Featured Post, Local Kitchener Waterloo, Real Estate Investment

Illegal Real Estate Investments in Kitchener Waterloo

What they are and how to avoid buying them & losing money

By and large, most of the investors we talk to about real estate opportunities in Waterloo Region want to invest in quality properties that they can own and profit from for the long term.   They don’t have to worry about buying an illegal rental property (well, as long as they are using the services of a professional REALTOR [like me!] who has experience in the local investment market they’re buying in); if this is you, this article will just be a reminder to you of why you want to do things above board.  If you might own one of these, or a dozen, pay attention!

A minority of the people we speak to are trying to ‘game the system,’ by fitting more rental units into a property than the city will allow, or by renting a unit legal for 3 lodgers (in town, you need a Lodging License if you’re renting most units out to 3+ non related people. Typical in the Student Rental market, for properties 3 units and under) to 5 etc.  When I explain to them the danger they are putting themselves in, they typically assure me that they ‘know what they’re doing’ and that ‘this is how all the big guys got started’ or some derivation of that theme.

In this video, I lay out what an illegal rental property is, what to do if you have one, and the consequences you are exposing yourself too if you continue to operate illegal real estate properties.

If you do have a property in Kitchener Waterloo or surrounding area that you are unsure of the legality, contact me at 519-772-4376 or email me, or find me on http://Twitter.com/BenjaminBach or http://Facebook.com/KitchenerWaterloo

Operating illegal rental properties means you are likely violating the terms of your mortgage covenant, as well as the terms of your insurance.  In Waterloo, for example, there are hefty fines that can be levied against owners – even without an incident to prompt this (i.e. if your tenant, or any member of the public tips the City off, you can face a large fine). 

If you are violating the terms of your insurance (i.e. your property is a legal duplex, and insured as a duplex.  You ‘were smart’ and converted the basement to a third separate unit, and now rent out the property to three different tenant groups.) and there is ever an insurance claim (fire, flood etc), your insurance company is likely going to discover that you are running the property contrary to what they believed when they insured it, and they’ll probably stick you with the bill.  No fun!  The consequences can be even worse – a claim against you that isn’t covered by your insurance can bankrupt many people – dont let this be you!

When in doubt, and before you invest your hard earned cash in a property, consult the professionals.  A lawyer, a REALTOR who deals with investments, the necessary people in Zoning or By-Law enforcement at the City or town you’re investing in etc. Better safe than sorry, and finding out before you buy is always better than finding out there is a problem once you own the place.

Related posts:

1. How profitable can investing in Kitchener Waterloo Real Estate be?
2. Kitchener Waterloo Real Estate Market Update: October 2009
3. Why we invest in Kitchener Waterloo Real Estate
4. 2009 Kitchener Waterloo Investment Real Estate Market Update
5. A new addition to our Kitchener Waterloo Real Estate Investment Portfolio