Hamilton is currently leading the country in construction projects, and it’s showing no signs of slowing. In 2016, the city saw over $1 billion worth of construction permits alone. And that’s for the sixth time in 7 years.
While a lot of this construction is in single-family homes, Hamilton is becoming a hotbed for condo development.
Choosing a condo unit, especially for investment, is a vastly different experience than buying a house. There’s no walk-through. There aren’t any open houses. And there certainly isn’t any talk of move-in readiness.
Instead, your pre-construction project goes in 3 stages: choosing the project, picking the unit, and settling on the features of your unit.
As an investor, what should you look for? What should you ignore? What’s worth splurging on? Find out below.
Choosing the Project
Investor Tip #1: Pick the Best Builder
There are tons of development firms there. Before getting swept away in the project, do your research on the development company first.
Choose your builder based on a history of completing high-quality projects on-time. Look for pending or past lawsuits, poor reviews about building quality, or a history or being non-communicative.
Reputation is key for builders. Finding out their past history will give you a good idea of what to expect in future projects.
One thing to note is that a builder may seem to be “new”, with few reviews or with no residential projects under their belt. If this is the case, they might be a commercial builder who has done projects outside of this sphere. Commercial builders are still worth considering – you might just have to dig a little to find reviews of their past projects.
Investor Tip #2: The Importance of Neighbourhoods
As an investor, you have a target audience for your purchase: the eventual tenant of your property, or future buyer if you’re looking to sell right away.
What kind of tenant are you looking for? Is it young families, professional couples, or students in Hamilton? When you decide, start using this end-user as your benchmark for decision making.
For students, then a multi-bedroom unit close to transit or McMaster is of key importance. Make sure whatever project you choose is very close to a transit stop, and that it’s within easy walking distance of a grocery store.
If you want a young family, then a condo with family-friendly amenities and location are key. Look for multiple bedrooms, nearby parks and recreation, and proximity to Hamilton’s top elementary schools. Extra points for commuter access, too.
Young families are the only audience where I would recommend factoring in amenities to your project decision. In general, condo amenities are about marketing. Buyers can be enamoured of pools, movie rooms, and pet spas, but these amenities add to monthly maintenance fees.
Young families and urban singles are the top markets for amenities. If your target audience is a young family, then look for family-friendly amenities like “hang-out” rooms, movie spaces, and parks.
For professionals, then picking a “hot” neighbourhood is key. Look for proximity to all kinds of transit, Hamilton’s top employers (McMaster and the hospital), and a hip cultural centre like Central or Beasley.
Investor Tip #3: Know Your Timeline
Are you in a rush? Many investors balk at putting their downpayment on a pre-construction property that won’t be built for 3 years or more. But think about the size – developments that are over 20 floors or have heritage features can take 5 years or more to build.
If you want to realize your returns sooner rather than later, find a project that’s a touch smaller or less complicated. It’ll be done sooner, and you’ll be able to realize your returns earlier.
Still, there’s no financial reason to avoid the big projects, and as long as you don’t mind the wait, snag the best project for you and your target!
Choosing the Unit
Investor Tip #4: Prioritize Floor Space
A walkable, usable floor plan is one of the top things tenants and buyers look for in a resale condo. When reviewing the floorplan, make sure the unit you pick has a reasonable flow, with room to breathe, and the right amount of space for the number of people who will be living there.
That being said, it’s not always about picking the “most” space. Instead, compare the price to the square footage. If you’re buying a junior one-bedroom near McMaster, then the lowest square footage should be the most affordable. Since your audience would be students in this area, an affordable monthly rent is an asset that can guarantee you long-term tenants.
So instead of picking the most floor space, compare your end user with what the floorplans offer. If your end user or tenant is a student, then a cheaper rent far outweighs the usable square footage. If your end users are families, look for more square footage, additional bedrooms, and family-friendly amenities.
