Sarah Larbi: the first presenter tonight, Ken Bekendam. He's a real estate investor, developer himself. Also a partner in many of my recent projects in the last year, we've bought a lot together. Ken helps and advises other investors, with their portfolios through rental property of innovations and particular conversions.
Whether it's second suite conversions, triplex, fourplexes, larger conversions. I think Ken, you're probably one of the only ones I know that are doing these larger, also, bigger types of projects, not just the basement conversions, but you can actually take a building and you can do the conversions, commercial conversions to residential conversions and anything in between.
Not many people can actually. That level of conversions that you can. So I think that is really cool. You're also a real estate investor. So first question, I guess to you, Ken, first of all, welcome and we're honored to have you on board.
Ken Bekendam: Thanks for having me. And it's great to be part of your event tonight.
Sarah Larbi: Awesome, okay, as a real estate investor, doing conversions yourself, working with investors, like what are you seeing in the market? What is important for investors to know today? What is happening, what's not happening? What are the risks? Maybe just give us some insights on that first.
Ken Bekendam: There's been a lot of changes that have happened, just in the last couple weeks, couple months, definitely within the last year or so, with the zoning bylaws across the province. Okay, and again, we're seeing further changes happening, just in the last couple weeks in light of Bill 23 from the province, which is basically allowing further density, which is in large part good news, when it comes to what we do, which is basically adding more dwelling units.
Whatever former fashion that looks like in our case, we're converting a lot of existing buildings, or existing houses and adding in basement apartments and duplexes, triplex, and the commercial buildings. It's a great time to be out there doing these types of projects. I would say it's definitely getting easier from a zoning perspective. But things are changing, like literally by the week. Because right now in light of Bill 23, the municipalities are all now mandated to update their official plans and zone in bylaws, to permit the increased density.
Sarah Larbi: Okay. Let's talk about that. So like in English, for somebody that's starting out, I mean obviously we talk about this day in and day out, but Bill 23 allows you to do what exactly with a single family as an example.
Ken Bekendam: Basically what with Bill 23, especially in light of basement apartments, they're basically allowing up to three units on a lot. Now, that's not like a radical announcement because, many municipalities were already allowing three units on one lot. But so that means, you convert the principal building into, putting a basement apartment in the house and then adding like a coach house in the backyard.
Like many municipalities were already allowed at. But what this change does is basically forcing every single municipality to allow that, so many of these townships and municipalities that didn't have it in place are now being forced to do it. Which is great because, obviously, that's what we need.
Sarah Larbi: What does that do with, for example, parking? So if some municipality, and I know we do a lot of stuff in Hamilton where this doesn't apply, but many others it does. So let's just say you don't have enough parking or parking is, like you don't have enough, driveway parking, or backyard parking.
What does that do now versus before you would've had to go and get like a special, Opportunity to be able to do that. You can probably talk about the wording a little bit better.
Ken Bekendam: A minor variance?
Sarah Larbi: A minor variance. So what does that do now?
Ken Bekendam: Basically, municipalities we're still able to implement restrictions on these types of units, such as requiring a certain amount of parking spaces. For the units, mandating like minimums and maximums, like minimum unit size or maximum unit size. So basically what Bill 23 is saying is that the municipalities can't do that anymore. So, especially for one to three units, they can't be placing parking minimums, unit size minimums and other such restrictions that really limit people's ability to do it.
As of right. What that means is, like right now in some municipalities, we still require a parking space for a secondary dwelling unit. And we would, if we implement that parking space for whatever reason. We have to apply to the committee of adjustment for minor variance. And obviously going through that process all of the surrounding neighbors get notices.
This is where a lot of Nimbyism comes in because, you go knock on your next door neighbor and you're talking me into building a coach house in the backyard, like nine out 10 times, they're probably not gonna be supportive of it. And that really limits the amount of housing that we can build.
That's why the province is doing what they're doing, making it more as of right. And so right now we're in this kind of limbo period between the provincial bill being passed and now in effect, and the municipalities updating their official plans and zoning bylaws. And so we're gonna be seeing changes happening, over the next couple weeks, months, definitely into next year.
