A duplex is essentially two separate and self contained dwelling units housed within a single residential structure. A duplex is typically purchased as a residential investment property and one or both of the units are leased to tenants.
Duplexes are not houses with accessory apartments, nanny suites or in-law setup….
Many single family homes within Kitchener are advertised as possessing investment potential. These properties operate as “De facto” duplexes containing a principal dwelling unit alongside a secondary or accessory apartment (often called nanny suites or in-law setup). Typically they contain 2 separate or semi-separate units each with a kitchen, bathroom and bedroom. However, the secondary apartments often do not meet municipal housing regulations. They may be missing proper fire separation, zoning, private entrances from the exterior, or sound transfer reduction. Furthermore, these “De facto” duplexes cannot be represented as legal apartments (although many owners and landlords rent them out anyways). It’s perfectly valid to have a relative live-in or even rent out your accessory apartment, however according to City officials, homeowners are expected not to advertise or lease out these spaces as investment units.
An investor looking to buy a duplex property will need to discern whether a potential purchase can actually legally be rented out or if it is just an accessory apartment within a single detached home. Not sure how to correctly identify a legal duplex? Benjamins Realty has been specializing in residential investment properties for well over a decade.
Three Approaches to Acquiring Legal Duplexes: Purpose-built, Modified, Conversion
When targeting a Duplex investment property there are three avenues for the Buyer to consider. They range in terms of price, return, and also the overall time required from an investor.
- The Purpose-built: A purpose-built duplex is designed from conception and construction to function as a rental property. The purpose-built duplex offers a host of advantages in that the overall layout and design accommodates both tenants and the landlord.
Typically each unit will be metered separately for hydro and water, there will be plenty of parking available, and proper layout and sound separation is provided for added tenant convenience.
Building permits will have been issued at the completion of construction certifying the properties duplex status. An older purpose-built duplex may no longer fully conform with requirements listed by the City of Kitchener for duplex property owners. Investors will want to ensure the property fulfills the latest regulations. Purpose built duplexes appraise for a higher value then a modified duplex as they are more attractive to investors for the ease in property management and general durability of the property’s mechanical systems.
- Modified Duplex: A modified duplex is a property that has been converted from a single family dwelling into two separate self contained units. These properties differ from purpose-built in that the original conception for the property was a single family home. At a later date, the home was retrofitted to
accommodate the separate units, a building inspection was completed and the home received a permit to operate as a duplex property. These homes may be warranted as legal duplexes on the market but depending on the age of that permit the property may no longer meet regulatory guidelines from the City. These duplexes although legal should be considered non-conforming. Investors should exercise caution in purchasing modified duplexes and ensure that each unit fulfills current standards to protect against potential liabilities. Furthermore, the quality of the modifications impacts the overall viability and value of the property as an investment. Examples of less desirable characteristics in a modified duplex could be shared heating with one furnace between two units or shared utilities.
- Duplex Conversion: A duplex conversion in many ways combines the principles of the first two types. An investor may target a single family home with adequate zoning and convert it into a duplex. The advantages of this approach are the investor can determine how to layout the units, ensure proper materials are used and potentially build value into the property. Furthermore, as residential investments have grown in
popularity due to rising property values, specialist contractors have also appeared. With careful project management and the right contractor in place, an investor can convert a single family home into a duplex that essentially becomes a purpose built duplex. The key here is the conversion process must be completed to exacting standards ie. proper sound separation, adequate parking and units finished tastefully and thoughtfully with materials suitable for tenant use. Most importantly each unit should have separate utility metering and temperature control. For the City of Kitchener building requirements on duplex construction, contact Benjamins Realty. Benjamins Realty specializes in locating ideal property targets for duplex conversion. Savvy investors can connect with our extensive trade network to deal with specialist contractors familiar with municipal regulations. Furthermore, with a careful renovation, a landlord will be able to maximize rent return. This provides the strongest driver for value as an investment property. Older duplexes that have long term tenants may rent substantially lower then market value due to provincial rent controls. Duplex conversion can sidestep this issue allowing the investor to receive top value rent for each unit.
The City of Kitchener has made owning a duplex investment property relatively easy for investors. Zoning regulations allow for any property zoned R2 or higher to be converted into a duplex. If you need help determining a property’s zoning simply contact Benjamins Realty and we will provide you the information needed. Within Kitchener, the vast majority of residential property is R2 or higher. Generally the exception would be those properties within City limits that are not connected into the municipal sewer system.
Duplexing Semi-detached and Townhouses: City of Kitchener vs. Province of Ontario
According to the Provincial Ministry of Municipal Affairs and Housing as well as the “Strong Communities Through Affordable Housing Act 2011” semi-detached and townhomes should be allowed to house secondary units. The Act does allow for municipalities to create regulatory provisions around such units but suggests that ultimately these types of secondary units should be permissible even in semi-detached or townhouse properties.
Recently the City of Kitchener has released a revision of duplex regulations no longer allowing duplexing of semi-detached or townhouse property. This appears to be in contravention of the “Strong Communities Through Affordable Housing Act 2011.” Semi-detached duplex buildings that already exits have been grand-fathered but no new permits will be issued by the city.
A landlord that already owns a semi-detached property and wishes to receive a duplex permit could potentially bring the City of Kitchener before the Ontario Municipal Board to challenge the denial of certification if they did meet all other permit regulations.
As an investor looking to buy a property for duplex conversion, it would make sense to avoid semi-detached properties at this time unless they are ready to pursue the City of Kitchener through appeal to the Municipal Board of Ontario.
They key to acquiring a profitable duplex property as an investor is building a team of professionals to work with. Benjamins Realty seeks to empower their investor clients by providing access to proven trade networks, in-depth research on target properties, and superior negotiation skills in the market place. Contact us today to discover the next great piece for your property portfolio.
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