Investor Tip #5: Match Bedrooms and Bathrooms to Target Tenant
Are the bathrooms accessible to everyone living in the unit? Is there one bedroom that’s far better than the other – say, with a walk-in closet and a master bathroom? These are things that your end user will pick up on. And depending on what they’re looking for, these are make-or-break features.
For bedrooms, one-bedrooms are usually the most in-demand but also have the highest market supply. If you’re in an area with few two- and three-bedroom condos, then picking one of these might be a competitive option. I might be hammering the target-audience topic here, but your decisions aren’t about you – they’re about your ultimate end user. Think like an investor.
Investor Tip #6: Windows and Light Sources Are Important
Balconies, windows, and natural light sources are an important draw for many buyers. While I wouldn’t stress about your unit’s placement on the floorplan, I would make sure your unit gets plenty of natural light.
Many smaller units have floating walls or indoor windows to allow natural light through the whole unit. I’ve heard that a number of buyers love these features, while others are concerned about noise levels in common areas.
When it comes to making these kinds of decisions, try to think about your end user. Are you buying a three-bedroom near McMaster? Try to aim for soundproof.
A one-bedroom for a single professional? Light is top priority!
In the end, if you’re unsure about one of these decisions, talk to a Realtor.
Most Realtors are experienced in dealing with tenants, landlords, and resale condos, and they can walk you through a lot of the process to make sure you’re making the best decision.
Picking Your Finishes
Investor Tip #7: Understand What To Pay For Now vs. Later
You don’t need to upgrade everything in your unit to stand out. But then again, many buyers go with the bare minimum when it comes to finishes, ultimately finding that their condo doesn’t shine against similar listings.
The important thing to remember? Developers buy in bulk so they often have the lowest materials cost. Do your research to find what’s cheaper to do now and what’s easy to do later.
If you do it, do it now:
- Smooth ceilings over popcorn
- Hardwood over laminate
- Higher-end appliances
- Additional lighting
- Swapping out specific materials (stippled glass for transparent, etc.)
If you want it, wait until later:
- Specialized blinds or window coverings
- Closet organizers
- Funky paint colours
- Higher-end countertops
- Trendy fixtures
Have any other hard-and-fast rules? Let us know in the comments!
Investor Tip #8: Don’t Pick Dark Floors
This might just be a personal preference, but it seems to be a widely-held one: don’t pick dark floors. They show footprints and dirt more than any other colour.
“But people take their shoes off!” buyers say. “It’s timeless!” you think. You’re not wrong. Except buyers, tenants, and anybody who views your unit isn’t taking their shoes off. And all they’ll see if how much they’ll be cleaning.
Use this general rule when picking finishes: choose what shows dirt the least. Things like stippled shower glass, patterned countertops, and neutral flooring
Investor Tip #9: Spring for Extra Lighting
It’s very difficult to add additional lights and light fixtures after your unit is built. Electrical work in condo units can get very expensive or tricky. But additional lighting is a major factor for buyers and tenants looking for their next home.
When choosing your finishes, it might be worth it to spring for additional lighting. Layered lighting, like under-cabinet lighting, pot lights, and chandelier hookups are all worth the splurge. “Useful” upgrades often carry more weight than merely esthetic ones, and lighting is something that makes it easier to live and work in a unit.
Think about how a space might look to a future buyer at night, especially with open-concept spaces.
Investor Tip #10: Choosing Light, Natural, and Contrasting Colours
Before going to your finishes appointment, take a look through Houzz or Pinterest to see how people are decorating cookie-cutter condos. You can use that information to get a good idea of what’s “in” right now – and then take that information with a grain of salt.
There are a few things that won’t go out of style. Lighter colours, natural-looking materials, and contrast.
Pick lighter colours for features, like walls, floors, cabinets. Then, for accent features like countertops, faucets, or drawer pulls, pick something with a little bit of contrast. It will add visual interest and won’t irk the largest portion of future tenants or buyers.
Have any other questions about how to choose a rental unit in Hamilton? We’d love to help. Send us a message and we’d love to walk you through the process.