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Suite Additions with Andy Tran

Suite Additions with Andy Tran
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Dave Debeau [00:00:09] Everyone is Dave Debeau coming in with another episode of the Property Profits Real Estate podcast today, zooming in all the way from beautiful Scarborough, Ontario. We've got Andy Tran, if you're not familiar with Andy, he's a real estate entrepreneur in many senses of the word. He's not only a real estate investor himself, but he also teaches and trains other real estate investors. And he's really, really focused and he's got it dialed in on. Densification, specifically with a single family home into a duplex by adding a suite, plus a few other cool things, and Andy is also not just a regular everyday real estate investor, is also a registered house and small building's designer. So he definitely knows his stuff so well. Andy, welcome to the call. Thanks for having me, Dave. Yeah. So, Andy, tell me, how did it. Well, let's get into the big picture. What's the big benefit? For a mom and pop real estate investor to start thinking about or start getting involved in densification, what does that mean? What does that mean in layman's terms?

Andy Tran [00:01:18] Sure. So densification has been sort of a trend that's happening in cities and towns throughout Canada. And it's not just an issue in Canada, throughout the world, us, other places as well. And basically, there's a perfect storm of issues that is resulting in housing affordability issues. Right. Obviously, the cost of real estate, lots of immigration. And so you have a lot of, you know, regular middle income folks that are not able to afford to get into housing. And so we're finding that a lot of cities are encouraging homeowners as well as investors, developers, to densify existing low rise residential neighborhoods. So your typical R-1 suburbs know they're encouraging things like second suites, of course, garden units, laneway houses. And we're seeing that starting to really take hold in Ontario. Now, you mentioned earlier you're in D.C. and that has been something that has happened for a number of years. But we're seeing it across Canada and we're seeing a lot of it in Ontario.

Dave Debeau [00:02:22] Yeah, makes sense. So you've got all these people that bought single family homes in what used to be the suburbs in the big cities, which have kind of now become almost part of downtown. And you got the single family home sitting there. But the price of those kind of houses, just looking at Toronto, looking at Vancouver, we're getting into the millions of dollars that's beyond the scope of most average income folks. And these are average income kind of houses. So one of the solutions, one of the solutions is add another, add another property, add another suite onto that and another unit to that property to increase the density in that area. Make sense. All right. So how did you get involved in this whole thing? Where you what was the first? The chicken and the egg? Were you a builder first and then got into real estate investing or did you were getting into real estate investing and then get to become a small building designer?

Andy Tran [00:03:21] Yeah. So regarding the how kind of everything came about was I kind of stumbled into that whole densification strategy. My background is in architecture and that's why I registered as a house designer. I was actually in the home inspection industry for a number of years in the GTA and over that period of time and spent a lot of houses and people would always ask me, is this basement apartments something that I can legally rent out? And this was kind of like the late sort of twenty eight, twenty nine time. And I didn't have a good answer for them. I would always say, you know, check with your realtor to check with your lawyer, call the city. But invariably that was not a lot of good information for them. So I kind of dug in, did research myself. That was also around the time when I was really interested in investing real estate myself. So I went through the process of of researching it. The first one I did was in my own property in 2010. And through throughout that process, I learned so much from it and I decided to kind of incorporate that as part of my service when I was doing home inspections. And then gradually it just became something that people were more and more interested in. And sort of the around 20 fifteen, I kind of went out on my own and started my own consulting design company. And since then we've worked with probably over two hundred and fifty conversion projects in the greater Toronto area.

Dave Debeau [00:04:38] Nice, nice. Now, before we jumped on camera and tell me that you work in and a variety of different markets in and around the GTA. For somebody who's kind of thinking about getting into densification or adding a secondary suite or things like that, certain municipalities are really friendly about them, other ones aren't. How do you go about finding out if your area is friendly towards this or if not, where you can go to find a friendly one, especially for folks who aren't in the.