That's gonna make it easier. Some municipalities are very progressive. Like Hamilton, for instance, is very progressive. They're already allowing four unit conversions, in their cities, in these kind of, these low density, single detached, zones. So like they've already been ahead of the curve.
Sarah Larbi: We just have to essentially wait until the citys put them into their bylaws. Is that what it is? So the bills passed, they just need to go ahead with it. Some people are gonna do it right away and some people are gonna drag their feet. Is that kinda what you're saying?
Ken Bekendam: Exactly. Like municipalities, like St. Catherine's, Burlington, these are very restrictive types of municipalities. They're actually fighting against Bill 23. And so they're not gonna be quick to implement these changes. They were slow to the game before, and they're gonna be slow to the game, this time around as well. So if you're in those cities, like don't hold your breath, you're not gonna be seeing any major changes happening soon.
Sarah Larbi: It's coming. And I think the fees too, right? Like what about the fees that people pay for these permits. Now, is that also gonna be out the window once they start implementing bill 23? .
Ken Bekendam: There's been a lot of talk about development charges, in particular. So part of this bill is that municipalities can't charge development charges on one to three units. Now when it comes to that fourth unit and fifth, sixth, etc. They can still charge development fees on them. Now there's lots of changes happening in the development fee when it comes to especially affordable housing, nonprofit housing, that type of stuff. The problem is again, the planning committees, the city council still need to meet and update their development charge bylaws.
Again, applications being made right now are still subject to the current development charge bylaw which has a really high fees, hopefully, we'll see some reductions on that front. But again, it's too early to say until we actually see it in writing in an approved bylaw.
For those of us that are doing one to three unit conversions, we're not gonna be paying development charges. Okay. So if you do come against a city plan examiner who is trying to make you pay for development fees while you just throw Atum Bill 23 and say, Hey, you're not allowed to do this.
We've had to be, we've had to do that already on some applications. And again, Know these planners and stuff like in these municipalities, like they're still getting themselves up to date on all the requirements. It's still such a new thing, that there's still lots of discussion that's happening back and forth and getting confirmations and reconfirmation and having to clarify with other staff and departments on exactly the fee structure.
Sarah Larbi: All right. That's good news. Finally, some good news for investors. Okay, let's just talk about the process and the timelines, on two unit conversions or three unit conversions. So if somebody has a property under contract, once they remove conditions or maybe just before they remove conditions, what do you recommend that they do? From working with your standpoint, timelines, what are the accurate expectations so that you can also coordinate with your contractors and coordinate, with all of that stuff as well along the way.
Ken Bekendam: Once you know you're going firm on the property, that's the trigger to start everything right away. It does take time to get drawings in place to get engineering completed, to get mechanical designs done. The sooner that you can get started, the sooner you can get us in to measure up the property to start those architectural drawings. , the sooner you're gonna ultimately have your building permit.
Once you waive conditions, like we should be in there like the next day or within a week, and start that process. Now there is a difference between a two unit conversion and three or more. And that has to do with the building code because in the building code a house is defined up to two units, whereas a building is defined as three or more units, and they're gonna be subject to different review times in the city.
A house, a two unit conversion is a 15 business day review cycle. To change of use permit, that's subject to a 15 business day review cycle and typically takes about two review cycles to get an issued permit, whereas a building or three or more subject to a 20 business day review cycle, that's one month and that takes about, again, two review cycles. To kind of get a permit issued.
Sarah Larbi: You'll essentially be waiting potentially three months in order to get your permits enhanced from this time you start.
Ken Bekendam: Exactly and if you have to throw a minor variance application into the mix, all of a sudden you've just added two months to your timeline.
Sarah Larbi: If you're in Burlington, why does it take a year? Is that a myth or is that true? Because I'm hearing that it takes about a year to actually.
Ken Bekendam: Burlington is a brutal city to work in. I pity anybody who lives in Burlington and is trying to get any form of a building permit application because their process is actually very cumbersome and they have a lot of what we call red tape in that particular city. For instance, to create a basement apartment, or what they call an interior accessory unit, they require even if you're not making a single change to the property, like in regards to parking or anything like that, they require a legal lot serving. So that's number one. And most people don't have one, so that could take some time to get.
