Hamilton: The Final Frontier

by Darrin DeRoches December 2 - 8, 2010

Is Hamilton the last frontier?     I just sold two properties to investors from outside Hamilton and they are happy to buy.  I sold a duplex in the east end and a single family home on the Mountain.  Both were sold to investors from Toronto.  They paid 99 per cent of the asking price and were very happy to buy.  This week I showed the same commercial property to four different parties – all from Toronto.  All  were looking to buy investment properties.  It is the end of the year and before the banks close their books for the year it seems Toronto investors are snapping up investment properties in our great city.     In my previous articles, I’ve pointed out that most investors buy property to make the 6 to 7 per cent increases in the yearly gain of the real estate market.  When they buy a condo in Toronto, they just want to cover the costs of the property and are happy to reap the 7 per cent increase from year to year.  In Hamilton they can buy a property that’s priced the same and make the same gain in the market, plus reap the monthly positive cash flow.  The duplex that sold last month is rented for $2800 a month.  The house mortgage with taxes is only about $1,400 a month plus heat and upkeep; let’s top it out at $1,800 a month to carry the property.  The investor is making a 7 per cent profit on the yearly increase plus $1000 a month in rent.  He is so happy with this purchase he is now looking to buy more.     The single family dwelling on the Mountain is a different type of rental.  It is a three plus one bedroom house that will rent for about $1600 a month plus utilities.  The house will cost about $1200 a month and the investor will make about $5000 a year plus the 7 per cent increase on the value of the home and the mortgage pay down.  This house is also in a rent to own type agreement where the tenant will be able to own the property one day, if the meet all of the conditions of the agreement.  The tenant will not only take care of the property: they will invest in it.  The investor also throws in a flat screen TV in the living room – a good hook for 500 bucks.     Back to the commercial property I showed four times this month. One of the potential Toronto investors compared the property to ones in Yorkville.  They can buy a property in Hamilton that is twice the size for about half the carrying costs.  It is interesting to me that investors from outside Hamilton are investing their money in our city and we cannot figure out a simple thing like a football stadium and invest our own money in our city!  V                [DARRIN DEROCHES] Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca.