. If you are relying on the Local Govt Act, let me know and I`ll talk specifically on how this works in BC (you can then research knowledgeably in your province).5. CMHC will insist on detailed quotes from trades, a project schedule, building permit, proof you have sufficient cash on hand to pay atleast your portion of the work (this is important!). CMHC will only advance you funds once you have demonstrated that your portion of the work has been completed and passed inspection. They want to ensure that any money they advance to you is to complete the project...not find out that it was used to start the project, and then find you don`t have the funds to complete it. This is fair, since the whole idea for them is to create a finished product, and not have to fight you to get it finished. This should help to get you started....let me know if you have any other questions.Cheers,
Mike
www.AffordableHoldings.com