Two they have this whole, what they call pre consolidated building, like zoning, which on a good day can take upwards of 10 weeks to go through a zoning clearance process. And part of that zoning clearance process is any sort of tree on your property. They want arborist reports for it.
Public and private trees, they want arbor reports. They want tree hoarding, tree protection plans. And so it takes time to get it all. Pray to the Lord that you can actually clear the zoning process, then you're put into the building permit process, which is another couple months.
Sarah Larbi: Is Bill 123 gonna eliminate all the Bs that happens in, and I'm just using Burlington as an example, cause I know it's a tough one. But does Bill 1 23 essentially eliminate the need for all of that?
Ken Bekendam: Yes and like Bill 23 was really speaking to a lot of the higher level approval red tape, especially like site plan applications for 10 units or less. The ability for conservation authorities to comment on a development application. A lot of dot stuff from Bill 23 is gonna affect the much larger developments, like the land development type of stuff, like the subdivisions. The condo towers, that type of density.
It's not really gonna help clear red tape for the lower level stuff other than them mandating no removals of things like parking, unit size and other types of zoning restrictions that will eliminate minor variances.
It's going to help the process overall. But municipalities still have control, about, all of the other zoning bylaws or processes and application forms that they require. So I don't see Burlington getting rid of their desire for arborist reports and grading and drainage plans and legal lot surveys to do a basement apartment. They probably will still require that. But that's people, Burlington loves their trees.
Sarah Larbi: For sure. And I know there's some questions like Ken, we'll get you to maybe just answer them in the chat afterwards about some, like specific areas and that kind of stuff. So if you do have specific areas, put them in the chat when Ken is done talking, he can give you some more insight on those. But essentially what areas do you cover? Like do you cover all of Ontario? Do you cover parts of Ontario?
Ken Bekendam: We're pretty much going province wide now. We're always primarily just west GTA, like Hamilton, Branford, Niagara region. Kitchen order, Cambridge, Waterloo, that kind of stuff. But we're now venturing further and further afield because we're being asked to go to different locations.
Now like anything that's really more than an hour and a half, maybe two hours radius of our office, which is in Hamilton we're doing it remotely. So we're relying on a third-party measuring service, or we're relying on the client themselves to provide us with the dimensions of the property. What's nice now with technology is we can do everything remotely. We can do all the design work from our office. Most municipalities have switched to electronic submissions. All the communication can happen via email and whatnot. We're doing a project up in Collingwood.
We're doing one out in, I think, the Kingston area. We're doing one up in Cochrane, which is like five hours from Hamilton here. We're pretty much-going province wide. I wanna touch base real quick cause I see it in the chat about Bill 23. This is a very common question we get.
People think that Bill 23 is like, basically it's gonna be free for all on your property. That's not what Bill 23 is saying. You can't just, like, all of a sudden you have an illegal basement apartment, now all of a sudden it's grandfathered in and you still don't have to comply with building code or zoning bylaw.
You still have to, it doesn't mean you can just willy-nilly build a coach house in your backyard and still not have to meet minimum setbacks or lot coverage or minimum heights or anything else like that. There's still bylaws that we have to maintain. So it's not a free fall, a free for all.
They've made some changes to help make the process a bit easier. They've removed some requirements to lessen the amount of variances required. Which ultimately will help speed up the process, but it's not free for all.
Sarah Larbi: Exactly. It sounds really good when you start digging into it, it's decent. It's an inner favor, but it's not amazing. All right. Budgeting for two unit conversions. I think that's a great question, from Richard. What are you seeing? So obviously you do the drawings, and then you'll likely bring a contractor, you'll have a contractor on the project to do a typical, let's call it 800 square feet.
It depends, right? Obviously on a lot of things, but let's just call it 800 square feet. Pretty standard. You're not having to do a basement dig out or anything like that, or benching, what are you seeing for a conversion cost? So somebody can say, okay, this could be a range to the range of what I would spend on that basement conversion.