Andy Tran [00:05:13] Right, that's a great question, and I think the first thing is just check out the information that's available on the city's website. A lot of the cities that are encouraging densification, you'll see that they have documents and things like that regarding doing conversions. And a lot of them will have two or three page document that outlines the process. So for me, what I found out was that the cities that were very easy to work with, encouraging them and really working with investors and homeowners in a reasonable manner to get their units legalized, they were the ones where you can go to the website or when you give them a call, they will give you a good answer. And you're absolutely right. There are some cities where they are not really keen on this, and a lot of them are kind of complying with the provincial mandates begrudgingly. But it's not something that is really kind of a top priority for them. So I do encourage people to kind of look into the cities and find out which ones obviously look at your own properties first, write your own principal residence. If you have an existing portfolio, see what you can do there. And if not, I would say you look at a municipality where where it is more friendly towards that type of project.

Dave Debeau [00:06:22] So talk to us a little bit about legal versus illegal Swede's conforming versus nonconformist, which, whatever the language is different places of different language for that pros and cons to to each, I imagine from your background and what you're teaching everybody that focuses on legal or conformity suites. But there are a lot of people out there that have kind of non conforming suites. What's your take on that?

Andy Tran [00:06:51] Sure. Yeah, I can try to clarify that. And it is confusing. The language is very confusing. So for it to be fully legal, there are really two components to it. There is the municipal bylaws. So things that you have to comply with for that particular city. So, for example, you have to ensure that you are in a zone which allows them so. Most cities in Ontario now do allow them and a lot of cities in B.C. as well, of course, and things like parking. Do you have adequate parking available? Do you have an adequate lot size? So you have to comply with all the municipal bylaws and then you have to comply with the building codes. And the building codes are typically provincial or national based. Right. So there are those two main components. Now, when people say I have a legal nonconforming unit, it may be that they had this unit existing prior to any sort of bylaws that were put in place to prevent them. So in Ontario, we have a cutoff date of around nineteen ninety five. So if you had a unit existing prior to nineteen ninety five and you can prove it, then you would comply with the bylaws, but you would still have to bring it up to current building code standards, maybe not everything, correct. Yeah. And so that's really kind of when it comes to legal and illegal, a lot of people will I see a lot of listings online and it will say it's a legal suite. And if the seller cannot provide any documentation or if the city doesn't recognize it as such, it's not legal. Even if, let's say they did everything according to their interpretation of the building code, it has to go through the process of inspections, permits and that sort of stuff. So really, the advantage of legality is to ensure that you don't potentially get shut down because of a neighbor complaint or tenant complaint or something like that. And it's important for investors.

Dave Debeau [00:08:36] Yeah, definitely. And what about insurance and whatnot? I mean, what's what's because you hear nightmarish stories about people could be secondary suites, it could be boarding houses, and then you have a fire and. God knows what happens. Tell us just a little bit about what some of the risks are if you've got an illegal suite.

Andy Tran [00:08:56] Sure, yeah. So I don't have a lot of information about boarding houses specifically. But for second suites, my understanding is that the most insurance companies will expect you to inform them that you do have a second suite. As it stands now, I believe that most are still sort of agnostic as to whether it's legal or illegal. Like they will say, that's not a big concern. Now, things may change and that could change in the future. And so I don't want anybody to assume that that's that's OK to have it illegal unit. But my understanding, speaking to brokers, is that you have to let them know because there is additional risk, because you have a second family potentially living there. So you're adding an additional risk they have to increase their premium. So the concern there is that if you don't tell them you have a second unit and there is a flood or a fire in the second unit, they may not insure you. Right?

