What are some of the pros and cons about the new addy property at 405 Main Street W in Hamilton, Ontario? Mehdi of the addy squad highlights some of the things to consider when thinking about investing in the 405 Main Street property.

Introducing 405 Main Street W in Hamilton, Ontario. This video goes over the plan, investment type, and other details regarding this addy. It also highlights the emphasis on addressing the scarcity of housing in Hamilton. Every unit in the property will be affordable housing.

This video is a recording of a City of Hamilton Virtual Design Review Panel meeting where they discuss this project. To view the entire PDF presentation click here.

Watch this video for an introduction on 3HP- an affordable housing developer.

• This is a societal project, in which one aspect of the development – in this case the affordable housing component – makes a positive impact on society.
• Non-profit partnership lowers operating expenses, including property taxes and municipal fees.
• Employs green energy technologies to adhere to create a comfortable and energy-efficient building.
• Expected to return your investment in Year 2.
• Target construction completion date is May 2024.

• Expected return in Year 4 is estimated to be 4.2% of equity. This return is expected every year indefinitely. The GP is not expected to sell, which means distributions are anticipated every single year evermore. In the event the GP does sell, it will be valued based on common real estate practices.
• 50% of the units will be deeply affordable one-bedroom units.
• Remaining 50% will be a mix of bachelor, one-bedroom and two-bedroom units priced at roughly 15% below market value.

• Housing is considered “affordable” if it costs less than 30% of a household’s before-tax income.
• The term “affordable housing” can include housing provided by the private, public and non-profit sectors. It also includes all forms of housing tenure: rental, ownership and co-operative ownership as well as temporary and permanent housing.
• Subsidized housing is rent‐geared‐to‐income. RGI housing is based on 30% of a household’s gross monthly income.
• In Ontario in 2018, 165,400 people were on the affordable housing waitlist, including 118,000 for a period of two years or longer. Source.
• Hamilton’s waitlist for affordable housing is roughly 5,000 households. It’s around 6,200 when you include people waiting to transfer. It’s a three to five year wait. Source.

• Announced in January 2022, over 10,000 new affordable housing units will be created across the country through the Rapid Housing Initiative (RHI).
• The RHI is delivered by Canada Mortgage and Housing Corporation (CMHC), under the National Housing Strategy (NHS).
• Canada’s NHS is an ambitious, 10-year plan to invest over $72 billion to give more Canadians a place to call home. Launched in 2017, it will create up to 160,000 new homes, meet the housing needs of 530,000 families, and repair and renew more than 300,000 housing units.
• The federal government recently pledged $26.7 million in funding for an estimated 109 affordable housing units in Hamilton. Source.
• Ontario Housing Affordability Task Force has set forth a goal of the province adding 1.5 million homes in the next ten years. Source.

• Main Street is a major artery through Hamilton.
• Main Street acts as the boundary for two neighbourhoods: Hamilton Centre and Kirkendall North. As the property is on the south side of the street, it is technically in Kirkendall North.
• Short drive or public transit east to Hamilton Centre (downtown), that includes retail, restaurants and cultural pursuits.
• Short drive north to Tiffany-Barton lands where a revitalization project is taking place that will welcome businesses, residents and tourists with employment opportunities, homes and recreational spaces.
• Four parks within 1km and 8-minute drive to Bayfront Park.

• 16-minute walk to the nearest public school, Westdale Secondary School, and 7 minute drive to the nearest elementary school, Bennetto Elementary School.
• 6-minute walk to Dundurn Plaza with Fortinos grocery store, Service Ontario, Walk-in clinic, Ontario Driver Licensing, McDonald’s and Tim Hortons.
• John C. Munro Hamilton International Airport is a 16-minute drive.
• 8-minute drive to Hamilton General Hospital.
• About a 20-minute walk to historic Lister Block in downtown Hamilton.

• Average home prices in Hamilton are up by 35% year-over-year, with the average sold price now at $976,423 for January 2022.
• Hamilton home prices are at a record high as average detached home prices increase by $176,256 in just one month.
• Detached home prices increased by 38% year-over-year to $1.10M.
• Semi-detached/townhouse prices increased by 44% year-over-year to $874k.
• Condo apartment prices increased by 38% year-over-year to $572k.

• Despite an increase in housing supply in Hamilton, purpose-built rental market vacancy rate was 2.8% in 2021.
• Condo rental vacancy rate was below 1% in 2021.
• Asking rents were 20% higher than rents paid by current tenants.
• Fewer renters transitioned to home ownership.
• In October 2021, the average rent was $1,273.

Coming Up

These General Partners are new and this may be their first time running a project or have not had any come to completion yet. In many cases, they have experience in a senior-level role in real estate or similar but have recently moved into the General Partner role (Learn more).

Opportunistic

Risk profile: 

 High

Investor type:

For investors willing to take on the most complicated projects and that may not see a return on their investment for three or more years.

What defines the risk level?  

An Opportunistic investment often has little to no cash flow at acquisition but has the potential to produce a tremendous amount of cash flow once the value has been added. Examples include developments, acquiring an empty building, land development and repositioning a building from one use to another.