Multiplex Property Investment
By OTP Design's Director of Design - Austin E.
Intro
In order to select a site for an investment property, it’s crucial to fully analyze the property to get the highest and best use out of it for development potential. If the property has too many obstacles to overcome then it may not be financially viable and won’t yield long-term investment returns. The below outlines property development planning factors to consider for real estate investing.
Size of Land
The size of the land and location of the property determines how much you can build on the land by right. In general, a 25’ wide lot or wider and 120’ deep lot or longer would allow a multiplex and laneway or garden suite to be built. A 50’ wide lot or wider could have the potential to be severed into 2 lots. Toronto has been at the forefront of opening up allowances for multiplex and laneway/garden suites so Toronto generally has the most development potential. However, if the lot is too small it may not be a worthwhile investment property to develop.
Zoning By-laws
The zoning by-laws applicable to the property determine how large you can build by right. The by-laws include limits such as front/rear/side setbacks, building height, density, lot coverage, building length and depth, lot frontage, lot area, and the maximum number of units possible per lot. These limits all define the built form on the property. The zoning by-laws can vary in different locations of the municipality so it’s important to find the most lenient areas to maximize the build. If desired, the zoning by-laws can be exceeded by requesting minor variances at committee of adjustment. Committee of adjustment is a municipal process that provides relief from the zoning by-laws when they can’t be met. However, this process notifies neighbours who can attend the hearing and adds roughly 4 months to the project timeline.
Site Features
The existing site features can determine the development potential of a property. If there are large trees on the property, it may not be possible to obtain permission to remove them to build which affects the project’s viability. If there are steep slopes on the property, it may make the build more expensive and could possibly lead to slope stability studies being required. A shared driveway, right-of-way or easement can possibly limit the buildable area on a property and/or lead to issues with the neighbours during construction and onwards.
External Authorities
There are numerous external authorities that can govern over a property which could impact the ability to obtain building permits. Toronto and Region Conservation Authority (TRCA) mainly regulates slope stability and flooding potential (100 year storm event). This could make a basement difficult to build. Ravines and Natural Feature Protection (RNFP) in Toronto makes any tree protection zones doubled within its jurisdiction which could affect the buildable area on a lot. TTC and Metrolinx regulate development nearby their infrastructure and may request drawings to determine if there’s any impact to their infrastructure. An existing house may be on the municipality’s heritage register which could limit the ability to alter or demolish the existing house.
Location
A rental property development should consider proximity to public transit, shopping, and services. In most cases, parking isn’t required in a multiplex development so it's important to look into the walkability score of the neighbourhood to make sure future tenants would find the location desirable to rent. This will ensure long-term investment returns as tenants would select the most convenient locations to live.
Vacancy
If a property being sought is currently tenanted then consideration should be given to the feasibility of evicting the tenants to be able to develop the property as intended. A vacant property is always more straightforward to work with as there’s no existing tenant delays to worry about.
Accessory Dwelling Unit (ADU)
A laneway or garden suite is a great way to fully maximize the property as the suite fits behind the multiplex in the front of the property. However, not all lots are able to accommodate a laneway or garden suite as certain fire safety metrics need to be met. The distance to the nearest fire hydrant by the property plays a crucial role in determining whether a suite is viable or not. There also needs to be enough clearance down the side of the multiplex so that firefighters can access the suite. These clearances may be difficult to meet when working with an existing house on a property.
Conclusion
It’s important to plan the project before a property purchase is made to make sure the development potential will result in a financially feasible project. On The Point Design is highly skilled in analyzing all the above factors to determine the development feasibility of a real estate investment property. Our Property Development Report (PDR) was created to ensure the property is a worthwhile investment before it’s purchased. This lets you (the investor) make a concerted decision on a property and ensures a smooth process from design to building permits to construction.
