09 Feb Investing in a duplex/triplex/fourplex
In a duplex, triplex or fourplex there are two or more tenants in a large house. Some hands-on maintenance is required but the cash flow is much better. The heating cost is usually paid by the owner. Separate hydrometers in each unit would be a bonus but are seldom found.
The property may be legal, legal non-conforming (grandfathered in) or illegal. Check Hamilton Zoning By law here and check out zoning of potential investment on the Interactive Zoning Map! Fire code regulations must be observed.
To facilitate more than two units, the house has to be big. They can be typically found in Central Hamilton, around Gage Park and St. Clair or in Kirkendall, Durand, North James Street or North End/West Harbour.
These 2.5 storey brick homes were built in the ’20s, have parking or plenty of street parking. Rents are approximately $900-$1100 for a 1 bedroom or $1200+ for a 2 bedroom utilities included. Hamilton vacancy rate is below 2%, so if you’ve got it and it’s decent, it will rent.
Here is a random proforma for review.
My abacus calculation is to allocate $3500 in expense per unit (utilities, property tax, insurance, maintenance). You can manage the property yourself or hire a property manager. Property management rates in Hamilton are between 5 and 10% of gross rents. With a little effort, tenants can help you be mortgage free sooner. Prices, from $400K++ for a duplex and upwards.
The neighbourhood is key. Good area, good tenant. The condition of the house is also important, good tenants do not live in dumps. A good client of mine’s philosophy is that she only buys and rents homes she would live in herself. It’s a good approach.
Here is the link to the zoning bylaw. It’s a long read.