Non-Legal Triplex in Hamilton

[SmoothOp]

First off...thanks for all the great info on this site.
I am just getting into the market and have recently put an offer in on a triplex in Hamilton. This is a positive cash flow property. I have just heard back from my mortgage broker with some bad news that the bank has appraised the property at less than I offered. They said it`s not a legally zoned triplex and is located in a "high crime" area and therefore would not be able to get mortgage insurance on this property with 90% financing.
I know they are not looking at the income the property produces and are considering it a family home. Has anyone had problems with this in Hamilton? I see duplexes and triplexs all over the place. Should I look for another mortgage broker? Or should I rethink my strategy on properties and look elsewhere?

Thanks

 

[BobHudson]

I have a 4 plex in Hamilton that appraised OK when I bought it. Not all of the units are legal.
It is south of Main Street and east of Sherman. If the property you are looking at is north of Main and/or west of Sherman, move on. The cash flow may look attractive but don`t do it. You will have headaches!!!

 

[SmoothOp]

Funny thing...It is very close to that intersection and is in fact North of Main AND west of Sherman. I think I`ll take it as a blessing and move on to a better deal.

 

[fvrdoljak]

QUOTE (SmoothOp @ Oct 25 2007, 08:20 PM) First off...thanks for all the great info on this site.
I am just getting into the market and have recently put an offer in on a triplex in Hamilton. This is a positive cash flow property. I have just heard back from my mortgage broker with some bad news that the bank has appraised the property at less than I offered. They said it`s not a legally zoned triplex and is located in a "high crime" area and therefore would not be able to get mortgage insurance on this property with 90% financing.
I know they are not looking at the income the property produces and are considering it a family home. Has anyone had problems with this in Hamilton? I see duplexes and triplexs all over the place. Should I look for another mortgage broker? Or should I rethink my strategy on properties and look elsewhere?

Thanks

I have appraised many duplex/triplex/fourplex in and around Hamilton and the GTA. First the appraiser has to look at zoning, does the triplex conform to zoning By-Laws? If so that is not enough, it needs to be registered with the municipality as such. Many times within downtown areas the zoning allows for triplex`s but owners convert single family homes to multi-units without a permit. The reason for the permit is to make sure it is constructed to code. If it is not "legal" or registered (by permit) it cannot be appraised as a legal triplex. I think Bob got lucky with the appraiser not doing their homework which would definitely come back to bite them (appraiser) if the house ever went power of sale. The grey area is that in the real world if the dwelling is put up for sale someone will pay extra, compared to a single family dwelling, based on the income it generates-too bad the banks don`t see it that way.

 

[brad]

I agree with Bob. That area of Hamilton looks good on paper (number wise), but the people that live there leave a little to be desired. I know that is some what of a stereotype, but it is what it is. The turn over of both tenants and property owners is extremely high. South of Main St. is definitely more desirable.

Brad

 

[carailio]

Pride of ownership....

I do agree that you have to be carefull, but here`s an interesting story;

I own a tri-plex on Grant Ave (crack alley in Hamilton). I bought it a few years ago without a system and just went for the cheapest thing I could find. I did have the issues that others are talking about, including drug trafficing and tennants that din`t care about the place. It got to a point where I just wanted to be there once a month to collect rent and get the hell out. (didn`t even want to see the place or admitt that I owned it)

That`s when things changed. I decided that I was the owner and needed to do somehting. I cleaned the place up both in and out (about 2 months for reno work after evicting problem tennants), and waited. It didn`t take long (less than a month) to get good tennants, that are paying me about 30% more than I was getting before. Other landlords are starting to follow suit on that street and we`re slowly cleaning it up.

I admitt that this is a rare situation, but there are great cashflow properties in Hamilton, we just need to clean up our image. Here are some of the things that the Grant Ave Landlords are doing:

-puting money into the properties (since they were purchsed at good price we have room to invest)
-better screening of tennants (I actually used a management company to find my tennants)
-having tennants and landlords call police for any problems (crack dealers get tired of the cops visiting and move)
-conduct property walk-throughs. (Its your right as a landlord)

Care about the property and good tennants will come. It was a lesson that I learned the hard way.

 

[BobHudson]

Grant Avenue???

Now there`s a great place for a Halloween visit. My wife and I looked at 4 Grant, a 9 unit building back in January 2005 asking $255,000. It looked good from the street, but inside...

We ran, and fast.

Glad to here that the Grant landlords are making a difference. Maybe not as scary anymore??

 

[SmoothOp]

Thats an interesting take. I think sometimes people do look at their role as landlord a little too short-sighted and I hear where cash flow and then clean their hands of the property as soon as it the right time for them. However it`s a matter of who is going to go first....It`s takes some really courageous souls to make the first move to begin fixing up properties in an area that has been long written off.

 

[andrew]

QUOTE (SmoothOp @ Oct 25 2007, 07:20 PM) First off...thanks for all the great info on this site.
I am just getting into the market and have recently put an offer in on a triplex in Hamilton. This is a positive cash flow property. I have just heard back from my mortgage broker with some bad news that the bank has appraised the property at less than I offered. They said it`s not a legally zoned triplex and is located in a "high crime" area and therefore would not be able to get mortgage insurance on this property with 90% financing.
I know they are not looking at the income the property produces and are considering it a family home. Has anyone had problems with this in Hamilton? I see duplexes and triplexs all over the place. Should I look for another mortgage broker? Or should I rethink my strategy on properties and look elsewhere?

Thanks

I never had a problem with my lender since I disclosed that it was a 4plex (illegal) in Hamilton - I have good tenants & I`m working on maintaining the property so i can keep good tenants coming and charge higher rents. I have one at main & dundurn . I would suggest looking into this area Locke-dundurn-main-aberdeen. The innovation park will eventually take off and that should also drive prices up, up & up!