One of the key fundamentals in real estate investing is ZONING changes

A change in zoning can make a property more valuable. And the good news is this can happen literally overnight.

Just imagine. You have a property worth X and tomorrow the city changes the rules about what you can do on that property and now it’s worth $100,000 more. All because the city made a decision about the zoning in your neighborhood.

A classic move for investors and property developers is to buy a property with the plans to rezone it or if they are smart they buy where they know municipalities are going to change the zoning and then profit from these new opportunities for redevelopment. 

In August the city of Hamilton passed the Residential Zones Project 

Which changes the rules for how many units you can build, by right, in a single family property. 

Where previously you could only create up to 2 units in a residential property, this new by-law now allows homeowners and investors to create up to 4 units, and the good news is, you can do this all without a costly and time consuming rezoning.

We’re going to go through what this means to you as a Hamilton real estate investor and how you can utilize it using a few simple steps.

When I first started investing in Hamilton one of the big change is that were always talked about was it we could convert single families to 2 unit properties this is back in 2015 and at the time converting single families to 2 units with somewhat of a new thing.

It wasn't until section 19 was passed that mandated cities in Ontario allow homeowners and investors to convert single family homes into 2 Family Properties as long as they meet certain parking requirements ceiling height and building code. 

With Ontario's housing crisis reaching common knowledge amongst ontarians.  Policy is again shifting in the favour of higher density. 

Greenbelt

While we all love the Greenbelt, the nature and access to Countryside. There's no denying the beauty and impact that this area (which spans the entire Southern Ontario geography) has on the well being of all residents.  The other side of this is that the Greenbelt serves as a lid on a pressure cooker for development all throughout Southern Ontario from Oshawa to Niagara. 

With the introduction of the places to grow Act in Ontario density In urban plans has become a priority. Municipalities are now required to create bylaws for property development that allow for higher density use in what was once only zoned for single families single use homeownership. 

Hamilton Residential Zone Project

In August of 2022 the City of Hamilton passed the residential zones project. We’re not going to focus on everything the passed in the by-law.  but we are going to look at what i think is one of the most important changes to the zoning bylaw in the city of Hamilton, one that creates big opportunities for real estate investors, and that is the allowance of conversions from single-family to up to 4 units.

In my opinion, this is a game changer and one that we always watch as homeowners and investors in any region.  One of the key fundamentals when it comes to investing is zoning changes because when they occur they can create openings that were previously never possible creating opportunities for investors and homeowners in the Hamilton area that make Real Estate Investors envious in other areas.

The rezoning problem is now gone

Before the passing of the residential zones project if a homeowner wanted to add one to 3 units to their property they were limited by the zone that their property happen to be located in.

For  example if your home happened to be located in a C Zone in Hamilton that would mean that you could add a second unit to the property but no more.  if for example you had a large property that could have three units the only way you could add that third unit voice to apply for a rezone with the city of Hamilton planning department.  This is not a fun process a rezoning can take months and months to receive a response on and and there's no guarantee that after applying, spending the fees that permission would be granted to rezone. 

This rezoning more often than not creates a day unsurmountable barrier for Real Estate owners in Hamilton and investors alike.

But with the passing of the residential zones project any real estate homeowner or investor in any region of Hamilton can convert they're single family home into three or even four units …heres the important piece: regardless of what zone They are in.

 This is extremely exciting news for industrious and creative Real Estate owners the Hamilton.

The process to convert your single family home into 3 or 4 units simplified.

Put simply the residential zones project removes the requirement for owners of real estate in Hamilton to rezone their property if they want to convert from a single family two or three unit or even a 4 unit property.

 All that is required Is to meet some basic by law and building code requirements:

1. Meet the minimum square footage required per unit (this used to require a minor variance but hasn’t been required for our last few applications)

2. Have at least two parking spaces

3. Have sufficient ceiling height in basements 

4. Meet the Ontario building code for construction of each unit

5. Electrical upgrade to 200 amp

Converting to a duplex or a triplex

What really blows me away about this announcement is really how few people I see talking about it because the ramifications i think are quite significant.

For example as a Hamilton real estate investor or Hamilton homeowner owning a large single-family home was great for yourself if you wanted to add an extra unit to your property as a in-law suite or a mortgage helper you could do that it's just that prior to August of 2022 you would have been limited to just one extra unit.  this extra unit depending on size and finishes of course could fetch you a extra $1500 to up to $2100. Quite a nice amount of monthly income.

Now you could add two extra units inside the existing home,  which could fetch you 1500 to 1900 each ($3600 per month) 

How to add a 4th unit to your Hamilton Home

The new rules around converting a single family home to 3 or 4 units are as follows.

You can add two extra units to your existing single-family home for a total of 3 units. Within the existing structure. 

You can add a fourth unit to a laneway, garage or garden Suite or build an accessory dwelling if you have enough space.

The simplest and easiest way is to build within the original envelope of the home.  Once you get into additions this opens up site plan and building code considerations that would be a little bit extra in terms of approval from the city but could be well worth the slight extra permitting work.

Our clients are already adding extra units to their properties.

We have a couple clients who are already taking advantage of this new residential zones project.

One of our clients has taken their duplex that they just purchased and are going through the process of adding a third unit in the Attic this is going to add an extra $1500 to $1,800 straight to their bottom line, which is a win not only for our client but also for ADD and rental units that are much needed to the real estate market.

A note on students and rentals in Hamilton - a coming rental crisis

So there's McMaster University and Mohawk College. McMaster University's has thirty-five thousand students, and Mohawk College has 13 thousand students. Approximately 25% of the student population are international students. Tuition cost for international students are sometimes three to five times more than what an average student pays. If you're a University you are really loving the fact that you're getting 25% of your students from an international student base because you're getting three four five times the revenue stream.

I mean let's face it. A University is a business. It’s in the business of education but they are there is a lot of money-making going on there.

I'm not knocking higher education, it is it's a beautiful thing school and education, but there is a boom happening in the international student business.

In students alone we've got twelve thousand International students.  If you look at the marketplace for rentals in Hamilton, rents have been going up like crazy over the last couple years everywhere. 

The rental market in Hamilton has 47,000 rental units in total. There's a vacancy rate of about 2.8%, so there's roughly 1,300 rental units available in Hamilton at any given time.  Lets say a 300-500 new international students come to Hamilton. You can see that the impact is going to be significant.

So for an owner of a rental unit these are major major implications and not only in Hamilton but all over Ontario. The lack of Supply and the fact that these students can buy houses. If an international student happen to be going to a Canadian University and they come from a wealthy family there and they can't find it Rental housing or and maybe they want to get into the Canadian Market they can go buy a house as international students. There is a coming crisis here and perhaps its already here. We’re currently is a supply crisis, but it's not going to get any better unless we can make some substantial developments.

The residential zones project is an important step in providing more rental housing to a significantly growing population in Ontario and more specifically in Hamilton. 

Real Estate Investors have not always had the most glowing reputation but the reality is Real Estate Investors, mom and pop shops,  serve as a very real solution to this growing rental housing problem.

The McCarroll Group has been working with real estate owners and investors for over 10 years in the Hamilton area. They have helped hundreds of investors buy and sell residential real estate and have helped many investors convert their homes and investment properties into duplexes and multiple units.  For more information about the McCarroll Group go to www.mccarrollgroup.com to book a consult call go to