Ken Bekendam: For one to three unit conversions, maybe even one to four unit conversions, we're really seeing around a hundred, 120,000 a unit. If you have just the basement apartment, and let's say the main floor of the house is fine, it's turnkey and you're just focusing all the renovations in the basement, you're still gonna be like 120,000, 140,000, somewhere in that range.
Like a typical top and bottom. Renovation they're getting into, 200, 220, 230 depending on the scope of work, like 230,000. Again, it's all scope of work dependent. Like when we get into the tries and the fours, this is where we're getting into, 350,375. Like you doing a full on fourplex conversion and you have all new windows and maybe you're doing roofing and who knows, maybe you got underpinning or bench footing going on, you can be over the 400,000 mark on those projects. Just real quick, napkin math. You're looking at two or three in a conversion, like budgeting, minimum a hundred grand a unit. I would say more like 120 grand a unit?
Sarah Larbi: It depends if you gotta dig the basement, it depends if you're gonna have to fix issues or if you're just changing in adding. Right?
Ken Bekendam: Like in this type of work, there's no such thing as square foot pricing when you're talking about renovations to existing buildings because it's all scope of work. Some houses, no one house might need a roof, the other one may not. One house might need underpinning, the other one may not.
One house might need a full rewire where the other one does not. You new construction, it's much easier to price by square foot. But renovations to existing buildings, it's really scope of work.
Sarah Larbi: What are you seeing? Generally timelines. So like from the permit issuance, let's just say once you have permits. Cause as you can tell, it changes whether you're in Burlington or Hamilton or Welland or wherever else. I think Toronto is another thing in itself. But from the time that you get the permits on hand to the time that you essentially can go for the refinance, what is that timeline that you've experienced as an example?
Ken Bekendam: I tell my clients and JB partners and stuff that look let's give ourselves a 12 month window to get this project done. Okay? Because it could take four weeks, six weeks to get drawings done. You're doing a permit submission. That could be another like two months after the City Street minimum, three months, maybe even four months to get your building permit, saying there's no minor variance.
It could take six months. If you have to do a minor variance application as well, then you're starting construction. Construction can equal the same amount of time as it took to get the permit to begin with, right? Construction should be 3, 4, 5, 6 months, again, depending on the scope of work.
Let's say a typical two unit conversion. Let's say we're three months into the permitting process, you're four months maybe into renovations that's seven months. Then you have to rent the unit. Let's say it takes you a month or two months to rent the unit. Now you're like month eight, month nine. Then you have to talk to the bank about a refinance and qualify.
Sarah Larbi: I would probably do the refi before the tenant moves, in sign, cause they could still do market rents. But I get your point. Like you technically should budget about 12 months of timeline, and then if you're done sooner, then it'll be like a happy surprise.
Ken Bekendam: Like the more, like the projects that I'm typically involved in, like they're pretty full on renovation, gut re-projects, so they tend, take longer. But if it's a real, like light, cosmetic, type of project, you can turn them around quicker. There's no question.
Sarah Larbi: For sure. Okay. So if somebody is interested in figuring out how you can help them with their conversions, drawings, helping them get their permits, like what's the best way to reach out to you?
Ken Bekendam: The best way is to obviously reach out via the website, legalsecondsuites.com. There you can book a consultation. So every single client that we work with, we start with a consultation. It's a free consultation. It can be on the phone, or it could be on Zoom. And we can share a screen on Zoom. Basically, I will take a look at your property. We discuss your project.
We basically look at the highest and best. For that land and what we can and can't do and some of the things that we need to be aware of, any sort of red flags or concerns. And then from there, we jump into the permitting stage, which is the drawings and getting the drawings done. But yeah, reach out legalsecondsuites.com and book a consultation and that's how we get started.
Sarah Larbi: Amazing, Ken. So you've got lots of questions in the chat. If you wouldn't mind, we're gonna bring in the next guest, but if you wouldn't mind answering them in the chat, just because I know there's some specifics and lots of really great interesting questions. And obviously, we'll have you back for the networking, but there's your email there as well. So guys reach out to Ken, take a picture of that screen. And Ken does all of my current conversions as well. You're also part of the lot of those deals. So thank you so much, Ken, for being on.
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