This is a non-statistical movie about the multi-family market and what went on in 2021 from a REALTOR’s perspective.
2022 is seeing a provincially regulated rental increase of 1.2%. In 2021, it was 0%. Inflation is running at 5%, so how is this fair? Where is the profit opportunity for an investor landlord?
In 2021, I personally helped investors buy and sell their income properties and I submitted many, many more offers than were actually successful. There were a lot of failed offers in 2021.
Let's get into my year in review and give you just some examples of what has been happening in the income property sector during last year.
0:00 - 1:07 Introduction
1:07 - 2:13 9 unit building, no documents
2:13 - 2:55 4 Unit building with buried oil tank
2:55 - 3:12 Illegal unit and false advertizing
3:12 - 3:50 Triplex infested with mold
3:50 - 4:33 5 Unit with mouse infestation
4:33 - 5:16 Failed offers due to Appraiser shortage
5:16 - 5:42 Not legal, but still Sold
6:05 - 6:58 Add an SDU to bungalow for income
6:58 - 7:38 Building did not exist legally, led to litigation
7:38 - 8:50 Get a compliance Report, reasons
9 unit building, no documents
One client was looking to buy a 9 unit building, and we submitted the offer and requested documents from the seller. This process took days and we never actually got all of the documents. The other party kept asking for extensions to gather all the documentation. At this point my client got frustrated and walked away from this one. This one got terminated.
If you're a seller, get all of your documentation for the property organized and ready to produce when agents ask for it, as you know they will.
4 Unit building with buried oil tank
Another property we tried to purchase was a 4 unit building, we got a conditional sale with an inspection condition. In the inspection we found an old buried oil tank. My client still wanted to proceed with the purchase, but the seller would not allow us to investigate the oil tank issue. My client wanted to check if it was leaking as there was a strong odour of oil. The seller was afraid that if their tank was leaking, they would need to disclose it and have an expensive clean up bill. Of course we backed out of this deal.
Illegal unit and false advertizing
On another property we submitted an offer and then withdrew it as one of the units was completely illegal and the property was not fire retrofit, as advertized. We walked away from this one too.
Triplex infested with mold
This next property was a triplex we conditionally purchased, where that inspection uncovered mold all over the attic area and roof. The mold was so bad that the shingles and plywood needed to be removed. The basement also had a lot of mold all over.
5 Unit with mouse infestation
This next one was a 5 unit that we conditionally purchased and during this inspection we discovered that it was infested with mice and other rodents, there was mold in the attic and walls. This property was a bit weird, it was a legal 5 unit building, but, if this property burnt down, it could not be replaced with another 5 unit, just a single family house. My client backed out of this one.
Failed due to Appraiser shortage
I had three other offers that I submitted that never worked out because we could not get appraisers in on time allowed. Appraisers in 2020 were so busy that one I spoke with told me they wre turning down up to 12 appraisals per day as they were so busy. Appraisals that usually too a few days were going into 3 and 4 weeks. Sellers were not willing to wait this long, so these deals were terminated.
Not legal, but still Sold
I sold a property that was not a leagl triplex, it was a legal duplex but it was being used as a triplex, and it was not fire retrofit. But we sold it for the seller and the buyer knew what they were buying.
I also helped a buyer purchase a similar type of property that was not legal and was not fire retrofit. This client went ahead and got his own fire retrofit certificate and made it legal.
Add an SDU to bungalow for income
I helped a group of investors buy an old bungalow from the 1960's with very few updates. My client will renovate it and put an SDU in the basement to rent it out as an apartment.
The example above worked out, but I also submitted 6-8 failed offers on buildings that were in rough shape or had the potential for adding a secondary apartment. This is a very competitive market in Ottawa rigt now. Some of these in 2020 had 20 or more offers on them.
Building did not exist legally, led to litigation
One client purchased a building that was meant to have a certain number of apartments in it, and the deal went firm. Then, during the legal check and compliance report, it was found that the building did not exist on City records. My client asked to get out of the deal and the seller refused, so this is now in litigation.
Staying on compliance reports, if you're a seller, get one before you list the property, so you know what you are selling.
That's the way this income and investment property market goes, lots of failed offers and REALTORS have to do their job 5 or 6 times with a client before they get a deal done.
Are you looking to buy an income producing property, have a look at all of the Multifamily for Sale
If you want to sell a multifamily building in the Ottawa area, let me give you an appraisal.