Dave Debeau [00:09:46] That's a big danger. All right, Andy, so you've done a couple of hundred of these kind of projects over the years. You definitely know your stuff roughly. And I won't hold you to this ballpark figure if I bought a single family house and the kind of area that you're in. Yeah. And it was set up that I could put in as a secondary suite, typically to put in a legal or a conforming secondary. So what are we approximately looking at for a cost for doing that property

Andy Tran [00:10:20] given to her? Yeah, I'm always cautious about answering that, but people always ask and I said I prepared for it. Right. So let's say your typical mid century bungalow, single story, eight hundred two thousand square feet, very common as a type of property that a lot of investors will buy and put in the second unit where, you know, I guess prior to the insane price run ups with lumber and other building materials lately. Right. Not withstanding that, we were looking at probably around ninety to one hundred and ten dollars per square foot roughly. Right. So we would feel pretty comfortable giving somebody a ballpark quote, roughly like a lot of just just the initial discussion, assuming they had to gut it or had to do it from scratch. You know, a thousand square foot would probably be one hundred thousand dollar range plus tax. That would be sort of a fair number of approximately. But from what I'm hearing with with material costs being up average 20 percent and lumber up one hundred percent, those numbers can change. And I haven't looked at those lately yet.

Dave Debeau [00:11:26] All right. Fair enough. Now, same idea, but let's say we've got somebody who's got a nonconforming suite and they want to bring it up to snuff. Have you worked on those kind of projects?

Andy Tran [00:11:38] Yeah, we have. We have worked on ones where they have been completed. Sometimes there is already a suite in there and sometimes it's just a finished basement. And so the difference between a suite and just a finished basement really is the kitchen. So if there is a kitchen there, then it would consider to be a second unit. But if you just had a finished basement with a bathroom, it may just be a recreational room. Right. So to the extent of us doing a legal conversion, it really depends on kind of what the quality of work was. A lot of times it was done really nicely. Several years ago, and now they want to sort of legalize the unit. It was never done. And there is really two things is whether you have the proper fire separation and all the safety items that are there. So things like egress, windows, smoke alarms and the rules are very similar across the country. With regard to those, there are slight variations based on province, but that's one thing. And then also just the sort of the quality of the renovation. Right. So it's wood paneled walls or drop ceiling tiles and a lot of cases it makes sense to gut it and redo it if there's if there was faulty wiring. And then sorry, there was a third thing also really depends on the city. So some cities are a little bit more conservative and they don't like to sort of, quote unquote, legalize things where the work was done prior to the permit issuance, where some cities recognize that the vast majority of them are illegal. And if you become too heavy handed in terms of the approach, a lot of people are going to register. And so it may be even more unsafe. Right. So it kind of depends on the city. But in my experience, I would say the majority of cities that I've worked with are fairly reasonable in kind of bringing up the legal nonconforming or just the non conforming units up to the current standard.

Dave Debeau [00:13:33] Very good, Andy. Time flies when you're having fun and people want to find out more about you and and what you're doing and how they can learn from you, how to do their own densification, how to how to add a secondary suite to their their properties or get into this as a strategy. What should they do?

Andy Tran [00:13:51] Sure, they can just go to my website, I have a lot of free resources. I have a couple of guides that they can download for free. One is a quick checklist that outlines eight important items. Some of those things we discussed the bylaw and the building code items. And then I also have a beginner's guide for legal second suites and legal second suites is really just the beginning. There are just so many opportunities with other types of densification, like regarding units, detached units, laneway houses, infill development is something that we always advocate as well. So there's there's a lot of opportunities for people, you know, not just the profit and real estate, but to create better housing for a community

Dave Debeau [00:14:29] of some very good. So where should they go?

Andy Tran [00:14:31] Triple W dot sweet additions, dot com. So that's you eite additions dot com.

Dave Debeau [00:14:38] Herbert, that has been a lot of fun. Thanks you.

Andy Tran [00:14:41] Yeah. Thanks, Dave.

Dave Debeau [00:14:42] All right, everybody take care and we'll see you on the next episode. Well, hey there. Thanks for tuning into the Property Profits podcast. If you like this episode, that's great. Please go ahead and subscribe on iTunes. Give us a good review. That'll be awesome. I appreciate that. And if you're looking to attract investors and raise capital for your deals, that may invite you to get a complimentary copy of my newest book. Right back there is the money partner formula. You got a PDF version at Investor Attraction book, dot com again, investor attraction book, dot com ticker.

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