To say COVID-19 has been bad for small businesses would be an understatement, but mixed-use properties that will invariably hit the market because of the economically calamitous nature of the pandemic could help boost housing supply.
“There’s a hidden gem: mixed-use commercial properties in downtown Hamilton that might be able to be converted into residential properties,” said Sandy MacKay, founder and CEO of MacKay Realty Network. “A lot of business owners own small mixed-use properties that aren’t excited about working from their offices or they’re shutting their businesses, or going fully remote, and those properties have potential for residential conversion.”
The only hurdle to overcome, in addition to actually finding such properties, is Hamilton’s slow rezoning approvals process—not out of character for the region. Still, MacKay says it would be a worthwhile endeavour.
MacKay Realty Network works with investors around the GTA, although it favours Hamilton, to find cash-flowing properties primarily in the multifamily residential sector. MacKay says that properties with at least two units carry easily, but the sweet spot is properties with five to 50 units.
“The last number of years, Hamilton’s downtown core has been booming and such a great area to be investing in, especially with a lot of renovation projects that are happening there,” he said. “There’s been a great commercial push there in the last five-plus years, although not so much in the last year because of the pandemic—but that’s not unique to Hamilton; it’s happened all around the world—and multifamily residential is our bread and butter because it’s the area in which we see the most potential. We see a lot of opportunities in the bigger buildings that have over five units, even up to a 100 units, which are harder to find. If you can navigate the difficult tenant situations that come with larger buildings, it’s a great payoff, and fortunately, our property management company, Executive Properties, can help with that.”
The rules governing Ontario rentals, including the Landlord and Tenant Board, favour renters, and the COVID-19 pandemic has been particularly arduous for investors stuck with problem tenants they’re legally prohibited from evicting. Moreover, when evictions are no longer proscribed, there will be a massive backlog to contend with.
“Landlord problems can turn into a great opportunity for the right person,” said MacKay, adding that MacKay Realty Network leverages its vast contact list to help its clients find those properties.“It’s definitely harder to find right now, and not all that realistic to find, but if you get a duplex and triplex, or a building with even more units, you will definitely find properties that carry themselves and mortgages and other expenses associated with the properties.”