Mixed-Use Buildings (Commercial + Residential Units):
From The Desk of Steven Kealey, BA, MSc, Broker of Record:
Here's a snapshot of the total number of Mixed-Use buildings (properties with commercial plus residential units) that exist within our market area... along with the total number of purely residential apartment buildings (of all sizes)... and the number of mixed-use buildings currently available for sale now:
Mixed-Use Rental Properties offer distinct advantages to the investor over other residential investment properties:
1) Conversion Opportunities -- Many older mixed-use buildings in our downtown areas qualify for grants or interest-free loans (from the city) to convert a portion of the unused commercial space into new residential use. And several of our local cities also offer facade improvement grants or interest free loans to help Landlords to improve and upgrade the exterior front face of these buidlings. In some cities, such as Welland, there is a property tax abatement program for Landlords who convert unused commercial space into additional residential units. Most cities locally have downtown incentive programs like these to encourage Landlords and Developers to "intensify" residential densities to help revitalize our downtown districts.
2) Live/Work Opportunities -- Many investors purchase mixed-use buildings in order to take advantage of the convenience of working and living at the same address. This is common with retail businesses (such as convenience stores) and it is happening more and more frequently with office professionals of all types.
3) Hidden Gems -- It is often possible to find a "Diamond in the Rough" when researching and viewing mixed-use buildings. There are typically less investors looking at mixed-use buildings for investment (as compared to the many investors looking at apartment buildings) and this leads to better value often being available to the astute investor who is willing to broaden his search criteria.
The two buildings you see on the upper right of this page are good examples of finding "Hidden Gems" with mixed-use buildings. I purchased the building on the left in the winter of 2005 and later purchased the building on the right in the summer of 2007. When I purchased the property on the left, it had been listed on the MLS system by another brokerage for close to a full year before I viewed it and it contained a bakery on the main floor that had been out of business for some time. It was a true diamond in the rough as most people who viewed the property as potential buyers could not see past the mess on the main floor and the cobwebs (yes... lots of spider webs). At the asking price it was an absolute BARGAIN, as it contained about 5,000 square feet with two very large apartments on the upper level (which were in very good condition) and the asking price was about 30% below the buildings true value at that time. Although not typical, deals as good as this (30% below market value) can be found if you know where and how to look for them.
One reason most investors overlook mixed-use buildings is that banks typically require a larger down payment (35% of purchase price) if the commercial component of the mixed-use property is greater than 20% (by square footage or rental income). Consequently, many investors with modest down payments will only look at residential investment properties in order to gain access to "residential" mortgages which require a down payment of only 20%. However, sometimes you'll still be able to obtain a "residential" mortgage on a mixed use building with a commercial component. For example, with the property on the left above I was able to purchase it with only 20% down by showing my bank my blue prints and plans for building a new apartment behind the commercial space on the main floor... effectively reducing the commercial component to just under 20% of the total square footage of the building (thinking creatively).
Over the past several years we've helped many investors find and purchase similar mixed-use properties that were also "Hidden Gems". At times, I've almost felt like a "treasure hunter" because we've been able to find so many great deals for our clients. Keep in mind that one of the biggest advantages of these mixed-use properties is that most investors aren't even looking at them, which can allow you to find some true treasures for yourself.
To gain access to our many years of local in-depth experience & expert analysis of mixed-use properties for sale (137 are now available) in Hamilton, St. Catharines, Niagara Falls, Welland, Port Colborne & the surrounding Niagara Region (including access to some "Exclusive" & "Off Market" opportunities... and urgent UPDATES of new listings available for sale), please complete the form below:
Copyright© 2017 Royal Real Estate Inc. (operating as Castle Quest Investment Real Estate). All rights reserved. Information herein is deemed reliable but is not guaranteed accurate by Castle Quest Investment Real Estate or it's representatives. Not intended to solicit Buyers or Sellers currently under Agency Agreement.
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5 Best Cities For Investing in
Hamilton & Niagara Region:
Statistics Canada 2011 Census
Teranet + 2012 Castle Q. Database
# of Apartment Buildings Existing
(With Only Residential Units):
Teranet + 2012 Castle Q. Database
# of Mixed-Use Buidlings Existing
(With Com. + Res. Units):
There are 2,253 Mixed-Use buildings existing within Hamilton, St. Catharines, Niagara Falls, Welland, and Port Colborne. Since there are just over 10,000 apartment buildings in these five cities (including duplexes, triplexes, fourplexes, and apartment buildings with 5 or more units), the Mixed-Use buildings represent close to 20% of all investment properties with rental apartments within Hamilton & Niagara (at least within the largest cities in our market area with the the best rental market prospects).
Buildings like the two to the right of the page are good examples of mixed-use buildings that have a commercial use on the main floor with apartments above or behind the commercial use. Most of the downtowns within our region were built with many buildings like these and they contain a significant percentage of our rental apartment stock (especially in the downtown cores of each city).
MLS + C.Q. Database (March, 2017)
Mixed-use Buildings Currently AVAILABLE FOR SALE:
Income Property Advisors
for the Niagara Region
& the City of Hamilton
Steven Kealey, BA, MSc
Broker of Record