Invest In Hamilton

by Darrin DeRoches October 6 - 12, 2011

I had a long conversation with a mortgage broker this week about income properties. They are keen on coming into Hamilton to look at the possibilities of investing themselves and also bringing clients into the Hamilton market. I sent him a current listing of a student home I have listed. The tenants just moved out and we put the house on the market for $319,000 dollars. It has seven bedrooms and two full bathrooms. The landlord has rented all seven rooms for a total of $2800 in the past. With 20 percent down (you have to put down on an income property) the mortgage would be around $255,000 with a 30 year amortization and a 3.9% mortgage you will pay about $1,200 a month. Add taxes, insurance, heat and hydro the total carrying cost will be another $600 a month. This brings the home to a total of $1,800 a month with a positive cash flow of a $1,000 a month.     The mortgage broker is impressed with how you can buy an investment property and make a good positive cash flow. He just helped another client of mine get a mortgage for 2.9% on a $212,000 dollar mortgage where they are just paying $780 a month. This property is going to be converted into a duplex which will bring in at least $2,200 a month. The cost of renovation will be rolled into the existing mortgage and when it is done the property will be worth at least $280,000 even though they will only have about $260,000 invested in the property. The mortgage will be about a $1,000 a month plus insurance and taxes, tenants will be paying heat and hydro. The house will cost under $1,500 a month, therefore a positive cash flow of $700 a month, the house valued up by $20,000 plus the pay down of the mortgage and value of the property rising, these clients will be making money – for years to come.     Hamilton is the last major city in Ontario where you can buy a property and the rents will carry the property and in some other cases create positive cash flow. The real estate investors are really looking at our city and realizing they can buy properties for a fair price and command high rents to carry the properties. The mortgage broker is so impressed he is bringing his family and clients into the city to do a tour. My company limousine will be driving them around on our Open House Tour and educating them on the correct properties and areas they should be investing in.      When considering on buying investment properties one must realize that you do not just sit back and collect the checks. You have to be able to rent the properties and maintain them, but with a little bit of work these investment properties in Hamilton can really create wealth!  V     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.